BBVA exceeds 50% in Garanti after raising offer for bank By Reuters May 4, 2022 BBVA is poised to take over Garanti BBVA raises offer in Turkish lira by 23 percent for Garanti1.985 bln euro bid lower than 2.25 bln offer in NovemberLira’s depreciation behind lower valuationBBVA sees maximum capital impact of 34 basis pointsShares in BBVA fall 3.9 percent, Garanti shares rise 5.5 percent Spain’s BBVA said on Monday it had already secured more than 50 percent of Garanti after raising its bid for the rest of the Turkish bank it does not own, takingadvantage of a slide in the lira with a 1.985 billion euro ($2.1 billion) offer to increase its emerging market exposure. BBVA had said earlier it had upped its offer to 15.00 Turkish lira ($1.02) per share from 12.20 lira for the 50.15 percent of Garanti it does not own. Despite increasing the offer by 23 percent to up to 31.595 billion lira, when valued in euros, BBVA’s bid is worth less than the 2.25 billion euros when it was initially announced on November 15 as the Turkish currency has since depreciated by more than 28 percent. Surpassing the 50 percent threshold will allow the Spanish lender to allocate more capital to Garanti without launching an additional tender offer. As a result of the increase in bid price, the acceptance period had been extended to May 18 from April 29, BBVA said earlier. In accordance with Turkish takeover regulations, the bid price cannot be amended during this extension. The proposal means BBVA could potentially buy the remainder of Garanti for less than a third of the 7 billion euros it spent buying up the 49.85 percent stake it already holds. Like bigger Spanish rival Santander, BBVA has been expanding in emerging economies where it sees greater growth as it struggles to boost income in mature markets. Although analysts mostly agree that the Garanti deal makes sense from a financial point of view, many have highlighted macroeconomic risks from betting on emerging markets. “Investor views on BBVA increasing its exposure in Turkey at the current juncture remains negative, with this announcement unlikely to help the stock from that perspective,” UBS said. BBVA shares closed down 3.9 percent compared to a 0.9 percent decline of Spain’s blue-chip index Ibex-35, while shares in Garanti jumped 5.5 percent to 14.99 Turkish lira. Spanish investment firm Alantra said that the revised terms indicated that BBVA was “looking to secure a large take-up from the Garanti bid”. BBVA estimated a maximum impact of around 34 basis points in its common equity tier-1 fully loaded ratio, the strictest measure of solvency, assuming all Garanti shareholders accept the bid, down from an initially estimated 46 basis points.