Belgium’s Dexia financial group has accepted a 780 million euro loss from sale of Turkey’s Denizbank to Russia’s top lender Sberbank, Dexia CEO Pierre Mariani said on Friday.
Sberbank has agreed to buy 99.85 percent of Denizbank for $3.5 billion earlier on Friday, in what could be the greatest ever purchase in the bank’s history, to further its European expansion plans.
The Russian banking giant added the Turkish bank to its international presence at a considerable less expensive price than it may have, with prices for all European financial players buffeted by doubts about balance sheet risks, exposure to sovereign debt issues within the eurozone, and often dire economic outlooks for many European markets.
Mariani told reporters that the company would have a 780 million euro loss from the sale if the deal was closed in late 2012 and if Turkish lira exchange rate at that time remained at current levels of 0.547 dollar and 0.435 euro for a lira.
“The disposal of Denizbank represents a major milestone in the orderly resolution plan initiated in October 2011. The backing of Sberbank, on its part, reinforces the potential for development of Denizbank’s commercial franchises, which recorded a sustained growth since its entering the Dexia group perimeter in 2006,” Dexia said in a statement.
Sberbank head German Gref told reporters that the bank hoped to increase its profit from foreign affiliates to seven or eight percent from the current two percent, after the purchase.
“We see that this purchase gives us opportunity to earn seven or eight percent of net profit abroad,” Gref told a news conference after the signing ceremony, adding that Sberbank would pay the deal from its own funds.