BBVA raises stake in Turkey's Garanti BBVA has agreed to pay €2bn to raise its stake in Turkey's Garanti Bank to 40 per cent, in a deal that gives the Spanish lender control of the board and marks a vote of confidence in Turkey after a period of economic and political volatility. Madrid-based BBVA bought the additional 14.89 per cent stake in Garanti from Dogus Holding, leaving the Turkish group with just a 10 per cent stake. The Spanish lender will now have the right to nominate seven of the bank's 10 board members, but will be under no obligation to make a mandatory offer to remaining shareholders in Garanti. BBVA bought 25 per cent of the Turkish lender in 2010, and currently controls four seats on the board. We believe that Turkey is a very exciting market where we can achieve strong long-term growth. We are maximising economic exposure to Garanti at a very good price," said Jaime Saénz de Tejada, BBVA's chief financial officer. The deal will be financed through a capital increase of up to €2.6bn, by way of an accelerated bookbuilding procedure. Bank of America Merrill Lynch and Morgan Stanley are joint bookrunners on the transaction. Mr Saénz de Tejada said he expected the capital raise to be €2bn. The deal marks the second large investment by BBVA in less than four months - and offers further evidence of a shift in sentiment within Spain's financial services industry. After years of crisis management and retrenchment, BBVA and domestic rivals such as Banco Santander and Caixabank are once again in expansion mode, snapping up assets both at home and abroad. In the case of BBVA, a desire to increase market share has trumped concerns about political risk. In July, the Madrid-based lender agreed to pay close to €1.2bn to take over Catalunya Banc, shrugging off the rising clamour for secession in the bank's home region of Catalonia. Turkey's banking market has also gone through a turbulent year. A sharp interest rate rise in January ate into margins, although rates have edged down since, while state authorities have restricted banks" increases in lending - particularly in the case of lucrative consumer loans. Irakli Pipia, an analyst at Moody's Investors Service, said the measures reflected the fact that the loan to deposit ratio in Turkey is weaker than in other emerging markets. "Very fast loan growth was not supported by the rate of deposit creation, which necessitates external funding," Mr Pipia noted. He said there were now lower profitability expectations for the sector as a whole. At the same time, Turkey's political debate has become more highly charged. Turkish misgivings about foreign banks were highlighted in a newspaper column in August by Yigit Bulut, the chief economic adviser to Recep Tayyip Erdogan, then Turkey's prime minister and now its president. Mr Bulut complained that the banking sector "seems to have been abandoned to the control and mercy of both foreigners and "foreigners within"." Despite these tensions, BBVA has frequently cited Turkey a key target for expansion, and pointed to its economic resilience, healthy demographics and growth prospects. According to BBVA's own estimates, Turkey's economy is on course to grow by an average 4.6 per cent every year over the next decade. Under the terms of BBVA's initial 2010 investment in Garanti, the Spanish group has the option of raising its stake and gaining control of the board in March 2016. The deal with Dogus would allow BBVA to achieve that goal earlier - and by way of a larger participation - than originally anticipated. Garanti reported net income of TL2.86bn ($1.28bn) for the first nine months of this year, a 1 per cent decline on the same period for 2013.