BAKU, Azerbaijan, Nov. 25
By Eldar Janashvili - Trend:
Italy's UniCredit SpA and Turkey's largest financial and industrial conglomerate, Koç Holding, are discussing the reorganization of their joint venture, Koç Financial Services, which owns nearly 82 percent of Yapi Kredi, Trend reports via Turkish media.
The partners bought a stake in Yapi Kredi in 2005, and each investor owns half of the holding through a jointly managed company.
UniCredit is interested in leaving the company and selling its 50 percent stake in the joint venture Koç Financial Services (KFS) to its partner in the enterprise - Koç Holding. The deal will give Koç Holding a controlling stake in Yapi Kredi, Turkey’s third largest bank, with a market value of $3.7 billion.
However, the board of directors has not yet approved a meeting on the deal.
That will give UniCredit greater strategic flexibility and make it easier for the bank to withdraw capital from Turkey, so UniCredit investors should welcome this decision, Hugo Cruz, an analytic at Keefe, Bruyette & Woods, said.
This deal is the last step in a series of sales that UniCredit CEO Jean Pierre Mustier has embarked on since began heading Italy's largest asset bank in 2016.
UniCredit is expected to retain a small stake in the bank with a view to selling it at a later stage without the need to consult with Koç Holding, a source reported.
Yapi Kredi is among the Turkish lenders who need to restructure their loans, as the depreciating lira made it difficult for companies to repay their dollar debt with earnings in national currency. According to Moody's Investors Service, a high level of borrowing in the corporate sector, where external liabilities exceed assets by almost $200 billion, increases the risks in the Turkish financial system, as more than half of these debts are in domestic banks.