Dubai Bank's Turkey Bet Just Got $1 Billion Cheaper. And Riskier - Bloomberg

Dubai Bank's Turkey Bet Just Got $1 Billion Cheaper. And Riskier - Bloomberg:

On the face of it, Emirates NBD PJSC’s acquisition of Turkey’s Denizbank AS has become about $1 billion cheaper. Still, the deal could prove to be the riskiest yet for Dubai’s biggest bank.

Since Emirates NBD agreed to buy the Turkish lender from Russia’s Sberbank for 14.6 billion liras -- worth $3.2 billion on May 22 -- the value of the acquisition has fallen to about $2.1 billion in dollar terms after the lira sank about 30 percent, with most of that occurring last week. A deal is expected to close later this year.

The lira plunge “might trigger a materially adverse clause that would benefit Emirates NBD, creating the possibility of renegotiating the deal with Sberbank,” Arqaam Capital Ltd. analysts led by Jaap Meijer said in a note on Sunday. This could reduce the purchase price and make it “more manageable from a capital perspective.”