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FAB eyes Turkish acquisition in overseas expansion drive

Last year, the UAE pledged over $50 billion to support Turkey

Published: Sun 7 Apr 2024, 5:28 PM

Updated: Sun 7 Apr 2024, 5:29 PM

By
Issac John

First Abu Dhabi Bank, or FAB, the largest UAE lender, is reportedly studying potential acquisition targets in Turkey, including Yapi Ve Kredi Bankasi, the country’s seventh-largest lender by assets, as part of its strategy for growth opportunities overseas.

Bloomberg, citing people with knowledge of the matter, has reported that the lender held early exploratory talks with the owners of several Turkish banks. For several months, the lender has been evaluating the possibility of acquiring Yapi Kredi.. The Turkish lender, which is part of Koc Holding, the country’s largest business and industrial group, is currently valued at $7.6 billion, according to the people quoted by the news agency.

Following Turkish President Recep Tayyip Erdogan's visits to Gulf countries in 2023, there was a surge in interest from UAE banks to acquire Turkish banks. During Erdogan’s visit, the UAE pledged over $50 billion to support Turkey after years of political differences

FAB is among other UAE lenders expressing interest in Turkish assets after Erdogan's visit to the Gulf region aimed at bolstering investments in Turkey’s $1.1 trillion economy.

Dubai Islamic Bank, the UAE’s largest Sharia-compliant bank by assets, announced in September 2023 acquired a 20 per cent stake in Turkey's TOM Group of Companies.

Shares in Turkey’s Yapi Kredi Bank jumped almost 6.0 per cent on Friday after Bloomberg reported the news.

Turkish conglomerate Koc Holding, Yapi Kredi’s majority owner, said in response there was no development requiring it to make a public disclosure.

“We may evaluate alternatives regarding our portfolio and engage in discussions with relevant parties as necessary at all times,” Koc said.

Bloomberg said FAB did not immediately respond to an emailed request for comment. Representatives for Yapi Kredi also declined to comment.

Daniel Takieddine, CEO Mena at BDSwiss, said the strategic move by FAB to target potential banking acquisitions in Turkey, particularly aiming at significant players like Yapi Ve Kredi Bankasi, is a testament to the UAE's robust approach to diversifying its economic engagements and extending its financial clout beyond its borders.

“This potential push into the Turkish market signals FAB's ambitious global growth strategy and could mark a new era of financial collaboration between the UAE and Turkey. The interest from one of the Gulf's largest lenders is likely to bolster investor confidence in Turkey, fostering a more positive outlook for the Turkish economy amidst its recent challenges. If FAB's preliminary discussions evolve into a concrete deal, it could catalyse a transformative period for the Turkish banking sector and further solidify the UAE's position as a significant player on the international investment stage,” said Takieddine.

FAB, which was created through the merger of National Bank of Abu Dhabi and First Gulf Bank in 2017, has been exploring opportunities to expand overseas like its GCC peers. Saudi Arabia's largest bank, National Commercial Bank, bought Turkey's Türkiye Finans Katılım Bankası for $1.08 billion in 2007.

In 2019, Emirates NBD, Dubai's largest lender, acquired Turkey's fifth-biggest bank Denizbank for $2.8 billion. Kuwait Finance House established Kuveyt Türk Katılım Bankası in Turkey in 1989, owning it entirely.

In February 2022, FAB offered to acquire 51 per cent of the issued shares of EFG Hermes, Egypt’s largest investment bank. However, it withdrew the offer due to global market uncertainty and volatile macroeconomic conditions, FAB said in a statement at the time.

In June 2022, FAB completed the merger of Bank Audi Egypt with its Egyptian operations, consolidating its market position in the most populous Arab country