UniCredit to Plan Sale of Less Than 10% in Turkish Bank
UniCredit to Plan Sale of Less Than 10% in Turkish Bank
(Bloomberg) -- UniCredit SpA is planning to sell a direct stake of less than 10% in Yapi ve Kredi Bankasi AS after unwinding its joint venture in the Turkish lender with local industrial group Koc Holding AS, according to people with knowledge of the matter.
UniCredit and Koc have agreed to dissolve the special purpose vehicle that controls their shares so that each party ends up with a direct 41% holding in the lender, according to the people, asking not to be identified because the information is private. UniCredit plans to eventually sell the remainder of its holdings in Yapi Kredi, they said.
The Italian bank will be able to reduce its risk-weighted assets and improve its common equity Tier 1 capital ratio once its shareholding has been reduced, the people said. Under the different scenarios, UniCredit could also sell the stake to a third party or offload it through a bookbuilding process if Koc decides not to buy it, the people said.
Representatives for Koc, Yapi Kredi and UniCredit declined to comment.
UniCredit said on Monday that it is in talks with Koc to reorganize the SPV, known as Koc Financial Services, and that no final agreement has been reached. Koc said in a separate statement it won’t seek to gain a majority of Yapi Kredi.
What Bloomberg Intelligence Says:
“UniCredit’s review of its stake in Yapi Kredi could mark the first step in a wider move by EU banks to limit their exposure to Turkey, where unpredictable policy making and lingering bad debts make for an unfriendly environment into 2020.”
-- Bloomberg Intelligence European Banks analyst Tomasz Noetzel.
Koc’s shares rose as much as 1.5% to 19.95 liras in Istanbul while Yapi Kredi fell as much as 1.6%. UniCredit declined as much as 1.3% before paring losses to trade 0.7% down as of 2:18 p.m. in Milan.
UniCredit’s potential exit from Turkey through the sale of its Yapi Kredi stake may add up to 80 basis points to it’s CET1 ratio, strengthening the case for buybacks, Bloomberg Intelligence European banking analyst Georgi Gunchev said in a note on Monday. “Other benefits would be a refocus on core operations and risk-profile improvement.”
UniCredit is “very happy” with the performance of Yapi Kredi, Chief Executive Officer Jean Pierre Mustier said in Milan this week. The CEO has cut costs and improved asset quality under a three-year plan to strengthen the lender. Earlier this year, it raised about 2.1 billion euros ($2.3 billion) by selling its holding in Banca Fineco SpA.
Koc is one of Turkey’s largest business groups and also owns the country’s biggest crude refinery and carmakers through joint ventures with companies including Fiat SpA and Ford Motor Co.
--With assistance from Sonia Sirletti.
To contact the reporters on this story: Ercan Ersoy in Istanbul at eersoy@bloomberg.net;Kerim Karakaya in Istanbul at kkarakaya2@bloomberg.net;Jan-Henrik Förster in Zurich at jforster20@bloomberg.net
To contact the editors responsible for this story: Onur Ant at oant@bloomberg.net, ;Stefania Bianchi at sbianchi10@bloomberg.net, Vernon Wessels, Ross Larsen
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