Posted by meb at January 17th, 2013

A strong economy and resilient banking sector will likely attract more foreign banks seeking Turkish bank acquisitions this year, Fitch Ratings said in a written note on Monday.
The rating agency said possible acquisitions of Turkish banks by foreigners could improve the credit ratings of the banks purchased “because buyers are likely to be more highly rated.”

“Turkey’s medium-sized banks are the most likely acquisition targets because of uncertainty about the long-term sustainability of their operations as independent entities. … The sector’s healthy credit fundamentals, market size [including a large bankable population] and the broadly favorable outlook for Turkey’s economy make it particularly attractive,” Fitch said. Fitch cited good liquidity, held up by a stable retail deposit funding base, low leverage, still wide margins by international standards and strong credit demand as factors for Turkey’s strong banking sector. “But a return to rapid loan growth could lead to a build-up of risks in the system,” it added.

Also referring to interest in Turkish financial institutions from Gulf investors, Fitch pointed to possible new attempts from Gulf investors to enter the Turkish banking market due to “the desire to diversify out of their home country’s narrow economy.” Turkey’s Alternatifbank has recently announced that it is in talks with the Commercial Bank of Qatar regarding the sale of a majority stake. This followed an announcement by Qatar National Bank of its interest in acquiring an undisclosed Turkish bank.