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Citigroup is to pay $3.1bn for a 20 per cent stake in Akbank, Turkey’s largest privately-owned bank, in the company’s biggest acquisition in four years.

The purchase is the latest in a string of foreign investments in Turkey’s fast-growing banking sector.

The stake is coming mainly from the controlling Sabanci family, which has granted Citigroup right of first refusal over the sale of any of the 34 per cent stake owned by Sabanci Holdings.

Citigroup is paying TL9.50 per hundred shares, a 17 per cent premium to the closing market price on Tuesday, including $1.3bn for new shares, valuing the enlarged equity at $15.5bn.

Citigroup has been keen to expand in Turkey, where it has had a presence since 1975, and was outbid this year by National Bank of Greece for Finansbank, another leading privately-owned Turkish bank.

The deal concludes months of talks between Citigroup and the Sabanci family. Akbank appointed UBS this year to lead the search for a strategic partner.

Chuck Prince, Citigroup’s chief executive, described the Sabancis as “one of the most highly respected and leading business families in Turkey” and said Akbank was the ideal partner. “It is a premier institution in the fast-growing and dynamic Turkish market, led by a highly skilled management team that has achieved a superior record of performance.”

The deal also involves a strategic collaboration between the two companies to pursue “new commercial activities, referral arrangements and joint ventures and to share certain expertise and technology,” Citigroup said. “Citigroup has always been eager to increase its presence in Turkey,” said Mahmut Kaya, head of research at Garanti Securities.

The deal caps a hectic period in the Turkish banking sector. Dexia, BNP Paribas, National Bank of Greece and Fortis are among the European banks to have acquired Turkish assets in the past 18 months as the sector undergoes widespread structural changes and Turkey reforms its economy with an eye on membership of the European Union.

Sabanci Holding, a diversified conglomerate with extensive industrial and financial interests in Turkey, owns 34 per cent of Akbank, 33 per cent is listed and the rest is owned by the family directly and through other holding companies.

Buying Akbank gives Citigroup a sizeable foothold in the Turkish banking sector and in one of the world’s fastest-growing economies.

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