Garanti - Snapshot (All figures in millions, €)TRY/EUR 0.503Garanti unaffected share price (TRY) TRY8.8Garanti implied share price in euros €4Garanti shares outstanding 4,200Market cap €18,485
GE Capital Stake Sold In Garanti (89% of its total stake) 18.60%Implied GE Capital stake face value (€) €3,438Discount On GE stake purchase 22%Implied GE stake cost for BBVA €2,682
Premium For Garanti Stake(All figures in millions, €)Premium for Dogus 6.29% stake in Garanti 25%Dogus stake being sold to BBVA 6.29%Implied cost of Dogus stake for BBVA €1,453Total spent by BBVA €4,135Implied BBVA stake in Garanti 24.89%
Garanti has a market cap of around €18 5 billlion. BBVA has bought an 18.6% stake in Garanti from GE Capital at a 22% discount for €2.68 billion
BBVA is on its Garanti "path to control" mission and has so far acquired 24.89%, which is likely to increase after five years.
BBVA's Garanti(zados) Buy BBVA has bought a roughly 25% stake in Turkish bank Turkiye Garanti Bankasi and it's using the opportunity of a rights issue to raise some extra capital to boost its Basel III ratios, as we argued previously.
BBVA RWA And CAGR(All figures in millions, €)Core Capital 3Q10 €24,969New erquity to finance Garanti buy €5,060BBVA Risk Weighted Assets (RWA, 3Q10) €306,319BBVA assumed RWA CAGR 7%Total cost of Garanti deal €4,135
Core Capital for BBVA after Garanti deal
2011E 2012E 2013E 2014E€327,761 €350,705 €375,254 €401,522
€30,000 9.4% 8.8% 8.2% 7.7%€34,000 10.7% 10.0% 9.3% 8.7%€37,000 11.6% 10.8% 10.1% 9.4%€40,000 12.5% 11.7% 10.9% 10.2%
Created: 2 November 2010Sources: DJIB Estimates, BBVA's financials, CapIQ and Factset
RWA
Core Capital
A EUR5 billion core capital raising finances BBVA's acquisition of Garanti and leaves the bank plenty of financial flexibility.
At last reading, BBVA core capital was nearly €25 billion. We are assuming RWA growth to 2014 of 7%, around 100bp above the last three years' average.
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