Reuters
Dubai
Emirates NBD is looking for acquisition targets in Turkey as Dubai’s largest lender scouts for opportunities beyond its home market, despite an improving economic environment within the emirate, its top executive said recently.
ENBD, which completed in June the purchase of BNP Paribas’ Egyptian assets for $500mn, has been looking to diversify beyond Dubai after a real estate market crash in 2008-2010 severely impacted the bank.
The lender aims for 20% of its revenues to come from overseas markets in five years - up from 8% after the Egyptian acquisition - and while organic growth will play a part, another acquisition will probably be needed to meet the target. “To open a branch in Turkey, you need $300mn of capital so it’s probably worth buying something if there’s an opportunity,” chief executive Rick Pudner said in an interview at the Reuters Middle East Investment Summit late last month.
“We’ve looked at a number of things in Turkey but nothing has come to fruition. The trouble is it’s either big or quite small and we want something not big but a bit bigger than small.” He added that the bank wasn’t currently examining any specific asset in Turkey.
After ENBD’s profits were buffeted by soaring bad loan provisions linked to Dubai’s problems, earnings have improved in recent quarters as the emirate’s economy has recovered, aided by growth of Dubai’s key tourism and logistics industries and booming house prices.
Net profit for the first nine months of this year, at 2.6bn dirhams ($707.9mn), exceeded ENBD’s entire 2012 net profit of 2.55bn dirhams.
ENBD will repay the remaining 4.8bn dirhams of crisis-related support which it received from the UAE Ministry of Finance by the middle of 2014, Pudner said.
The bank received 12.6bn dirhams as part of system-wide support, in the form of capital-boosting bonds, but UAE banks have been repaying the money this year as the value of the instruments has diminished.
