In a move which could offer a rare window of opportunity to enter into Turkey's resilient banking sector, General Electric (GE) is planing to sell its 20.85% stake in Turkey-based Garanti Bank.
GE is said to be trying to stabilize itself after realizing eight consecutive quarters of plunging profit and has been scaling back its huge GE Capital finance arm.
Due to regulation imposed after a domestic crisis in 2001 Turkish banking sector avoided exposure to the toxic assets, remaining well capitalized and profitable. Prior to the global financial turmoil foreign banks such as ING, Fortis, BNP Paribas and Citigroup had scrambled to foray into Turkish banking sector.
The stake could attract several overseas investors suitors, possibly from the Middle East, as Garanti is almost 50% public-owned in a nation where other banks are either run by families or the state.
Reportedly, GE bought a 25.5% holding from Turkey-based Dogus Group for $1.6bn in 2005, before selling part of it back to Dogus in 2007. Analysts are of the opinion that Dogus Group that owns a 30.5% holding in Garanti, may increase its stake.
However, Oyak Securities, a Turkey-based subsidiary of Armed Forces Pension Fund, said: “We do not believe Dogus group is capable of purchasing GE shares worth $3.33bn as they are already leveraged from the previous share transaction. Also, it is not easy to find a strategic investor who would want to pay such a sum without assuming control of the bank.”