Citigroup has sold a 10% stake in Turkeys Akbank in order to boost its capital. The bank divested the stake by placing 404 million shares with investors at 5.24 liras per share.
Total proceeds from the transaction are expected to be approximately $1.15 billion at the current exchange rate, resulting in an after-tax loss of approximately $243 million in the second quarter.
The transaction is estimated to generate approximately 23 basis points of Tier 1 Common capital under Basel III, said Citi in a press release.
On April 30, 2012, Citi entered into an agreement with local bank Sabanc and Akbank under which Citi committed to hold the balance of its strategic stake in Akbank, approximately 9.9% of Akbank common shares, for a three year lock-up period following such sale, and Sabanc Holding agreed to waive its right of first offer in relation to the sale of Citi’s 10.1 percent stake.
As part of the ongoing co-operation between Sabanc and Citi, one non-executive member of the board of directors of each of Akbank and Citibank, Citi’s local franchise in Turkey, will continue to be elected from among candidates mutually agreed and nominated by Sabanc Holding and Citigroup. Citi maintains a very strong and productive relationship with Akbank through a number of products and services and is very pleased with its investment and business partnership, said Citi.
Akbank provides local custody services to foreign institutional investors and domestic investors.
(JDC)