TURKEY - Oyak, the Turkish Army Pension Fund, is selling its subsidiary Oyak Bank to the Dutch ING Group for $2.67bn (€1.98bn) and opening its investment strategy to energy and foreign assets.

Oyak's CEO Coşkun Ulusoy said the fund is planning to make two new investments, which it will announce later this year.

"We are in talks over a very serious investment In the energy sector. We are also going to start investing in foreign assets," he explained.

Oyak owns 40 subsidiary companies at present, ranging from cement factories and financial services to Renault production plants. In 2006, member reserves of the fund were €2.87bn, and had yielded a return of 25.1% in that year alone.

Michel Tilmant, chairman of the ING executive board, has also hinted ING will in the future compete against Oyak Emeklilik, the private pensions subsidiary of Oyak, by marketing pension saving products to Turkish consumers.

Oyak Emeklilik, which was established in 2003 and also insures civilians, has approximately €107m of assets under management.

"During the last few years, the number of old people in the world population is getting higher. More people now want to invest for the long term for their old age. We try to offer them the necessary services for investment. In Turkey we plan to offer, among other products, pensions and investment solutions for the growing middle class. We want to be where growth takes place," Tilmant said.

ING's total market value currently stands at €73.1bn and the firm has strong positions in the US, Canadian, Belgian and Netherlands' markets.

Oyak's Ulusoy noted, however, competition in the Turkish pensions industry is warmly welcome even if it comes from a former subsidiary.

"Competition is always a positive issue," he said.

Sale of Oyak Bank to ING has contributed to an industry-wide debate in Turkey on the limits foreign ownership as approximately 70% of the Istanbul Stock Exchange is under foreign ownership and eleven pension companies operate in Turkey, with total assets of €2bn.

The ING deal was criticised by the Confederation of Labour Unions (Türk İş) and some members of the Turkish armed forces are alleged to have questioned it.

Ulusoy, however, was keen to remind the public foreign investments also add value to Turkish economy.

"We would not have sold Oyak Bank unless it considered ING Group a trustworthy buyer," he added.