General Electric said it has no plans to sell its stake in Garanti Bank, Turkey's third-biggest lender, because it remains profitable.
GE also plans to keep its energy projects in Turkey, despite increased difficulty in obtaining financing, Kursat Ozkan, head of GE's Turkish unit, told reporters.
GE isn't considering a change in its financial portfolio in Turkey, Ozkan said, adding it considers Istanbul-based Garanti one of its most reliable investments.
“Garanti Bank is a profitable company,” he said. “Of GE Capital's (investments), we feel most comfortable with Garanti.”
The Turkish news conference was held as US-based GE is working to lower its financial unit's debts amid the global financial crisis. On Monday GE Capital sold $8 billion of bonds. Goldman Sachs on Tuesday said GE Capital's losses could be 7% of total assets through 2010 and that it expects it to break even in 2009, compared with a company forecast of a net $5 billion.
GE Capital owns about 20% of Garanti. It bought 25.5% of the company for $1.556 billion in 2005.
Garanti shares have declined about 14% since GE bought the stake, while the benchmark Turkish stock index has lost nearly a quarter of its value. Garanti shares rose 0.5% to 1.92 Turkish lira in the morning session.
Garanti posted a 6.1% rise in its fourth-quarter profit as deposits and assets climbed. It has warned that it expects loan defaults to increase in 2009 amid the global economic downturn, impacting profit.
Ozkan said GE's Turkish unit, which has interests in energy, finance, pharmaceuticals and media, had 2008 revenues of $1.4 billion, compared with $1.25 billion the previous year.
A third of GE Turkey's revenues last year came from Garanti, he said.
Capacity has risen by a third to 4,000 megawatts at GE's energy venture with Turkey's Gama, Ozkan said. GE bought 50% of Turkey's Gama Energy in 2007, when it announced total investment of $3 billion for Gama over a three year period. (Reuters)