Standard Bank's Exit From Turkey

Image New Zeland - Standard Bank’s decision to largely exit from Turkey has been welcomed by the market and analysts alike. Standard’s share price has continued its upward trend since it announced last year the group was divesting from previous emerging market investments to focus on African expansion. It rose to a new high of R113,50 a few weeks before the Turkey announcement. Some analysts estimate it could hit R115 before being fully valued. A year ago it was trading at R90.

Spokesmen had earlier denied the Turkish Standard Ünlü division was on the block. Standard Ünlü is involved mainly in corporate finance and was bought by Standard in 2007. The operations were deemed to be profitable, with Standard Ünlü capitalising on the high-growth Turkish economy.

But in a statement Standard said it had concluded an agreement with Turkish businessman Mahmut Ünlü to sell a controlling 53% interest. His shareholding will be 75%; Standard will retain 25%. No price was divulged but it is thought to be around $200m, bringing Standard’s cash pile from the sale of its investments to roughly $1bn, including $750m from the sale of its Argentine and Russian investments.
Standard is also curtailing operations in Brazil, where asset portfolios are being reduced in its Banco Standard de Investimentos division.

Its small share in Ünlü makes sense as it could act as a springboard for transactions done through Standard Bank Plc in London.

Lossmaking Standard Plc has been downsized considerably since 2010.

But Standard Corporate & Investment Banking (CIB) CEO David Munro says Standard Plc is a key element in the competitive position the bank hopes to hold in its African focus. Many clients and investors in Africa want to engage with a counterparty in a major financial centre to retain the ability to access the global capital markets from London as a vantage point. “This also gives us a strong position to secure some of the skills and experience we need to succeed in competing with other international banks in chosen markets.”

Analysts welcome the exit from Turkey as part of a strategy to sell foreign interests where the return on equity has been low and where Standard has been unable to establish a competitive advantage. “We hope the additional capital will be released soon,” says one. (Maarten Mittner,
Last modified onSaturday, 06 May 2017 10:07