First Abu Dhabi Bank targets Turkish lender

Reuters/Murad Sezer

• FAB wants to pay $7.5bn for 61% slice
• Parent Koç wants $8.5bn
• Bid values Yapı Kredi at $13bn

One of Turkey’s largest corporations has confirmed it is in talks with First Abu Dhabi Bank (FAB) over the sale of a majority holding in the Istanbul-headquartered lender Yapı Kredi, the country’s fourth largest private bank in terms of assets. 

A report by Reuters on May 21 said sources told it FAB was offering around $7.5 billion for a 61.2 percent stake in Yapı Kredi, while Yapı Kredi’s parent corporation in Turkey, Koç Holding, was seeking $8.5 billion. 

This could value Yapı Kredi at between $13 billion and $14 billion. 

---

---

In Turkey, Koç issued a statement acknowledging that it was in talks with FAB regarding the deal.

However, while Koç  admitted that “preliminary discussions are ongoing regarding the subject matter of the news in the media,” it played down reports that the negotiations were at an advanced stage.

Koç said there were no developments that required the company to make a public announcement under the regulations of Turkey’s capital markets board covering material events disclosure. 

• International business drives Q1 growth at First Abu Dhabi

• First Abu Dhabi makes China expansion a priority

• FAB to pay out record $2.1bn cash dividend

News of the potential takeover sent Yapı Kredi’s shares up close to 10 percent in the hours after the story broke in the media. The bank’s parent company also rose, with Koç Holding’s shares on the Istanbul Stock Exchange up just under 10 percent in the first session of trading on May 21. 

One Istanbul-based financial markets analyst, İris Cibre, said it appeared likely that the deal would be concluded, though the final cost to FAB was the sticking point.

“It appears that fierce negotiations are going on about the price,” she said. 

AGBI has contacted FAB for comment on the Reuters report.

For Turkey’s economy the question was not so much whether FAB would enter the market but what Koç, one of the country’s largest industrial corporations, would do with its expected windfall. 

“Will it take the capital raised from the sale abroad or keep it within Turkey,” Cibre said. “That is what will have an impact on the Turkish economy.”

If the buyout goes ahead, it would give FAB a significant stake in Turkey’s financial sector.

There has been an increased interest in Turkish assets from Gulf banks over the past year, coinciding with improved relations between Ankara and regional governments. 

In September, Dubai Islamic Bank announced it was buying a 20 percent share in TOM Group, a Turkish ecommerce and fintech company, while the Qatari lender QNB has long been a presence in the Turkish marketplace, through its acquisition of Finansbank in 2016. 

AGBI reported in February that GCC-based banks have 2,156 branches in Turkey, citing figures from Marmore Mena Intelligence, a subsidiary of Kuwait Financial Centre. For comparison, banks in the region have 1,147 branches in Pakistan, 745 in Egypt and just 56 in the US and Europe.