SocGen Deal May Presage Alternatifbank Decline After Gains

Investors in Alternatifbank AS may be setting themselves up for declines after driving up the stock more than 60 percent since Anadolu Group started talks to sell the lender to Commercial Bank of Qatar QSC, according to analysts at Garanti Securities and Arqaam Capital Ltd.

The Istanbul-based lender, 96 percent owned by Anadolu, jumped 16 percent on Dec. 24 when the news was announced. It’s since surged a further 43 percent to give it a market value of

1.01 billion Turkish liras ($570 million). It trades at a price-to-earnings ratio of 13, compared with 11.05 for the 16-member Istanbul Stock Exchange National Banks Index.

The share surge is reminiscent of gains at National Societe Generale Bank SAE in Egypt, a unit of Paris-based Societe Generale SA, which soared about 24 percent after Qatar National Bank SAQ said it was interested in buying the bank in August. The stock plunged 9.9 percent on the day of the sale on Dec. 13 after the French bank agreed to sell it for below market value.

A similar event may occur at Alternatifbank, said Recep Demir, an analyst at Garanti Securities in Istanbul.

“With only 4 percent of the bank in free float, we have to think about how much of an indicator market value really is,” Demir said by telephone. “I would expect a downwards movement of the share when more becomes known about the sale.”

Relative Strength

The talks with Commercial Bank of Qatar may last about two and a half months, Anadolu Group Chairman Tuncay Ozilhan said last month.

Commercial Bank of Qatar may also lowball any offer for Alternatifbank because it will probably need a large capital increase to buy the company, said Jaap Meijer, director of equity research at Dubai-based Arqaam.

The Doha-based bank had a Tier 1 capital ratio of 15.6 percent at the end of September, compared with an average of

18.4 percent for Qatari banks, according to data compiled by Bloomberg. Net income dropped 1 percent annually to $150.5 million in the third quarter.

“Alternatifbank’s current share price should not dictate any price tag,” Meijer said in an e-mailed response to questions. “CBQ could offer less than the current market price given its low structural returns and poor capital position.”

Shares Rise

Abank rose 0.8 percent to 2.43 liras on the Istanbul Stock Exchange at 3:48 p.m. today. The ISE National Banks index traded two percent higher.

Abank reached a record high of 2.61 liras on Dec. 27 and traded at 1.46 liras on Dec. 21 before the sale talks. The lender is ranked 13th of 16 listed Turkish banks in terms of market value and has 63 branches nationwide.

Overseas lenders are likely to seek Turkish bank acquisitions this year, to benefit from a strong economy and banking industry, Fitch Ratings said in an e-mailed report in London today, citing Anadolu Group’s talks with CBQ.

Turkey’s economic growth will probably accelerate to 4.0 percent this year from an estimated 3 percent in 2012, according to the average of 22 analyst estimates on Bloomberg.

Investors from the Middle East, Russia and the Far East are seeking to boost their presence in Turkey, attracted by rising profit and growth in loans.

Abank reported a nine-month profit of 57.4 million liras in 2012, five times greater than the year-ago figure. Net interest income more than doubled to 330 million liras in the same period.

‘Performing Well’

“Both the bank and the parent are performing well so this is not an obligatory sale,” Bulent Sengonul, manager of equity research at Is Investment Securities, Turkey’s biggest broker by trading volume, said by telephone. “Abank is a smaller bank with improved profitability and the multiple might be larger than, for example, Denizbank’s.”

Russian OAO Sberbank bought Turkish bank Denizbank AS from Belgium’s Dexia SA in June last year for $3.53 billion, or 1.33 times book value. Qatar National Bank said last month it may target stakes in the country’s major lenders. Bank of Tokyo-Mistubishi UFJ Ltd, a unit of Japan’s biggest financial company Mitsubishi UFJ Financial Group Inc., is in the final stages of its license application and may begin operations early this year, Mukim Oztekin, head of the industry regulator, said in December.

Total profit at Turkish banks rose 19 percent annually in the first 11 months of last year to 21.8 billion liras, the regulator in Ankara said on its website on Jan. 8. Loans grew 16 percent to 805.7 billion liras in 2012.

(Updates with Fitch’s comment in 11th paragraph.)
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