Citigroup Inc. sold a 10.1 percent stake in Turkey’s Akbank TAS for about $1.15 billion as the third-largest U.S. bank by assets boosts capital.
The New York-based bank placed 404 million shares in Akbank owned by Citigroup Overseas Investment Corp. to investors at 5.24 liras apiece, according to a statement today. Akbank dropped 0.7 percent to 5.80 liras in Istanbul trading yesterday, a fourth straight decline. The shares peaked at 9.70 liras in October 2010.
Citigroup is Akbank’s second-biggest shareholder after buying a 20 percent stake from Haci Omer Sabanci Holding AS in 2007 for $3.1 billion, according to data compiled by Bloomberg. The U.S. lender is cutting its holding in Turkey’s second-biggest listed bank by market value as it sells assets around the world to meet capital requirements. It said in March it would reduce its shareholding in Akbank subject to market conditions and approvals.
“The bank has been a notable underperformer this year, primarily because Citi announced their intention of selling off their 20 percent stake,” said Julian Rimmer, a trader at CF Global Trading U.K. in London. “They are only selling half and there is a lock-up, which should offer some comfort to investors.”
As part of the sale, Citigroup will keep its remaining 9.9 percent stake in the Istanbul-based bank for three years, a term sheet of the sale the sale obtained by Bloomberg News showed yesterday. The transaction will result in an after-tax loss of about $243 million in the second quarter, Citigroup said in today’s statement.
Akbank shares have dropped 3.7 percent this year, compared with a 7.1 percent gain for the Istanbul Stock Exchange National 100 Index.