Türkiye’s biggest private lender’s decision to undergo a demerger that frees up its subsidiaries will pave the way for their potential public listing in the future and allow the bank to use its equity more effectively, a senior executive said on Monday.
Işbank’s shares soared to a record high after it announced on Friday it would transfer shares in its subsidiaries and an affiliate to a new holding company, a move it said would bring about sustainable growth and investments in new fields.
The bank’s Chief Financial Official, Gamze Yalçın, said the overhaul would pave the way to boost shareholder value given what she said was an evident discount in the Istanbul-listed bank’s share price.
Addressing a webcast event in Istanbul, Yalçın said timelines for establishing the new structure and the potential initial public offering (IPO) of the holding company remain undisclosed.
About 75% of Işbank’s approximately 150 subsidiaries were operating in the highly regulated financial sector, Deputy Chief Executive Cahit Çınar said, adding there would be more investments in the industrial sector.
"Taking increased regulation and this (high) concentration into account, we expect the new holding company will increase our concentration in the non-financial sector," he said at the same event.
Işbank’s largest industrial holding is Şişecam, one of Europe’s largest glassmakers. The company merged five glassmaking units under its roof in 2020. The lender’s portfolio also includes lender TSKB, borekare Iş Investment, builder Iş REIT, and private pensions firm Anadolu Hayat.
Çınar said Işbank exercises direct control over 118 of its subsidiaries.
Yalçın underscored that consolidating subsidiaries under the new entity could lead to a potential IPO, generating additional capital and allowing for greater flexibility in balance sheet management.
Çınar highlighted plans for shared activities in personnel, procurement and information technology, highlighting the potential for synergies and cost savings.
Additionally, he indicated that the new holding company would focus on expanding its non-financial operations, addressing the challenges posed by increasing financial regulations and sector consolidation.
"When we look at the increasing regulation and intensity dimension of banking, a fiction prevails today that makes it difficult to enter into the financing of non-financial activities as an investor ... taking this into account, we plan that the roof company will increase our concentration in non-financial areas," he noted.
As Yalçın and Çınar revealed, the restructuring will particularly benefit subsidiaries like Iş Enerji, Pazarama, Moka and Proemtia, elevating their perceived value among investors and facilitating strategic investments or partnerships.