Dubai’s largest bank is making massive savings on its purchase of Turkish Denizbank from Russian state lender Sberbank thanks to the past year’s crash in the lira.
A revised purchase agreement signed Tuesday saw Emirates NBD acquire 99.85 percent of the shares of Denizbank for 15.48 billion lira, or $2.76 billion.
The United Arab Emirates’ second-largest bank paid around $440 million less for its acquisition than it originally agreed to on May 21, 2018, when it signed a sale and purchase agreement of the shares for 14.6 billion lira, which translated to roughly $3.2 billion at the time.
The Turkish currency has fallen so steeply over the past 10 months that the new purchase agreement of 15.48 billion lira represents a more than 13 percent price drop.
The sale is expected to be completed by the second quarter of 2019, subject to regulatory approvals.
Turkey’s economy dipped into recession last year after fears over government interference into central bank independence, over-leveraged banks, a growing current account deficit, ballooning inflation and a diplomatic spat with the U.S. triggered investor and capital flight. The lira lost 36 percent of its value against the dollar by the end of 2018.
Recent local elections, seen as a referendum on President Recep Tayyip Erdogan’s performance, saw his ruling AK Party lose several major cities as voters voiced their discontent about the state of the economy.
The lira was trading at 5.602 against the dollar on Wednesday morning at the opening of London trade.