Commercial Bank completes majority stake acquisition in Alternatifbank in Turkey

The transaction is based on two times book value at 30 June 2013, and expands Commercial Bank’s international footprint to four regional markets. Anadolu will retain a 25% stake in ABank, in addition to board representation.

ABank, a commercial bank focusing on small and mid-size enterprises (SMEs), is a mid-sized lender in Turkey with assets of TL 7.9 billion ($4.4 billion) at the end of 2012. It provides a suitable entry point for Commercial Bank into a key strategic market with strong growth prospects and a fast-expanding banking sector.

The acquisition is an important step in Commercial Bank’s strategy to expand its footprint in retail and corporate banking outside the Gulf Cooperation Council (GCC) region. The Bank’s international expansion strategy has focused, to date, on countries within the GCC. In 2005 the Bank successfully acquired minority stakes in National Bank of Oman (34.9%) and in 2008 in United Arab Bank (40%) in the UAE, and has forged successful alliances with these banks. 

This milestone deal represents one of Commercial Bank’s biggest investments, its first investment in Turkey and its first acquisition of a majority stake in another bank.

His Excellency, Abdullah Bin Khalifa Al Attiyah, Chairman of Commercial Bank, commented: “We are delighted to have received regulatory approval for, and now completed, this very important transaction for Commercial Bank.  As the trade and economic links between the GCC countries and Turkey grow ever stronger, and corporates become more active in their cross border activities between the two markets, we feel the timing for our entry into the Turkish market is right. ABank is a highly respected, growing bank and we are looking forward to welcoming the bank into the group to facilitate further growth for all of our alliance banks.”

ABank was established in 1991 and is now the country’s seventeenth biggest lender by assets with 69 branches in 25 cities across Turkey.  At 31 December 2012, total loans stood at TL 5.1 million, with customer deposits of TL 4.2 million and shareholders’ equity of TL 601 million.  The bank posted a net profit after tax of TL 81 million, up 290% from the prior year.

Turkey is the eighteenth biggest economy in the world and has enjoyed an average annual GDP growth rate of over 5% since 2002. Turkey and the Middle East have an increasingly close financial and economic relationship, with the Middle East and the Caucasus accounting for 28% of Turkey’s exports, twice the level of five years ago.  Exports from Turkey to Arab countries increased 11-fold in the last decade and imports from Arab countries grew 12-fold. The level of bilateral trade was nearly USD 50 billion in 2012.  Turkish investment in the MENA region has grown from approximately USD 5 billion to more than USD 34 billion in just under a decade.  The country saw GDP growth of 2.2% in 2012. The banking sector, which has seen loan growth of 142% since 2008, remains relatively under penetrated compared with the Eurozone.  It is expected to continue to grow on the back of continued GDP expansion. 

Mr. Hussain Alfardan, Commercial Bank’s Managing Director, said: “The management team from each of our four alliance banks have started to work together to ensure that our customers in each country, as well as our shareholders, see the benefits of our growing regional presence.  Combining ABank’s extensive knowledge of the Turkish market with our existing operations in Qatar, the UAE and Oman will reiterate our position as one of the leading commercial banks in the region, and will also ensure we deliver the best results for all our stakeholders.” 

Mr. Andrew Stevens, Group Chief Executive Officer of Commercial Bank, said: “We see the ABank acquisition as a very exciting opportunity for the whole Commercial Bank alliance of our customers, shareholders, employees and our other stakeholders in each market.  We’re aiming to deliver multiple revenue synergies from the development and cross sales of innovative products and services across the group, and we will be seeing cost synergies resulting from enhanced processes and systems for our alliance members.  I’m very excited and optimistic about our alliance, and I look forward to capturing the opportunities it offers.”