Citigroup announced today that it is buying a 20% stake in a Turkish bank, Akbank.

The U.S. banking giant and Turkey’s Akbank announced today that they have signed a definitive agreement under which Citigroup will purchase a 20% equity position in Akbank for approximately US$3.1 billion.

Akbank is a full-service retail, commercial, corporate and private bank in Turkey, with assets of US$35.8 billion, loans of US$17.7 billion and a deposit base of US$22.7 billion. It is the third largest bank by assets and the most profitable banking institution in the country.

Citigroup has had operations in Turkey since 1975 and has more than 2,000 employees, 47 branches and 68 ATMs. It is currently the 19th largest bank in Turkey by assets with approximately US$2.1 billion in assets and US$1.6 billion in deposits.

The firm is acquiring its stake from Sabanci Holding, which owns 34% of Akbank shares, together with its subsidiaries, which own an additional block of shares in Akbank. It has granted Citigroup a right of first refusal or first offer over the sale of any of their Akbank shares in the future. In addition, Citigroup has granted a right of first refusal or first offer over its Akbank shares to Sabanci.

The agreement also establishes a strategic collaboration between Citigroup and Akbank to pursue new commercial activities, referral arrangements and joint ventures and to share certain expertise and technology. The terms also grant Citigroup the right to appoint one non-executive director to Akbank’s nine-person board, and the Sabanci Group the right to appoint one non-executive director to the board of Citigroup’s Turkey subsidiary.

“The Sabancis are one of the most highly respected and leading business families in Turkey. Akbank is an ideal partner for Citigroup; it is a premier institution in the fast growing and dynamic Turkish market, led by a highly skilled management team that has achieved a superior record of performance,” said Charles Prince, Citigroup chairman and CEO. “What made this transaction particularly attractive is our strategic collaboration, which provides opportunities to broaden our international distribution capabilities and extend the availability of world-class financial products and services to individuals and institutions.”

“Turkey has great strategic importance and financial prospects for Citigroup,” said Sir Win Bischoff, chairman, Citigroup Europe. “Our existing operations allied to a significant stake in Akbank, a pre-eminent financial institution with excellent management and an outstanding reputation, will allow us to strengthen and accelerate our position in this vital market.”

The transaction, subject to shareholder and regulatory approvals, is expected to close in 60-90 days.