Shareholder rebuffs BBVA’s share price offer for Garanti

Engin Esen - ISTANBUL

Spanish banking group BBVA’s share price offer to achieve full control of Turkish lender Garanti BBVA, which was announced in November 2021, is far below a fair level, one of the major shareholders has said.

“Due to the monetary policy introduced since November, the net interest margin and profitability of the bank have soared,” RPD Opportunity Fund LP founder Ahmet Okumuş said.

Garanti BBVA will release financial results for the first quarter on April 28, but BBVA’s voluntary takeover bid - 12.20 Turkish Liras per share - is expected to be concluded before then.

“The first quarter has been very rewarding for Garanti due to the interest rate policy that is being implemented. Garanti had guided a return on equity [ROE] rate of 20 percent, while [its competitor] Akbank announced a rate of 30 percent. I think Garanti was very conservative,” Okumuş said.

The Spanish bank already owns a 49.9 percent share in Garanti BBVA. When it launched a voluntary takeover bid in mid-November last year, 12.20 liras was equal to $1.22. Now it is around $0.82.

In November 2021, BBVA’s offer represented a premium of 34 percent over the volume-weighted average price of the past six months, a sum that seemed to be very attractive to shareholders. But yesterday, Garanti BBVA’s stocks at Borsa Istanbul were traded for 12.05 per share.

In a letter sent to the BBVA’s chief executives, Okumuş stressed that the voluntary takeover bid should be revised upwards to 17.45 per share.

RPD currently holds a stake of around 0.8 percent. Other institutional investors own around 36 percent of the Garanti BBVA shares, whereas individuals have around 11.2 percent of the stocks.

The Spanish bank made its first investment in Garanti in 2011 by buying 25.01 percent of shares. It expanded its stake in the lender in 2015 and again in 2017, reaching 49.85 percent.

Turkey is currently the third-largest market for BBVA in terms of profit contribution, and executives, including Turkish national CEO Onur Genç, have repeatedly defended their focus on the emerging market.

“I think our message in the letter is strong, and it resonates with other investors. They are trying to buy the most important financial asset in our country for a song,” Okumuş said.

“If they don’t revise up the offer, they will only be able to buy too less shares. And then, they will have to revise it up,” he added.