ECONOMY

GE buys Turkish stake

ISTANBUL (Reuters) – General Electric Co’s consumer lending unit is buying a 25.5 percent stake in Turkey’s Garanti Bank from local conglomerate Dogus Group for $1.56 billion (1.26 billion euros), the companies said yesterday. Garanti shares rose nearly 3 percent on news of the deal, the latest in a series of foreign investments that Turkey’s banking sector has attracted ahead of European Union membership talks in October. The acquisition extends the reach of GE Consumer Finance – one of the industrial, financial and media conglomerate’s most profitable businesses – into a market it has targeted for expansion, along with Malaysia, Serbia and the Philippines. «This investment presents an excellent opportunity for us to grow strategically in… the rapidly expanding Turkish banking and financial services sector,» said Dan O’Connor, president of GE Consumer Finance in Europe in a statement. Under the deal, the total value of Garanti Bank, which serves some 5 million customers through a network of 419 branches nationwide, is estimated at 4.9 billion euros. Dogus has a 51 percent stake in Garanti, with the rest publicly traded. GE Consumer Finance, which offers everything from mortgages to car loans to credit cards, will also pay 200 million euros to buy 49.2 percent of Garanti Bank’s founding shares, Dogus said in a statement to the Istanbul stock exchange. The deal is subject to regulatory approval and is expected to be completed in the fourth quarter of the year. Analysts welcomed the news for Garanti Bank. «Besides the positive aspect of a partnership with GE, the transfer of $697 million (562 million euros) worth of non-core assets back to Dogus Group will clean up the balance sheet and boost the profitability in line with an improved cash equity base,» said Figen Cevik, banking analyst at Oyak Securities. Dogus Holding Chief Executive Ferit Sahenk, who will remain chairman of Garanti’s board, said he hoped the deal would help to attract more foreign investment into Turkey.