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Italy’s UniCredit interested in taking direct control of its 41 percent stake in Turkey’s Yapi Kredi

Türkiye Materials 29 August 2019 14:19 (UTC +04:00)
The Italian bank UniCredit SpA and Koc Holding, the largest industrial conglomerate in Turkey, are in discussions about reorganizing their Koc Financial Services joint venture, which owns almost 82 percent in the Turkish private bank Yapi Kredi
Italy’s UniCredit interested in taking direct control of its 41 percent stake in Turkey’s Yapi Kredi

Baku, Azerbaijan, Aug. 29

By Eldar Janashvili – Trend:

The Italian bank UniCredit SpA and Koc Holding, the largest industrial conglomerate in Turkey, are in discussions about reorganizing their Koc Financial Services joint venture, which owns almost 82 percent in the Turkish private bank Yapi Kredi, Trend reports referring to Bloomberg.

UniCredit bought a stake in Yapi Kredi with Koc Holding in 2005 and each investor holds half of the holding through a company jointly managed by the partners.

UniCredit is interested in exiting the venture and taking direct control of its 41 percent stake.

Both companies are seeking to finalize the changes by the end of the year, allowing UniCredit to decide on the future of its holding in Yapi Kredi without needing to consult Koc. One option may be a secondary public offering of the stake. Talks haven’t been finalized yet.

“A direct stake would give UniCredit more strategic flexibility and would make it easier for the bank to release capital out of Turkey,” said Hugo Cruz, an analyst at Keefe, Bruyette & Woods. “Therefore it should be welcomed by UniCredit investors.”

Yapi Kredi is among Turkish lenders that needs to restructure loans as the depreciating lira made it difficult for companies to repay their dollar debt against earnings in liras. High levels of borrowings in the corporate sector, where foreign liabilities exceed assets by almost $200 billion, are increasing risks in the Turkish financial system, as more than half of those debts are owed by domestic banks, Moody’s Investors Service said in May.

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Follow the author on Twitter: @eldarjanashvili

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