Eurobank’s Turkish buy

EFG Eurobank agreed yesterday to buy a majority stake in Turkish bank Tekfenbank, becoming the second major Greek bank to move this year into Turkey’s fast-growing financial sector. «(The two banks) agreed to join forces in the Turkish financial services market,» Eurobank stated, sending its shares up 1.5 percent. Greece’s third-largest lender in assets will buy 70 percent of Tekfenbank from Tekfen Group for 145 million euros, including 100 percent of subsidiary Tekfen Leasing. The deal needs to be approved by regulators. Eurobank’s deal follows a similar move by the National Bank of Greece in April to buy 46 percent of Finansbank for 2.3 billion euros. «I think it makes sense to expand in Turkey because of historical ties, proximity… The banking sector is growing fast,» said Maciej Szczesny, a Morgan Stanley emerging banks analyst. Greece’s big banks have been expanding into the Balkans to secure new growth before expansion in their home market peaks. Turkey’s EU aspirations have boosted interest in its economy, which is expected to grow 5 percent this year. «It’s a new market with strong growth prospects that has entered the radar screen of Greek banks,» said analyst Sophia Skourti at HSBC Securities in Athens. «Increasingly, they are looking at Turkey within the context of new areas for expansion.» Tekfenbank, founded in 1989 and merged with Bank Express in 2001, is one of the country’s smaller banks. It said the deal valued it at 206 million euros. Eurobank, with a current market value of 10.4 billion euros trades at 16.3 times 2006 earnings, at a slight premium versus other EU banks, according to Reuters Estimates. The bank said the acquisition is expected to be concluded by the third quarter this year. It plans to strengthen Tekfenbank’s 30-branch-strong network with new outlets and promote mortgage lending and asset management services. Tekfenbank’s clients are mostly small to medium-sized businesses. (Reuters)