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Investors May Sell Turkey Banks to Switch to Sberbank, VTB Says

Sept. 12 (Bloomberg) -- Investors may cut their position in Turkish banks to subscribe to the expected sale of Sberbank shares by the Russian government, VTB Capital said in a note.

Turkish banks are vulnerable, given their 19 percent to 70 percent gains so far this year, VTB Capital analysts including Mikhail Shlemov and Akin Tuzun, wrote in an e-mailed note today. The lenders are trading at 7.3 times to 9.8 times next year’s earnings, they said.

The banking index in Turkey has outperformed Sberbank shares listed on Russia’s Micex Index by 23 percent this year, according to data compiled by Bloomberg. It surged 42 percent this year, compared with a 33 percent advance in Turkey’s benchmark ISE National 100 Index.

Foreign institutional ownership of Turkish banks has grown to “historical highs” and “some of these past inflows could prefer to take profits and switch to Sberbank, which is at a discount of almost 50 percent to its Turkish peer,” the analysts said in the note.

Russia will decide on selling a stake in Sberbank, the country’s biggest lender, on Sept. 13, two people with knowledge of the matter said yesterday.

“After last week’s action, with the European Central Bank announcing Outright Monetary Transactions, there has been a sharp rally on the markets and an increase in risk appetite. We believe that the window for the long-awaited Sberbank secondary public offering is now open.” according to the report.

Over the last two years, Sberbank has traded at average discounts of 40 percent to global emerging-market banks and 15 percent to Turkish banks, according to VTB.

To contact the reporter on this story: Selcuk Gokoluk in Istanbul at sgokoluk@bloomberg.net

To contact the editor responsible for this story: Gavin Serkin at gserkin@bloomberg.net

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