ING Groep NV’s talks to buy the Turkish unit of HSBC Holdings Plc have stalled amid political and market turmoil, according to people with knowledge of the matter.
ING, which had been on track to announce the acquisition of HSBC’s unprofitable Turkish division by the end of August, may need one or two more months to reach an agreement, said the people, who asked not to be identified because talks are private. The discussions could fall apart and HSBC is still talking with other potential buyers while maintaining negotiations with ING, three people said.
HSBC, based in London, is seeking a buyer for its business in Turkey to cut costs, after agreeing to sell its Brazil unit for $5.2 billion in cash last month. War on Turkey’s borders and inconclusive general elections have compounded the effects of a global emerging markets rout. The country’s currency has dropped 21 percent this year while banking stocks have lost almost 40 percent of their value in dollar terms.
The country’s finance minister has warned that political instability is putting the economic accomplishments of the last 13 years at risk.
Adding to the sale’s hurdles is a court ruling on Turkey’s seizure of a lender that HSBC subsequently purchased from the government, Milliyet newspaper reported in July. The European Court of Human Rights ruled that Turkey should compensate former shareholders of Demirbank, a decision that has made ING cautious, Milliyet said.
Raymond Vermeulen, an ING spokesman, declined to comment on the acquisition plans. An HSBC official said the bank has no comment on the sale process.