GE allowed to buy Turkish bank

Turkey's economy is forecast to see strong growth

The Turkish authorities have cleared the way for General Electric (GE) to buy a 25% stake in the country's third largest bank for $1.55bn (£893m).

Turkey's Competition Board said it would allow GE's consumer finance arm to buy the stake in Garanti Bank, which has assets of more than $20bn.

Garanti said the investment would allow it to develop new products and open branches in neighbouring countries.

Turkey's privatisation programme is back on track after faltering.

Foreign expansion

Earlier this year ministers approved the sale of a stake in state telecoms firm Turk Telekom to a consortium led by Saudi firm Oger Telecom for more than $6bn.

Under the terms of the agreement, General Electric Consumer Finance - one of GE's most profitable divisions - will jointly control Garanti Bank with Turkish conglomerate Dogus Group, its other major shareholder.

General Electric is an important partner for sustainable growth and higher shareholder value Garanti Bank

Established in 1946, Garanti Bank has more than 8,000 employees and about 400 branches.

It is a market leader in corporate banking and the second largest provider of credit cards in the country.

Garanti said GE's investment would help it improve its offering in key areas such as personal loans and mortgages.

GE's involvement will also make it easier for the bank to raise capital in foreign markets while making large savings in procurement.

"General Electric is an important partner for sustainable growth and higher shareholder value in the future," a Garanti spokeswoman said.

Domestic opposition

The bank plans to open a further 90 branches by the end of 2006 while looking to expand in Kazakhstan, the Ukraine, Bulgaria and Romania.

Turkey's privatisation programme has helped bolster its fragile public finances by raising $10bn over the past decade.

However, the disposal programme has met with domestic opposition while investor apathy has repeatedly threatened to slow the process.

The privatisation plans are a key part of the programme Turkey agreed with the International Monetary Fund to help stabilise the economy after years of inflation.