First Abu Dhabi Bank (FAB) is in "advanced" negotiations to purchase a 61.2% stake in Istanbul-based lender Yapı Kredi from Turkish conglomerate Koç Holding for approximately $8 billion, according to sources familiar with the matter.
Final details of the potential deal for Türkiye's fourth-biggest private bank are being hammered out after several months of negotiations, three sources told Reuters on condition of anonymity because the talks are confidential.
Following the media reports, Koç Holding said it is in early discussions regarding the sale.
Shares in Yapı Kredi rose as much as 10% in Istanbul after the news emerged, while Koç Holding was up 9.5%. FAB shares were flat.
Borsa Istanbul Stock Exchange's benchmark BIST 100 index rose by almost 3%, while its banking index surged nearly 8.7% as of 2.15 p.m. in Istanbul.
One of the sources said the Turkish conglomerate had sought about $8.5 billion for its shares in Yapı Kredi and that FAB had offered about $7.5 billion.
“As an investment holding company, we may engage in discussions with relevant parties to evaluate potential alternatives regarding our portfolio. As such, although preliminary discussions are ongoing regarding the subject matter of the news in the media,” Koç Holding said in a statement to the Public Disclosure Platform (KAP).
FAB, the United Arab Emirates' largest bank by assets, declined to comment.
Koç Financial Services owns 40.95% of Yapı Kredi, while Koç Holding owns 20.22%.
The bank has a market value of around $9 billion, up from about $7.5 billion early last month. A second source said the estimated sale value would value the entire bank at between $13 billion to $14 billion.
Any deal would mark the latest Gulf investment in Türkiye and comes amid warming in relations with the UAE and Saudi Arabia in recent years.
Last year, Türkiye and the UAE signed a free trade agreement and then said they agreed on a series of deals worth more than $50 billion after President Recep Tayyip Erdoğan visited the region in July.
Türkiye's economy and banks are on a sounder footing after a shift toward more orthodox policies since last summer, including aggressive interest rate hikes that helped rebuild foreign exchange reserves.
It was unclear whether FAB and Koç would ultimately reach a final deal, which could depend partly on Yapı Kredi's second quarter financial results, set to be announced next month.
FAB and other Gulf banks have benefited as regional governments boost investment and diversify economies away from oil revenues. Last year, the Emirati lender said it had briefly considered bidding for London-listed Standard Chartered.
After Bloomberg reported in April that FAB was studying potential targets in Türkiye, including Yapı Kredi, Koç said in a statement to the stock exchange regarding the report that there was no development that required a public disclosure.
In 2022, Italian bank UniCredit completed the sale to Koç of its remaining 18% stake in 80-year-old Yapı Kredi.
