Turkiye Garanti Bankasi A.S., once a prominent name in Turkish banking, disappeared from the PINK exchange in May 2023. Delisted and absorbed into its parent company, Banco Bilbao Vizcaya Argentaria (BBVA) (BBVA), the bank's story seems to have reached its conclusion. But a closer look at the available financial data reveals a perplexing enigma, a financial riddle that might have slipped past the scrutiny of seasoned analysts. It's a story of vanishing cash flow, a trend that began long before the delisting and points to a deeper, potentially overlooked narrative.

Garanti's financial statements tell a tale of two contrasting realities. On the surface, the bank appears robust, with a market capitalization of $3.83 billion at the time of delisting and a history of consistent earnings per share, reaching $0.2852 in 2018. The bank's description paints a picture of a diverse financial institution, offering a wide array of services, from traditional banking products to insurance, leasing, and investment services.

However, beneath this seemingly healthy exterior lurks a puzzling trend: a steady decline in free cash flow. Looking back at the bank's yearly cash flow statements, we see free cash flow peaking at $13.83 billion in 2019, then plummeting to $8.36 billion in 2020, further shrinking to $3.1 billion in 2021, and finally hitting a negative -$6.49 billion in the third quarter of 2022. This dramatic decline in free cash flow raises a fundamental question: where did the money go?

While delisting often coincides with financial distress, Garanti's situation presents a unique anomaly. The bank wasn't floundering; it was being absorbed by a larger entity. This distinction is crucial, as it suggests that the free cash flow decline might not be attributable to typical distress factors like loan losses or dwindling customer deposits. Instead, the explanation might lie in strategic decisions made within BBVA, decisions that could have been masked by the consolidation process.

One hypothesis is that BBVA strategically shifted Garanti's cash flow towards other parts of its global operations. This could have taken the form of intercompany loans, investments in other BBVA subsidiaries, or even a deliberate drawdown of cash reserves to bolster the parent company's financial position. These actions, while not necessarily negative in the context of BBVA's overall strategy, could have significantly impacted Garanti's standalone financial performance, contributing to the observed free cash flow decline.

Another possibility is that BBVA orchestrated a deliberate reduction in Garanti's profitability ahead of the delisting. This tactic, sometimes employed in mergers and acquisitions, could have served to minimize the acquisition cost for BBVA. By reducing Garanti's perceived value, BBVA could have negotiated a more favorable price for complete ownership. However, this hypothesis raises ethical questions about transparency and the potential impact on minority shareholders who held Garanti stock.

The mystery of Garanti's vanishing cash flow underscores a crucial point: even in seemingly straightforward corporate actions like delisting, there can be underlying financial maneuvers that deserve further scrutiny. The dramatic decline in free cash flow, particularly its negative trajectory in the final reported quarter, suggests that a deeper investigation is warranted.

While the available data doesn't provide conclusive answers, it presents a compelling case for further exploration. Unraveling this financial enigma could reveal insights into BBVA's strategic decisions, potentially exposing hidden motives and shedding light on the complex dynamics of international banking mergers. It's a reminder that even in the world of finance, where numbers are king, there are often hidden narratives waiting to be unearthed.

"Fun Fact: The word "Garanti" means "guarantee" in Turkish, which is ironic given the lack of transparency surrounding the bank's cash flow disappearance."