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FAB Looking At Yapi Kredi; Spread Positive, Highlights Interest In European Banks

FINANCIALS

First Abu Dhabi reportedly looking at Yapi Kredi in Turkey which should be a credit positive for the Turkish bank but credit barely trades, we feel. Highlights the interest from cash-rich Mid-East financials looking towards Europe.


  • Yapi Kredi is the no.5 bank in Turkey by market cap (USD7.6bn) (YKBNK TI) and c.60% owned by investment company Koç (KCHOL TI) which has already put a statement out indicating that it “may evaluate alternatives regarding our portfolio and engage in discussions with relevant parties”.
  • Turkish banking is dominated by QNB Finansbank which is around three times the size of the no.2 bank and is owned by Qatar National Bank – so there is form in Mid-Eastern banks buying here. We would speculate this is due to the adjacency of Turkey and its effective bridge to Europe. Plus a weak currency right now helps.
  • First Abu Dhabi (FAB UH) is a USD40bn market cap bank so Yapi Kredi is easily within its sights. FAB has no EUR traded credit but Yapi Kredi has some outstanding lines, but these appear very thinly traded.
  • The more actionable idea here is simply to highlight the capital present in the oil states and their keenness to diversify, in light of the number of smaller European banks out there. Most governments would prefer domestic/local solutions (e.g. BCP in Portugal with Caixa or BBVA and any of MPS, BP Sondrio or BPM with a European major) but any rogue bids from the Mid-East would likely be credit positive in short-term, if unlikely to be successful quickly.

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