Sources say Burgan Bank reaches deal to buy 70% stake in Eurobank Tekfen
Kuwait's Burgan Bank has reached a deal to buy a 70 percent stake in Turkey's Eurobank Tekfen, a partnership of Greece's EFG Eurobank and Turkey's Tekfen Holding, sources with knowledge of the deal said.
The stake sale comes as Greek banks, hit by the country's sovereign debt crisis, look to boost their capital base to cope with a protracted recession and rise in non-performing loans.
EFG Eurobank, Greece's second-largest lender, said in July last year it had begun talks to sell a majority stake in Eurobank Tekfen as it sought to safeguard its balance sheet against debt losses.
In December Eurobank Tekfen said talks with three potential buyers were continuing.
The sources said on Wednesday the deal with Burgan Bank, the commercial banking arm of Kuwait Projects Co (KIPCO), was in excess of Eurobank Tekfen's equity capital value of 608.3m Turkish lira ($347m).
"A deal has been reached. An official statement is expected in the coming couple of weeks," one of the sources told Reuters.
The deal also includes an option for Burgan to buy Tekfen's 29.26 percent stake in Eurobank Tekfen.
Greece's EFG Eurobank sold a majority stake in its Polish operation Polbank to Austria's Raiffeisen Bank in February last year for 490m euros ($698m).
Eurobank bought 70 percent of Tekfenbank in 2007.
Eurobank Tekfen made a net profit in the first nine months of last year of 20.3m lira. Its balance sheet size was 5.1bn lira, with deposits at 2.2bn lira.
KIPCO is the Gulf state's largest investment company. It also has stakes in United Gulf Bank, as well as other financial services sector companies across the Middle East and North Africa.For all the latest banking and finance news from the UAE and Gulf countries, follow us on Twitter and Linkedin, like us on Facebook and subscribe to our YouTube page, which is updated daily.