The scramble to get a piece of Turkey’s banking market continues – or, in fact, might even be reaching its conclusion.
ING’s deal to take over Oyak Bank for $2.7bn in cash takes out one of the final attractive buys into the Turkish market, after a series of deals in the industry over the past two years has resulted in a sizeable portion of the market now being controlled by international banks.
Among those to dive into the Turkish market, on the back of a period of relative economic and political stability, were a number of Greek banks, as well as Citigroup, which last year paid about $3.1bn for a 20 per cent stake in Akbank.
The purchase of Oyak, a mid-sized Turkish bank with about 3 per cent of the market, would not affect ING’s plan, announced at its Q1 results in May, to buy back €5bn of its shares over the next year. The bank said at the time that it had already factored in some assumed bolt-on deals.
After several years of relative calm, 2007 has been marked by the return of tension in Turkish politics when an attempt in April to appoint Abdullah Gul, the foreign minister with past links to Turkey’s Islamist movement, as president caused a constitutional crisis after a stand-off between the secular opposition, including the military, and the government.
Turkey’s banking market has proved popular with foreign banks for good reason – low penetration for many services, fast economic growth rates and favourable demographics. Foreign investors, desperate for yield, have also piled into Turkish equities.
Events earlier this year, said Lex, show that it’s time for those heading to Turkey to start embracing political realities.