An escape route for Turkey's Yapi Kredi
Now enjoying the third year of a recovery that is clearing away the debris of the 2001 crisis, Turkey's bankers are hoping soon to complete the final important clean-up operation: resolving the on-again, off-again fate of the fourth-largest private bank, Yapi Kredi.
UNDERGOING DUE DILIGENCE is a tentative e2.05 billion deal that would transfer a 57.4% controlling interest in Turkish bank Yapi Kredi to Koc Financial Services, a joint venture between the Koc Group conglomerate and Italy's UniCredito.
Although Yapi Kredi's own asset base was sound, it narrowly avoided seizure by the state at the height of the 2001 banking crisis due to outstanding debts of its parent, Cukurova Group, to the group's other bank, Pamukbank.
The smaller Pamukbank was taken over by the Savings Deposit Insurance Fund in 2002, setting the stage for complex negotiations involving virtually all the parent group's diverse interests. A series of protracted renegotiations beginning in late 2002 ensued over repayment of Cukurova's debt to Yapi Kredi of $2 billion, with the most recent proposed terms accepted by Yapi Kredi's board last November.
Pamukbank was ultimately merged with state-owned Halkbank last autumn. If the Yapi Kredi deal announced in February with Koc is consummated, it will be the first voluntary acquisition of two Turkish banks in history and will also resolve the main outstanding legacy of the financial storm that closed the doors of a third of Turkey's banks in 2001.