Mubasher: NBK Capital, the investment arm of Kuwait’s NBK, said the agreement reached by Qatar National Bank (QNB) to acquire National Bank of Greece’s 99.81% stake in Turkey’s Finansbank would support the Qatari bank’s long-term growth.
QNB announced Tuesday it entered into a definitive agreement with National Bank of Greece to acquire its entire stake, amounting to 99.81%, in Finansbank for Euro 2.7 billion ($ 2.94 billion).
This acquisition is in line with QNB’s strategy, and Turkey has always been a very important market for QNB to enter. Finansbank is a major Turkish bank with $ 29 billion of assets as of June 2015. The transaction is expected to close in the first half of 2016.
With Finansbank shareholders’ equity at around $ 3.6 billion, the transaction’s multiple is around 0.8x, similar to the average P/B of a sample of the largest Turkish banks. Finansbank recorded a net profit of around $ 226 million in 9M2015, which represents around 9% of QNB’s net profit in that period.
“QNB mentioned that it will finance the acquisition from its own funds and will remain strongly capitalized after the acquisition. We roughly estimate that QNB’s CAR will decrease by around 300 to 350 bps following the acquisition. QNB had a CAR of 14% by the end of September 2015. Therefore, we think QNB will need to raise capital to complete such a transaction without witnessing a major decrease in its capital adequacy ratio,” said NBK Capital.
It added that the acquisition of Finansbank in Turkey is supportive for QNB’s long-term growth and diversification. Moreover, the multiple appears cheap knowing that Finansbank is a major player in the Turkish banking sector. On the other hand, this acquisition will increase balance sheet risks for QNB in the short term.
