ISTANBUL (Reuters) – Saudi National Commercial Bank, the Gulf’s largest lender, has agreed to pay $1.08 billion for a 60 percent stake in Turkish Islamic lender Turkiye Finans, the two firms said on Tuesday.
The deal values the whole company at $1.8 billion, which compares with a $2.02 billion market value for its rival Bank Asya, which is around the same size in terms of assets.
The ruling AK Party has encouraged Gulf investment into Turkey and the news comes just a few days before a general election.
Turkiye Finans had assets of 4.5 billion lira as at the end of the first quarter, according to data from the Participation (Islamic) Banks Association.
The owners of Turkiye Finans, industrial groups Ulker and Boydak, had said they were looking for a strategic partner to take a 50 percent stake in the bank, and hired HSBC to find a deal.
The two firms will continue with a 20 percent stake each, they said in a statement.
NCB is the largest bank in the Gulf by assets, but is set to be overtaken by a planned merger of Emirates Bank International and National Bank of Dubai.
Commercial Bank of Kuwait and Noor Financial Investment Company made a joint bid for a 60 percent stake in the lender, a source familiar with the situation said earlier in the month.
Islamic banks, which do not charge or pay interest in line with Islamic law, are growing fast in European Union-applicant Turkey and shares in Bank Asya have more than doubled since their listing in May last year.
The four banks making up the sector saw total assets grow 38 percent last year and net profit rise 56 percent, according to data from the Participation Banks Association.