Bloomberg News

Dexia’s Denizbank ‘Crown Jewel’ in Assets, CEO Ates Says

October 11, 2011

(Adds price-to-book value in the fifth paragraph.)

Oct. 11 (Bloomberg) -- Denizbank AS, Dexia SA’s unit in Turkey, is a “crown jewel” for the French-Belgian lender and there are no current plans for a sale, the Turkish bank’s chief executive officer said amid discussions to sell off Dexia assets after a European bailout.

“It’s a crown jewel of the company,” CEO Hakan Ates said in an interview in Istanbul today. “Denizbank has always been a big chance for any bank to penetrate this market with a decent market share that will grow.”

Ates said there are currently no plans for Dexia to sell its Turkish unit, which he said Dexia purchased for 4.7 times book value in 2006. He will fly to Belgium and possibly France tomorrow to meet with Dexia management and discuss the restructuring process, after returning from meetings in Belgium yesterday, Ates said.

“The key thing in this business, especially at this time, is profitable growth, and we have it,” Ates said. He said he’s not authorized to speak about any possible sale of Dexia’s assets, including Denizbank. Any sale would have to be approved by Turkish regulators, he said.

Denizbank shares surged 10 percent in Istanbul trading to 11.10 liras at 3:02 p.m. in Istanbul, putting the bank’s market value at 8 billion liras ($4.4 billion), or twice that of its parent’s 1.6 billion euro ($2.2 billion) market value. Denizbank’s price-to-book ratio rose to 1.98, while Dexia’s fell to 0.23.

‘Bad Bank’

Dexia’s board met two days ago, 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. France and Belgium are breaking up the bank, one of Europe’s leading municipal lenders, three years after bailing it out.

OAO Sberbank, Russia’s largest lender, is studying the possibility of acquiring Denizbank, Sberbank Chief Executive Officer German Gref told reporters in Moscow today. Talks haven’t started yet, Gref said.

Belgium, France and Luxembourg yesterday provided a 90 billion-euro ($123 billion) 10-year guarantee to cover Dexia’s funding needs. Excluding Dexia’s consumer bank in Belgium and its French municipal lending unit, assets will be sold to limit the bailout costs, people with knowledge of the matter said.

Denizbank shares have gained 33 percent this week.

--Editors: Linda Shen, Gavin Serkin

To contact the reporter on this story: Benjamin Harvey in Istanbul at bharvey11@bloomberg.net

To contact the editor responsible for this story: Steve Bryant at sbryant5@bloomberg.net


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