GE to sell $3.3 billion stake in Garanti: GE sources

ISTANBUL (Reuters) - General Electric Co (GE) will sell its $3.3 billion stake in Turkey's Garanti Bank, GE Money sources said on Thursday, a move which could offer a rare chance to buy into Turkey's resilient bank sector.

GE has a 20.85 percent stake in Garanti, the most actively traded stock on the bourse and Turkey's largest listed lender by market value. Foreign investors like the bank because it is around 50 percent publicpubliclyally-owned in a country where other banks are either run by families or the state.

"GE Money is selling its stake in Garanti Bank in line with its global reduction strategy," a GE Money source said.

GE, the U.S.'s largest conglomerate, has been trying to stabilize itself after posting eight straight quarters of falling profit amidst the global downturn and has been scaling back its hefty GE Capital finance arm.

Garanti shares were flat at 5.85 lira at 1149 GMT.

Analysts speculated that Turkey's Dogus Group, which owns a 30.5 percent stake in Garanti, could up its holding.

GE originally bought a 25.5 percent stake from Dogus Group for $1.6 billion in 2005, before selling part of its holding back to Dogus in 2007.

"Dogus is first in line to buy this stake but I don't know if they have the money. They are non-listed so we can't see their position," said analyst Ayse Colak at Tera Securities.

"Assuming they can raise the money I think they would be interested. I think this will remain a non-traded stake. Dogus bought a tranche back from GE before, but if they do buy it would be below the current market value," she added.

Newspaper Haberturk reported on Thursday that Dogus was entitled to a first chance to buy the shares, but that it and GE had failed to agree a sale in talks last week. The newspaper said JP Morgan had now been mandated to sell the shares.

"We do not believe Dogus group is capable of purchasing GE shares worth $3.33 billion as they are already leveraged from the previous share transaction. Also, it is not easy to find a strategic investor who would want to pay such a sum without assuming control of the bank," Oyak Securities said in a note.

Colak said it was not an easy time to buy the Garanti stake.

"Western banks don't have the money... but a Middle East investor might be an option," she said.

Prior to the global financial crisis foreign companies had rushed to buy into Turkey's banking sector, regarded at the time as highly lucrative and with strong growth potential in a country of 72 million people.

Thanks to stringent regulation imposed after a 2001 domestic crisis Turkish banks avoided exposure to the toxic assets which toppled some of their peers, remaining well capitalized and profitable.

A year-long rate-cutting cycle by the Central Bank which cut the borrowing rate by 10.25 percentage points also helped banks boost their net interest income.

Garanti posted a 151 percent rise in fourth-quarter net profit earlier this month, while full-year profit rose 69 percent. Its shares rose 143 percent in 2009, outperforming the index of banking stocks which rose 116 percent in the same period, and the Istanbul index as a whole. (Additional reporting by Birsen Altayli; Writing by Alexandra Hudson; Editing by Jon Loades-Carter and Sharon Lindores)