Dutch ING Group to acquire Oyak Bank for $2.67 bln
Posted by meb at June 20th, 2007
Turkey’s Oyak Bank, a subsidiary of the Armed Forces Pension Fund (OYAK), released a statement on Tuesday saying it will be bought by Dutch bank ING for $2.67 billion (2 billion euros).The transaction, which remains subject to approval by Turkish authorities, will be conducted in cash, Oyak Bank said. The name of Oyak Bank will be changed within one year of the sale, it added. The sale of the bank had been on the agenda for some time. The OYAK Group has participated in the privatizations of the Turkish Petroleum Corporation (TÜPRAŞ), Turk Telekom and Ereğli Steel & Iron Corporation (Erdemir), which it purchased with a $2.7 billion bid.Neo-nationalist circles were pleased with the purchase of Erdemir by a “national” group. Under the terms of the agreement, ING will acquire 100 percent of the shares in Oyak Bank for a cash consideration of $2.67 billion, which will be financed entirely from existing internal resources.
Michel Tilmant, chairman of the executive board of ING Group, said: “Oyak Bank is a high-quality bank with a strong position in the rapidly growing Turkish market. The acquisition is in line with our strategy of supporting the strong organic growth of the group with suitable add-on acquisitions and will provide ING with a solid banking platform with significant further growth potential. It also provides the opportunity to distribute wealth management products in the future as the market further grows.”
The deal would be accretive to earnings per share from 2008, the precise amount dependent on investment levels. Tilmant said ING also planned to increase Oyak’s annual marketing expenditure from 5 million euros to 20 million euros and invest 25-40 million euros in IT.
Tilmant said ING would increase its market share from 3 percent to 5 percent “relatively quickly.” He said the plan was to increase the number of branches throughout Turkey from 360 to 400 or 450, adding: “We expect to improve Oyak’s cost income ratio and profitability very quickly. Turkey is a fast-growing and increasingly stable banking market that we have frequently reviewed for opportunities. This is the platform we needed to expand profitably in Turkey.”
He said it was “the perfect time” to enter Turkey, citing a range of demographics to justify the deal, which will result in a price/earnings multiple of 26.6 times the 2006 normalized earnings and a price/book multiple of 3.26 of the shareholder’s equity.
Tilmant said Turkey would have the world’s 12th largest economy in the next decade, with its 2006 gross domestic product (GDP) having grown 6.1 percent, adding that the country was under-banked and had “relatively high” margins in consumer loans, credit cards and overdrafts. “If Oyak has not been able to realize its full growth potential it has been because of lack of capital to back their development,” Tilmant said. Eli Leenaars, the executive board member responsible for ING’s global retail banking activities, said: “Given our experience in Poland and Romania this is an exciting opportunity to enter another major fast-growing market. Oyak Bank is a strong bank with an excellent management team. By further leveraging ING’s retail banking expertise, especially in internet banking, marketing and risk management in combination with Oyak Bank’s strong distribution and knowledge of the market, we are in a good position to rapidly expand our position in Turkey.”
Founded in 1984, Oyak Bank is a professional and well-managed top-10 bank in the Turkish market with 5,581 employees and a market share of approximately 3 percent. It offers a full range of banking services with a focus on retail banking. The bank has 1.2 million active retail customers and 10,000 small and medium-size enterprise (SME) customers. In total it has 360 branches throughout Turkey, with a good representation in all major cities. In 2006 it made pre-tax profits of YTL 165 million and at the year end it had total assets of YTL 11.8 billion and its book value was YTL 988 million. The transaction is expected to close in the second half of 2007. ING was advised by Citigroup, and Oyak by Morgan Stanley.
source: Today’s Zaman
Related posts: