UAE’s FAB reportedly in advanced talks to acquire Yapi Kredi

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UAE’s First Abu Dhabi Bank (FAB) is reportedly in advanced talks to acquire Turkish conglomerate Koc Group’s 61.2 per cent stake in Istanbul-based lender Yapi Ve Kredi Bankasi (Yapi Kredi) in a deal that is valued at around $8bn (Dhs29.4bn).

Final details of the potential deal for Turkey’s fourth-biggest private bank are being hammered out after several months of negotiations, according to a Reuters report.

Koc Holding, said in a bourse filing to Borsa Istanbul, that it was holding preliminary talks on the sale of Yapi Kredi shares, adding it can always negotiate “to evaluate possible alternatives” in its portfolio.

However, the conglomerate said though “preliminary discussions of a similar nature continue regarding the issue reflected in the media, there are no developments that require public disclosure.”

Koc Financial Services owns 40.95 per cent of Yapi Kredi, while Koc Holding owns 20.22 per cent.

FAB, said in a bourse filing, that it was focusing on executing its growth strategy, without denying or confirming the media reports.

“The bank may engage in strategic discussions on growth potential to its operational network that has a strategic fit with its overall banking operation,” the filing added.

Meanwhile, sources told Bloomberg that negotiations between FAB and Yapi Kredi have been hamstrung by disagreements over price.

The Abu Dhabi-based lender has baulked at Yapi Kredi’s valuation as the Turkish lender’s majority owner is reportedly seeking a higher price than FAB is currently willing to offer.

Given those disagreements, FAB has not yet formally started due diligence after weeks of talks, the people close to the matter told Bloomberg. Neither side has hired advisers, but they continue to engage on ways forward.

With the backing of some of the world’s biggest sovereign wealth funds, banks in the UAE cannot hide their growing ambitions to dominate the global financial services industry.

FAB has made several attempts to acquire a lender outside the region in search of growth. Last year, it was weighing an offer of as much as $35bn for Britain’s Standard Chartered and tried to buy Egypt’s biggest investment bank EFG Holding in 2022.

Dubai Islamic Bank, the UAE’s biggest Shariah-compliant lender by assets, acquired a 20 per cent stake in Turkey’s TOM Group of Companies in September 2023.

Similarly, Dubai’s largest bank Emirates NBD acquired 99.85 per cent of the shares of Denizbank for $2.76bn.

With a population of more than 85 million, GCC banks see Turkey as a promising market to expand in given its geographical proximity and their familiarity with the domestic banking system.

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