Bazaar move

21 October 2010 By George Hay Follow @gfhay

The Spanish bank is in talks to acquire General Electric’s 21 pct stake in the Turkish lender. But the deal is more expensive than in the spring, and new bank regulations won’t help. It is only worth considering if BBVA has more management control than the U.S. conglomerate had.

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BBVA has confirmed it is in talks to acquire a stake in Turkey's Garanti Bank, the Spanish bank told its national regulator on Oct. 21.

"At the request of the Spanish Securities Market Regulator, BBVA informs that it is in discussions on the terms of a potential transaction involving the purchase of a stake in Turkiye Garanti Bankasi A.S.," it said. "However, no assurance can be given that any transaction will be announced or undertaken, or, if undertaken, as to the terms or timing of any such transaction."

The Spanish bank could pay between $4.5 billion and $5 billion to acquire General Electric's 21 percent stake in Garanti, Turkish daily Milliyet reported on Oct. 20.

The Spanish bank is only keen to do a deal if it can have role in the management of the lender, Milliyet reported. GE's stake gives it representation on the bank's board but the Dogus Group, a Turkish conglomerate, has a controlling 30 percent shareholding.

GE acquired a 25 percent stake in Garanti in 2005 by paying the Dogus Group $1.8 billion. It has since reduced its stake to 21 percent by selling some shares back to Dogus. At current market prices, its stake is worth $5.4 billion.

GE has been keen to sell the stake since February and at one point HSBC, Standard Chartered, Santander and Intesa SanPaolo were interested, according to reports.

BBVA shares fell 1.5 percent to 9.8 euros on Oct. 21.

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