Citigroup is to buy a 20 percent equity position in Akbank for approximately USD 3.1 billion, at a price of Yeni Turkish Lira (YTL) 9.50 per 100 shares.
Akbank is a retail, commercial, corporate and private bank in Turkey, with assets of USD 35.8 billion, loans of USD 17.7 billion and a deposit base of USD 22.7 billion.
Sabanci Holding, a 34 percent owner of Akbank shares, together with its subsidiaries, which own an additional block of shares in Akbank, have granted Citigroup a right of first refusal or first offer over the sale of any of their Akbank shares in the future. In addition, Citigroup has granted a right of first refusal or first offer over its Akbank shares to Sabanci.
Subject to a number of exceptions, including purchases from Sabanci Holding and its subsidiaries, Citigroup has agreed not to acquire additional shares in Akbank. The transaction will be accretive to Citigroup’s earnings in year one.
Citigroup and Akbank plan to pursue new commercial activities, referral arrangements and joint ventures and to share certain expertise and technology. The terms also grant Citigroup the right to appoint one non-executive director to Akbank’s nine-person Board, and the Sabanci Group the right to appoint one non-executive director to the Board of Citigroup’s Turkey subsidiary.
“Akbank is an ideal partner for Citigroup; it is a premier institution in the fast growing and dynamic Turkish market, led by a highly skilled management team that has achieved a superior record of performance,” says Charles O. Prince, the Chairman and Chief Executive Officer at Citigroup. “What made this transaction particularly attractive is our strategic collaboration, which provides opportunities to broaden our international distribution capabilities and extend the availability of world-class financial products and services to individuals and institutions.”
“In the last five years Akbank has implemented a very successful change program and consolidated its leading position in the Turkish Banking Sector,” adds Zafer Kurtul, the CEO of Akbank. “As Turkey is becoming an increasingly attractive market for financial institutions, we anticipate that with Citigroup’s contribution, Akbank will enter a new era of expansion and growth.”