Russia's largest bank state-controlled Sberbank will complete the sale of 99.85% in Turkish Denizbank by the end of the second quarter of 2019, the bank said on April 3, finalising a deal anticipated by the investors.

Since 2018 the bank's senior management promised to close the sale, but the economic turmoil in Turkey has raised concerns over the sale of Denizbank to Emirates NBD. Most recently analysts said that the next bottom-up catalysts for Sberbank allowing for a potential dividend payout increase is finalising the Denizbank sale.

Investors are waiting impatiently for Sberbank to increase its dividend payout to 50% of earnings, as per the Ministry of Finance orders to all state-owned companies last year. While the bank has promised to up the amount it pays again this year, it has been waiting for the Denizbank sale to go through before going all the way on dividend payments at 50%.

However, the increase in dividend payments to 50% is still unlikely to be put in place until next year, as the bank also wants to improve its capital ratios somewhat first. The sale will not yet impact the 2018 dividend decision, as the Supervisory Board meeting of Sberbank takes place on April, 16 before the sale closes, BCS GM argue.

"The sale removes uncertainty regarding the deal completion and will improve Sberbank’s capital position by about 100bp," BCS Global Markets commented on April 4.

New terms of the deal undermine TRY15.48bn versus TRY14.6bn on May 2018 agreement and a lower valuation of the Turkish bank, as Sberbank hasn’t retained 2018 Denizbank’s profit. 

USD/TRY rate is not set and at the current level the price is $2.7bn or about 20% discount to the low band of the range previously agreed, BCS GM estimates. The pricing of the deal will be especially difficult as the TRY is currently experiencing some of the same volatility it suffered from last year’s currency meltdown that has thrown the Turkish economy into its first recession in a decade.