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1st Abu Dhabi Bank eyes major stake in Türkiye’s Yapi Kredi in $8B deal

May 21, 2024

First Abu Dhabi Bank (FAB) (FAB.AD) is in advanced discussions to acquire a 61.2% stake in Istanbul-based lender Yapi Kredi (YKBNK.IS) from Turkish conglomerate Koc Group (KCHOL.IS) for around $8 billion, according to three sources familiar with the matter.

The sources, who requested anonymity due to the confidential nature of the negotiations, indicated that the final details of the deal for Türkiye’s fourth-largest private bank are being ironed out after several months of talks.

Following the news, shares in Yapı Kredi surged 10%, and Koç Holding’s shares rose more than 9%, both reaching record highs. Meanwhile, FAB’s shares experienced a slight decline.

One of the sources said that Turkish conglomerate Koc had sought about $8.5 billion for its shares in Yapı Kredi and that FAB had offered about $7.5 billion.

FAB, the United Arab Emirates’ largest bank by assets, declined to comment.

In a statement to the Istanbul bourse, Koç Holding referenced the Reuters report and said it was holding preliminary talks on the sale of Yapı Kredi shares, adding it can always negotiate “to evaluate possible alternatives” in its portfolio.

“Although preliminary similar discussions continue regarding the issue reflected in the media, there are no developments that require public disclosure,” it said.

Koc Financial Services owns 40.95% of Yapı Kredi, while Koç Holding owns 20.22%.

Before the Reuters report, 80-year-old Yapı Kredi had a total market value of around $9 billion, up from about $7.5 billion early last month. The first source said the estimated sale value would put the entire bank at between $13 billion to $14 billion based on Koc’s request, though it could be less.

Any deal would mark the latest Gulf investment in Türkiye, whose President Tayyip Erdogan has worked in recent years to mend ties with the UAE and Saudi Arabia and court their funding to bolster Türkiye’s sputtering economy and depleted reserves.

Ties between the regional powers had been strained by ideological differences which saw them back opposing sides across the Middle East and North Africa in the last decade.

But last year, the UAE and Türkiye signed a free trade agreement and then said they agreed on a series of deals worth more than $50 billion after Erdogan visited the region in July.

Türkiye’s economy and its banks are on a sounder footing after a dramatic U-turn toward more orthodox policies since last summer, including aggressive interest rate hikes that helped rebuild some foreign reserves.

It was unclear whether FAB and Koc would ultimately reach a final deal, which could depend in part on Yapı Kredi’s second-quarter financial results, set to be announced next month.

FAB and other Gulf banks have benefited as regional governments boost investment and diversify economies away from oil revenues. Last year, the Emirati lender said it had briefly considered bidding for London-listed Standard Chartered.

Bloomberg reported in April that FAB was studying potential targets in Türkiye including Yapı Kredi.

In 2022, Italian bank UniCredit completed the sale to Koc of its remaining 18% stake in Yapı Kredi.

Last Updated:  May 31, 2024 5:37 PM