Halkbank privatization to reshuffle cards in banking sector
Posted by meb at January 21st, 2007
KENAN ŞANLI
ISTANBUL – Referans
The privatization of Halkbank, will have a major impact in the Turkish banking sector according to Banks Association of Turkey (TBB) 2006 data, which indicates that any group that buys Halkbank will immediately lead in the market, thus “reshuffling the cards.”
Currently Halkbank has a 7.3 percent active share in the banking system, where competition has toughened after the entrance of foreign investors sector.
Three kinds of banks are expected to compete for Halkbank’s privatization. The first group consists of the existing major players in the Turkish banking system, namely Akbank and Garanti Bank who have united with global financial giants. The second group consists of banks like Fortis who have already entered the Turkish banking system but have not reached their desired volume. In the third group, there are those powerfully positioned banks in France, the Netherlands, the United States and the Persian Gulf countries who do not possess any entities in Turkey and at the same time wish to hold a powerful position in Turkey. Akbank and Garanti Bank are leading players in the Turkish banking system that have openly made their names known as suitors for Halkbank. Also, after buying Dışbank and changing its name to Fortisbank, Fortis will also bid for Halkbank to strengthen its existence in Turkey.
Akbank to bid for Halkbank:
Akbank, having paired with Citigroup, the biggest financial group in the world with its 1.5 trillion active assets, declared it is bidding for Halkbank’s privatization. The head of Akbank’s executive committee, Erol Sabancı, said after selling 20 percent of Akbank to Citigroup, they were seriously interested in Halkbank.
“It would require huge numbers,” Sabancı said of a possible bid. He underlined that they have “sufficient ammunition for it.”
“Now, the game is being played in our court. It is not beyond our reach,” he said. Sabancı added that he did not just utter the words, “We are present for Halkbank,” but meant it. Akbank has ample resources for this, he said.
“Akbank had $5 billion of equity and even that would have been adequate. In addition to that, now there is $1.3 billion more. Halkbank is a game that is played in our country; it is in our court. Automatically, we have plans in that direction,” Sabancı said.
Garanti-Halkbank partnership:
An equal partner with General Electric, Garanti Bank is seriously interested in Halkbank with the ambition of becoming the biggest in the sector in addition to its wish to be more active in Anatolia.
In a statement at the end of last year, Garanti Bank’s executive committee head Ferit Şahenk had said: “Garanti Bank is a bank that has to grow in the region. In this context, a possible partnership with a privatized Halkbank will be beneficial to shareholders, customers and to the nation.”
No obstacles to privatization:
Turkey’s Parliament passed a law last week allowing the privatization of state lender Halkbank to go ahead. The three-article law will override a decision last month by Turkey’s top administrative court, the Council of State, to suspend the sale.
Turkey told its major creditor, the International Monetary Fund (IMF), in its last letter of intent that it would privatize the bank by May 2007. It plans to privatize it in a block sale.
Opposition lawmakers in Parliament expressed concern over a rising share of foreign ownership in the Turkish banking sector and objected to Halkbank’s sale, which lends to small and medium-sized enterprises (SME).
The government has vowed to press ahead with privatizations and structural reforms this year under a $10 billion loan deal with the IMF, though it has postponed the sale of three electricity grids until after the elections.
The privatization of Halkbank is also being closely monitored from abroad.
The eligibility criteria in the privatization process for Halkbank prevent smaller banks from bidding on the basis of a pre-condition barring banks falling under a certain asset volume. Also, only entities and groups already operating in the banking system will be qualified to submit tenders.
These criteria prevent smaller banks from entering the tender process initially. With the other pre-condition that submissions must come from banks already operating in the banking sector, non-banking sector groups and entities – such as the Turkish Union of Chambers and Commodities Exchanges (TOBB) – are blocked from entering the tender alone.
Experts say that these conditions also indicate that the government wishes Halkbank to be managed by those who have experience in managing a large bank. Experts also say that several developed countries set similar criteria for these types of sales.
Halkbank in figures (thousand YTL)
Asset volume 33,845,255
Deposits 26,676,068
Loans 10,117,007
Paid capital 1,250,000
Net periodical profit 651,154
Staff 11,007
Number of branches 588
Year founded 1938
Source: 2006 September data from Banks Association
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