MADRID: BBVA bank, the second-biggest Spanish bank, said on Tuesday that it had agreed to buy 24.89 percent of Turkish bank Garanti Bankasi for 5.8 billion dollars (4.2 billion euros).
BBVA said in a statement that it would raise capital of up to 5.06 billion euros to finance the investment.
The price of shares in BBVA fell by 3.51 percent to 8.79 euros, in initial trading after the announcement.
Garanti Bankasi is the second-biggest private bank in Turkey in terms of assets. The bank, which employs 20,000 people, has activities in Turkey and Romania. On October 29, it was capitalized at 19 billion euros.
BBVA, which has expanded aggressively in recent years, picking up assets in the aftermath of the financial crisis, is to acquire 6.3 percent of the capital in the Turkish bank from Dogus Holding for 2.06 billion dollars and a stake of 18.6 percent from US group General Electric (GE) for 3.78 billion dollars.
The Spanish bank will end up with 24.89 percent of the Turkish bank, Dogus Holdings will also retain 24.89 percent and 50.22 percent will be owned by other shareholders.
The stake held by GE, which now owns 20.85 percent, will fall to 2.25 percent.
Under the agreement, BBVA and Dogus Holding will have joint responsibility for managing the bank which would have the same number of voting rights and seats on management boards, in the first instance.
In a second stage, BBVA could decide to increase its holding and would then have increased representation on the board.
The deal is subject to approval by competition authorities in Turkey and Spain and for the European Union. Spain is a member of the EU, Turkey is not.
