Bloomberg/ Geraldine Hope Ghelliby Kudakwashe Muzoriwa
UniCredit has secured a deal to reduce its exposure to Turkey’s Yapi Kredi, a move seen as a first step toward the Italian bank’s full exit from the recession-hit country, reported Reuters.
As part of the plan, UniCredit will sell its 50 per cent stake in its joint venture Koc Financial Services—which controls Yapi Kredi –to its partner Koc Holding. UniCredit kicked off talks with Koc Holding earlier this year aiming to dismantle the joint venture and lay the groundwork to fully cash out of Yapi Kredi.
The deal will give Koc Holding a majority stake in Yapi, Turkey’s third-biggest bank which has a market value of $3.7 billion. Similarly, UniCredit is expected to retain a small interest in the bank with a view to selling it at a later stage without having to consult Koc.
Additionally, Koc Financial Services is a joint venture vehicle that owns almost 82 per cent of Yapi Kredi and is equally invested by UniCredit and Koc Holding. As of December 2019 the Italian lender—which has a market value of EUR 27.7 billion—will no longer be invested in the joint venture.
The Italian bank has been invested in Yapi Kredi since 2002 when it entered the joint venture with Koc Holding in what became the first foreign partnership in Turkey’s financial services industry, however, the Turkish economy slipped into a recession last year, resulting in the lira losing 30 per cent of its value against greenback, forcing UniCredit to write down its stake in Yapi by EUR 846 million ($933 million) in Q3 2018.