November 25, 2019 / 9:22 AM / 21 days ago

UniCredit, Koc confirm talks over Turkey's Yapi Kredi ownership

ISTANBUL (Reuters) - Italy’s UniCredit (CRDI.MI) and Turkey’s Koc Holding (KCHOL.IS) said Monday they were in talks to change the ownership structure of Yapi Kredi Bank (YKBNK.IS), which the two companies control via a joint venture, adding they had yet to reach a deal.

FILE PHOTO: Yapi Kredi Bank headquarters is pictured in Istanbul, Turkey February 3, 2016. REUTERS/Murad Sezer/File Photo

Three sources had told Reuters on Friday that UniCredit had struck a deal to reduce its exposure to Turkey’s third biggest bank, in a move seen as a step toward UniCredit’s exit from the country, which has been mired in recession.

As part of the plan, UniCredit would sell its 50% stake in its joint venture Koc Financial Services (KFS), which controls Yapi Kredi, to its partner Koc Holding, two sources had said.

Koc Holding said on Monday talks were ongoing with UniCredit on reorganizing the shareholder structures of the joint venture and Yapi Kredi “in such a manner to ensure that the parties shall not reach direct or indirect majority” of Yapi Kredi.

The sources had told Reuters a deal would give Koc Holding a majority stake in Yapi Kredi, which has a market value of $3.7 billion.

Koc Holding said in its Istanbul stock exchange filing that there had been no development that required public disclosure and its statement was prompted by questions from its investors.

UniCredit confirmed in a statement that discussions were underway “about a potential evolution of the current joint venture in Turkey”, but said a deal had not been reached.

Italy’s biggest bank has been restructuring under Chief Executive Jean Pierre Mustier, shedding assets to strengthen its balance sheet.

Yapi Kredi shares dipped 2% on Monday. Shares in UniCredit rose 1.9%, outperforming a 1% rise in the sector .FTIT8300

Koc Financial Services, in which Koc Holding like UniCredit has 50% stake, owns almost 82% of Yapi Kredi.

Citigroup in a research note estimated a 50 to 80 basis point capital boost for UniCredit from disposing its Yapi Kredi stake, which had a book value of 1.3 billion euros ($1.4 billion) at the end of 2018. It said the negative impact on future earnings per share would be about 10%.

“We believe the market might see a potential disposal as positive, as despite lower future earnings, UniCredit could benefit from higher capital available ... and also could see a reduction of its cost of equity,” Citi said.

UniCredit presents a new business plan to investors on Dec. 3.

Reporting by Birsen Altayli; Additional reporting by Giulia Segreti in Rome and Valentina Za in Milan; Writing by Daren Butler; Editing by Jonathan Spicer; Editing by Edmund Blair

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