STOCK First Abu Dhabi Bank / FAB
Deliberations are still at a preliminary stage and there's no certainty that FAB will ultimately pursue a deal. Image Credit: Gulf News archives

First Abu Dhabi Bank PJSC is studying potential acquisition targets in Turkey, including Yapi Ve Kredi Bankasi AS, as part of the lender's hunt for growth opportunities overseas, according to people with knowledge of the matter.

FAB, as the UAE's largest lender is known, has held early exploratory talks with the owners of several Turkish banks, the people said. For several months, its been evaluating the possibility of acquiring Yapi Kredi, which is currently valued at 241.6 billion liras ($7.6 billion), according to the people, who asked not to be identified because the information is private.

Deliberations are still at a preliminary stage and there's no certainty that FAB will ultimately pursue a deal, the people said. Representatives for FAB, Yapi Kredi and Koc Holding AS, the Turkish lender's majority owner, declined to comment.

Yapi Kredi shares rose 9.4 per cent to their highest level on record. Koc's stock traded as high as 8 per cent before paring those gains to 4.4 per cent at 10:17 a.m. in Istanbul.

FAB is the latest UAE lender to express interest in Turkish assets after President Recep Tayyip Erdogan toured the Mideast Gulf region in July to shore up investments in Turkey's $1.1 trillion economy. Dubai Islamic Bank, the UAE's biggest Sharia-compliant lender by assets, said in September that it's acquiring a 20 per cent stake in Turkey's TOM Group of Companies.

During Erdogan's trip last year, the UAE pledged more than $50 billion to support Turkey. 

With a $40 billion valuation, FAB is more than five times as valuable as Istanbul's Yapi Kredi. The Emirati lender has made several attempts to acquire a lender outside the region in search for growth. Last year, it was weighing an offer of as much as $35 billion for Britain's Standard Chartered Plc and tried to buy Egypt's biggest investment bank in 2022.

Yapi Kredi, Turkey's seventh-largest lender by assets, is part of the country's largest business and industrial group, Koc Holding. With a population of more than 85 million, Gulf lenders see Turkey as a promising market to expand in given its geographical proximity and their familiarity with the domestic banking system.