KFS, the joint venture between Italian bank Unicredit and Turkish Koc Holding company, has bought a 57% stake in Yapi ve Kredi Bankasi (YKB), the fifth-largest Turkish bank by assets, for €1.16 billion. The deal values YKB at €2 billion. YKB's stock fell around 5% on May 8, the day the deal was announced.
KFS bought the bank from the Cukurova holding group. Cukurova says it will use the proceeds of the sale to pay off early part of its €2 billion debt to YKB. It also says it has reserved the right to buy YKB's stake in Turkcell, and some other assets on the bank's balance sheet.
The deal means Turkey now accounts for 25% of Unicredit's New Europe business unit's portfolio. Massimiliano Moi, head of planning and development at the unit, says the bank is justified in placing such an emphasis on Turkey: "The banking sector is still fragmented there, so there's a real possibility of establishing Koc and Unicredit as the market leader in the country."
KFS already owns Kocbank, the fifth-largest private bank by assets in Turkey. Moi says there are significant synergies between the two banks, and that a merger would create the third-largest private financial group in the country, with 7 million customers and a network of 560 branches.