Dubai’s Emirates NBD seals biggest acquisition with purchase of Turkish lender Denizbank

Denizbank has assets of 169.4 billion lira and operates 751 branches, including 43 outside Turkey. (Reuters)
Updated 22 May 2018
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Dubai’s Emirates NBD seals biggest acquisition with purchase of Turkish lender Denizbank

  • The deal is the biggest ever acquisition by Emirates NBD
  • The transaction is expected to be accretive to shareholders in the first year, said Emirates NBD Chief Executive Officer Shayne Nelson

Emirates NBD is set to buy Turkey’s Denizbank from Sberbank in Russia as part of efforts to expand its operations away from the Gulf region. 

Sberbank has decided to sell Denizbank — which is the fifth largest private bank in Turkey — as it refocuses its attention on Russia’s domestic market.

ENBD agreed to pay 14.6 billion Turkish lira ($3.14 billion) for the stake, according to a filing on the Dubai Financial Market. It is the Dubai bank’s biggest acquisition to-date. 

“Through this transaction, Emirates NBD will establish itself as a leading bank in the Middle East, North Africa and Turkey region and achieve meaningful diversification of its operations, both in new countries and in a broad range of business segments,” said Hesham Abdulla Al-Qassim, vice chairman and managing director of Emirates NBD, in the filing. 

The Dubai-based bank acquired French bank BNP Paribas’ Egyptian operations in 2013 as part of its regional expansion effort. 

“ENBD’s earnings are primarily from its domestic market and Egypt, and this deal would offer diversification to its earnings,” said Chiradeep Ghosh, banking analyst at Sico Bank in Bahrain.

“In addition, Turkey has favorable demographics and Denizbank is a well-managed bank, aggressively growing its balance sheet,” he said. 

Aarthi Chandrasekaran, vice president, investment management at Shuaa Capital in Dubai told Arab News that the deal was “not a surprise.”

“ENBD has always been keen on inorganic growth, rather than returning capital to shareholders via dividend payments,” she said. 

Analysts agreed that further acquisitions by the bank outside of the GCC region would be unlikely without ENBD first raising fresh capital to ensure it kept within regulatory capital requirements. 

The acquisition also comes as relations between Turkey and the Gulf states.

Chandrasekaran added that the Turkish market is “not an easy market” to operate in. 

“It is very challenging to break into the market, as it has tight domestic competition, the local lenders in Turkey gets support from government and the return ratio is less appealing for an outsider. To top it, you have to face the brunt of the weakening Turkish lira,” she said. 

She added: “The only comforting angle to the acquisition is that Denizbank is a better quality bank in Turkey compared to some of its mid-sized peers.”


Saudi Aramco to invest in refinery-petrochemical project in east China

Updated 18 October 2018
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Saudi Aramco to invest in refinery-petrochemical project in east China

  • This is the third such project in China that Saudi Aramco has set its sight on
  • Last month, Saudi Aramco signed a long-term deal with the Zhejiang project’s operator Zhejiang Rongsheng to supply crude oil

ZHOUSHAN, China/SINGAPORE: State oil giant Saudi Aramco signed an agreement on Thursday to invest in a refinery-petrochemical project in eastern China, part of its strategy to expand in downstream operations globally.
The memorandum of understanding between the company and Zhejiang province included plans to invest in a new refinery and co-operate in crude oil supply, storage and trading, according to details released by the Zhoushan government after a signing ceremony in the city south of Shanghai.
Zhejiang Petrochemical, 51 percent owned by textile giant Zhejiang Rongsheng Holding Group, is building a 400,000-barrels-per-day refinery and associated petrochemical facilities that was expected to start operations by the end of this year.
This is the third such project in China that Saudi Aramco has set its sight on as it seeks to lock in long-term outlets for its crude oil and produce fuel and petrochemicals to meet rising demand in Asia and cushion the risk of a slowdown in oil consumption.
Last month, Saudi Aramco signed a long-term deal with the Zhejiang project’s operator Zhejiang Rongsheng to supply crude oil.
The oil giant had not yet finalized the size of its stake in the project and still needed to complete due diligence, Aramco’s Senior Vice President of Downstream, Abdulaziz Al-Judaimi, said on the sidelines of the event.
Saudi Aramco expects to supply 170,000 barrels per day of Saudi crude to the refinery in Zhoushan when it starts operations, he said.
The first crude carrier supplying the refinery should arrive in December or January, depending on when the project starts, he added.
Aramco also owns part of the Fujian refinery-petrochemical plant with Sinopec and Exxon Mobil Corp, and has plans to build a 300,000-bpd refinery with China’s Norinco. It is also in talks with PetroChina to invest in a refinery in Yunnan.