Turkish banking sector’s ‘compelling potential’ drawing foreign investors: JP Morgan official

By Aysu Bicer

LONDON (AA) - The valuation levels of Turkish banks continue to be attractive for foreign investors, spurring strong interest in the Turkish banking sector, according to an analyst.

This is evident by the two transactions completed in the last four months, the sale of Rabobank Türkiye to Ronesans Holding and the recent deal for Odeabank, the subsidiary of Lebanon’s Bank Audi in Türkiye, Gokhan Ozkan, an official at JP Morgan, told Anadolu.

Abu Dhabi-based sovereign wealth fund ADQ last week acquired 96% of the share capital of Odeabank, and Ozkan views the deal as a testament to the growing economic ties between Gulf states and Türkiye.

“The acquisition of Odeabank by ADQ reflects a strategic alignment where both regions see mutual benefits in collaboration,” said Ozkan, managing director and head of Middle East, Türkiye, Africa FIG, and EMEA Credit Management Services at JP Morgan.

“It signals confidence in the Turkish banking market’s compelling potential and a commitment to strengthening bilateral relations between the UAE and Türkiye.”

In 2022, ADQ, in partnership with the Türkiye Wealth Fund (TWF), launched a $300 million investment fund focused on companies advancing emerging technologies or enhancing existing technologies in critical sectors.

In the same year, ADQ acquired Birgi Mefar Group, a leading Turkish pharmaceutical company, which has since been integrated into Arcera, ADQ’s wholly owned global life sciences holding company.

In 2023, ADQ strengthened bilateral relations with Türkiye by signing two memoranda of understanding aimed at supporting the country’s economic development.

- ‘Türkiye has once again become an attractive market’

Ozkan emphasized that this investment showcases ADQ’s confidence in Türkiye’s banking potential, with the country seeing steady economic growth in 2023, including a real GDP increase of 4.5% and nominal GDP surpassing $1.1 trillion.

“Banking sector performance is often seen as a proxy for the strength of an economy,” he explained.

“Any transaction in the banking sector is linked to investors’ views on the overall economic environment. Despite the challenges in recent years, Türkiye’s banking sector continues to present opportunities for foreign investors.”

Despite the volatility a few years ago, there has been a more stable economic environment and the country continues to present substantial long-term growth potential, he underlined.

“With the orthodox macroeconomic policies in place, Türkiye has once again become an attractive market for both debt and equity investors,” he asserted.

- ADQ could expand Turkish banking footprint

Odeabank’s acquisition is part of a broader trend where Gulf investors are increasingly looking to diversify their portfolios by tapping into emerging markets with strong growth prospects.

Ozkan cited the recent investment by Dubai Islamic Bank in T.O.M. Bank, a digital banking entity, as another example of this trend.

According to him, the timing of the sale was influenced by Bank Audi’s strategic decision to streamline its operations and refocus on its core markets in Lebanon and Europe.

“Odeabank has become a non-core asset for Bank Audi over the last years given the volatility in Lebanon, and capital injection requirements have been challenging despite strong performance and internal revenue generation of the bank,” he said.

For ADQ, he emphasized, this acquisition represents an opportune moment to enter the Turkish banking market.

“The close ties between Abu Dhabi and Ankara have certainly facilitated the process, creating a supportive environment for strategic investments,” said Ozkan.

“This alignment of interests could allow ADQ to confidently expand its footprint in Türkiye’s banking sector, knowing there is a strong foundation of further mutual cooperation.”