First Abu Dhabi Bank (FAB) (FAB.AD), opens new tab is in advanced talks to acquire Turkish conglomerate Koc Group’s (KCHOL.IS), opens new tab 61.2% stake in Istanbul-based lender Yapi Kredi (YKBNK.IS), opens new tab for about $8 billion, according to three sources close to the matter.
Final details of the potential deal for Turkey’s fourth-biggest private bank are being hammered out after several months of negotiations, the sources said on condition of anonymity because the talks are confidential.
Yapi Kredi shares soared 10% after the news of what would be one of Turkey’s largest bank buyouts, while Koc Holding jumped more than 7%, both touching record highs and driving Istanbul’s main index (.XU100), opens new tab to a new peak. FAB shares slipped.
Any deal would mark the latest Gulf investment in Turkey, whose President Tayyip Erdogan has worked in recent years to mend ties with the UAE and Saudi Arabia and court their funding to bolster Turkey’s sputtering economy and foreign reserves.
One of the sources said that Koc had sought about $8.5 billion for its shares in Yapi Kredi and that FAB had offered about $7.5 billion.
In a statement to the Istanbul bourse, Koc Holding referenced the Reuters report and said it was holding preliminary talks on the sale of Yapi Kredi shares, adding it can always negotiate “to evaluate possible alternatives” in its portfolio.
“Although preliminary discussions of a similar nature 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 Yapi Kredi, while Koc Holding owns 20.22%.
FAB, the United Arab Emirates’ largest bank by assets, said in an email to Reuters it was aware of the “media speculation” and focused on its growth strategy.
“The bank may engage in strategic discussions on growth potential to its operational network that has a strategic fit with its overall banking operation,” it said, adding any material disclosures would be made as needed.
Before the Reuters report, 80-year old Yapi 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 and $14 billion based on Koc’s request, though it could be less.
Ties between regional powers Turkey and the UAE had been strained in the last decade by ideological differences that saw them back opposing sides across the Middle East and North Africa.
But last year, they signed a free trade agreement and then said they had agreed a series of deals worth more than $50 billion after Erdogan’s visit to the Gulf in July.
Turkey’s economy and its banks are on a sounder footing after a dramatic U-turn towards 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 Yapi 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.
In 2022, Italian bank UniCredit completed the sale to Koc of its remaining 18% stake in Yapi Kredi.