A good story would be: the lira is an attractive currency; Turkey has an independent central bank; Erdogan heads a government that applies orthodox economic recipes and of proven success; and the market rewards that BBVA changes the US for Turkey. But it sounds like that poem by José Agustín Goytisolo about “an evil prince, a beautiful witch and an honest pirate …”.

BBVA repeats that investment in Turkey is very profitable and brings a lot of benefit to BBVA. But it does not seem that the entity dedicates itself with similar eagerness to inform us about the strong losses due to exchange differences, when the lira falls, charged directly against the net worth.

BBVA entered there in 2010 and has made three purchases, each one cheaper than the previous one. Altogether, the bank spent 7,124 million for 49.85%. And the other 50%, at the price of the takeover bid, would now be worth 2,249 million. Which serves to give an idea of ​​the decline in value in the previous investment… In reality, BBVA’s acquisitions strategy in Turkey resembles that of bad stockbrokers who average down.

However, BBVA is right when it says that the Garanti is the best Turkish bank. Apart from the fact that, without a doubt, BBVA professionals have made him improve his practices and management over the years. The problem is the country and the environment, which determine a very high level of risk. And that it becomes especially problematic in a financial group such as BBVA that is highly dependent on other high-risk businesses such as Bancomer and even more so Argentina, Venezuela, etc. To the point that BBVA’s risk profile would be, in my opinion, absolutely unbalanced.

A year ago he was able to buy the Sabadell at a bargain price. It would have increased earnings per share, strengthened its poor business in Spain and balanced its risk profile. I think he was wrong to discard it, valuing, for example, the British business of Sabadell at zero for which another entity has just offered 1,200 million euros.

The market, which has been punished yesterday on the stock market, does not seem to have been much convinced by the entity’s arguments to “sell” this takeover bid. And I’m afraid the ECB doesn’t either. But entities are sovereign and the supervisor cannot impose his vision on them. What it can do is demand more capital from them, although BBVA currently has enough.

In short, BBVA strengthens itself in a financial institution that is not bad and at a price that does not imply levels of PER (which measures the relationship between the price of a share and earnings per share) and PVC (which reflects the relationship between the stock market value of the company and the one it has in its accounting books) excessive. But in which the devaluation of the lira has punished him in these years. And it accentuates your risk profile. Perhaps you trust the Turkish government to apply another kind of policy.