Bloomberg News

Denizbank Surges on Bets Dexia Will Sell Under Rescue Plan

October 10, 2011

(Closes shares in the second paragraph.)

Oct. 10 (Bloomberg) -- Denizbank AS, the unit of Dexia SA in Turkey, jumped the most in 20 months, making the share among the most expensive regionally when compared to book value, on bets that it will be sold under a rescue plan agreed with the French and Belgian governments.

Denizbank advanced 1.72 liras, or 20 percent, to 10.12 liras at 5:30 p.m. in Istanbul, the biggest increase since February last year and valuing the bank at 7.25 billion liras ($4 billion.) That equates to 1.8 times book value, the highest among more than two-dozen local and regional peers tracked by Bloomberg. Dexia owns more than 99.8 percent of Denizbank, with the remainder traded on the exchange, Bloomberg data show.

The bank is likely to be sold, though unlikely to fetch the same premium of three times book value that it reached in 2006, when Turkish billionaire Ahmet Nazif Zorlu sold a 75 percent to Dexia for $2.4 billion, banking analyst Nergis Kasabali at Ata Invest in Istanbul said in a telephone interview today.

‘Alternatives’

“Currently, the average is around 1.4 times book for the sector in general, and there are lots of alternatives around the world of banks trading below book,” Kasabali said.

Turkiye Garanti Bankasi AS, Turkey’s biggest bank, trades at 1.64 times book value. Goldman Sachs Group Inc. added Garanti to its “focus sell” list last week, saying the stock is vulnerable to losses as economic growth slows. The average price to book ratio for Turkish banks is 1.45.

Dexia’s board met yesterday, when it reviewed a plan under which the lender would set up a bad bank for its troubled assets, hive off its French municipal loan book and seek buyers for remaining units.

OAO Sberbank, Russia’s largest bank, hired Deutsche Bank AG and Troika Dialog Group Ltd. to advise on a possible offer for Denizbank, Kommersant newspaper reported.

Dexia bought Denizbank in May 2006 joining Citigroup Inc. and HSBC Holdings Plc in a market where economic growth is more than three times the European Union average. Dexia increased its stake via an offer to minority shareholders.

Denizbank had net income of 137.2 million liras in the second quarter compared with 140 million liras a year previously. Net interest income was 385.8 million liras in the period.

--Editors: Chris Peterson, Alan Purkiss

To contact the reporter on this story: Mark Bentley in Istanbul at mbentley3@bloomberg.net

To contact the editor responsible for this story: Mark Bentley at mbentley3@bloomberg.net


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