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Emirates NBD reaches deal to acquire DenizBank from Sberbank of Russia

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Emirates NBD reaches deal to acquire DenizBank from Sberbank of Russia

After months of negotiations, Dubai-based Emirates NBD Bank PJSC has finally entered into a definitive agreement to acquire PAO Sberbank of Russia's entire 99.85% stake in DenizBank AS for a consideration of 14.6 billion Turkish lira.

Emirates NBD will also pay interest on the consideration for the period between Oct. 31, 2017, and the deal completion date, which is expected in 2018. As part of the transaction, the Dubai lender will assume ownership of DenizBank's subordinated debt from its Russian parent once the deal is closed, upon which Sberbank will cease to be a shareholder in the Turkish bank.

The deal is subject to approvals from regulators in Turkey, Russia, the United Arab Emirates and other relevant jurisdictions where DenizBank operates.

Sberbank noted that it expects a positive impact on its capital adequacy ratios under both Russian Accounting Standards and International Financial Reporting Standards once the transaction is finalized. The actual financial effects of the deal for Sberbank are subject to currency exchange rates, as well as on the timing between the deal signing and completion, according to the Russian lender.

Emirates NBD and Sberbank said the total consideration is under a locked-box mechanism based on DenizBank's equity capital as of Oct. 31, 2017, which totaled 12.5 billion lira. At March 31, the Turkish lender's equity capital was 13.7 billion lira and its assets totaled 169.4 billion lira.

Emirates NBD said it will increase its international presence to 13 markets, while its international assets will exceed 30% of its consolidated balance sheet post-acquisition.

As of May 21, US$1 was equivalent to 4.59 Turkish lira.