MADRID, April 25 (Reuters) – Spain’s BBVA said on Monday it had raised its bid for the rest of Turkish bank Garanti, taking advantage of a weaker lira with an offer of 1.985 billion euros (2 .1 billion) to increase its exposure to emerging markets .

BBVA (BBVA.MC) said it raised its offer to 15.00 Turkish liras ($1.02) per share from 12.20 liras for the 50.15% of Garanti (GARAN.IS) it does not own . Read more

Despite a 23% increase in the offer to 31.595 billion liras, BBVA’s offer, valued in euros, is worth less than the 2.25 billion euros initially announced on November 15, the Turkish currency fell since being depreciated by more than 28%.

The proposal means BBVA could potentially buy the rest of Garanti for less than a third of the €7 billion it spent to buy out the 49.85% stake it already owns.

Like Spain’s biggest rival Santander (SAN.MC), BBVA has expanded into emerging economies where it is seeing greater growth as it struggles to boost revenue in mature markets. Read more

While analysts mostly agree that the Garanti deal makes sense from a financial standpoint, many have pointed to the macroeconomic risks associated with emerging market betting.

“Investor views on BBVA’s increased exposure to Turkey at present remain negative, as this announcement may not help the stock from this perspective,” UBS said.

BBVA shares were down 2.3% at 0753 GMT, against a 0.7% drop in Spain’s blue-chip Ibex-35 index (.IBEX).

Spanish investment firm Alantra said the revised terms indicated BBVA was “seeking a broad participation in Garanti’s bid”.

BBVA said that due to the increase in the offer price, the acceptance period has been extended from May 18 to April 29.

In accordance with Turkish takeover bid regulations, the offer price cannot be changed during this extension.

BBVA estimated a maximum impact of around 34 basis points on its fully loaded common equity Tier-1 ratio, the most stringent measure of solvency, assuming all Garanti shareholders accept the offer, compared to 46 basis points initially estimated.

($1 = 14.7589 lira)

Reporting by Jesús Aguado; Editing by Inti Landauro and Alexander Smith

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