AT THE END of August, GE Consumer Finance agreed to pay $1.56 billion for a 25.5% stake in Turkey’s third-largest privately owned bank, Garanti Bank. The deal, struck with Dogus Holding, Garanti’s parent, is expected to close in the fourth quarter, valuing Garanti at $6.1 billion.
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“This investment presents an excellent opportunity for us to grow strategically in an important European market,” Dan O’Connor, president and CEO of GECF Europe, said in August. Under the agreement, GECF will also pay $250 million in cash for 49.2% of Garanti’s founders’ shares. The agreement stipulates that the two parties will form an equal partnership.
GECF’s decision to take a strategic stake in Garanti is indicative of the growing international interest in Turkey’s banking sector but it also typifies the style of partnership that foreign players are entering.
“The most important development in the banking sector in 2005 was the increase in direct or indirect investments by foreign investors in the banking sector,” according to research from the BDDK, Turkey’s banking regulation and supervisory agency.