Talking Turkey is proving difficult for Qatar National Bank

Markets Update: Qatar National Banks talks to acquire Denizbank, the Turkish lender put up for sale by Dexia, are stalled over price and may collapse, say sources.

Qatar National Bank's talks to acquire Denizbank, the Turkish lender put up for sale by Dexia, are stalled over price and may collapse, sources said.

Dexia, which is being broken up after the European debt crisis reduced its ability to obtain funding, has reached out to other potential buyers, one of the people said, declining to be identified because the discussions are private.

The Franco-Belgian lender is seeking about 1.5 times Denizbank's book value of $2.1 billion, while Doha-based QNB is prepared to pay between 1 and 1.2 times, the people said. While the two sides may still reach an agreement, Dexia could also decide to end the process and begin a new search for a buyer at a later date, they said.

Denizbank surged more than 50 per cent since early October, following reports Dexia would sell its majority stake in the bank under its rescue plan. The lender is valued at about 9.3 billion liras ($5.3 billion), according to the share price, which rose 3.2 percent to 13 liras in Istanbul on Friday. Less than 0.2 per cent of the shares are traded, with the remainder owned by Dexia, Bloomberg data show.

A spokesman for Dexia, based in both Paris and Brussels, declined to comment. A spokesman for QNB could not immediately be reached for comment. While QNB is in talks with Dexia, Denizbank will "cost us a lot" and the bank won't distribute "more profit than necessary" for the deal, chairman Yousef Hussain Kamal told shareholders January 29.

European banks are seeking to sell assets, portfolios and units to raise cash amid the region's debt crisis and to meet tougher capital requirements. Lenders including Deutsche Bank AG and France's Societe Generale SA have announced plans to shed more than $1 trillion in assets, according to Bloomberg data.

QNB, the country's largest lender, was the last serious buyer for Denizbank after earlier bidders including HSBC Holdings and OAO Sberbank dropped out, sources said in January. A month earlier, Banco Comercial Portugues opted to keep its Polish unit. Both Denizbank and BCP's Warsaw-based unit were examples of profitable businesses in attractive markets that lost bidders, people familiar with the discussions said in December.

The European Banking Authority told the region's banks to raise €114.7 billion ($151 billion) in fresh capital in December to respond to the sharp fall in the value of securities issued by euro-area governments. The agency also required banks to keep a core Tier-1 capital ratio of 9 per cent and hold additional reserves, called a sovereign buffer, to protect against default on debt tied to weaker euro-area economies.

Dexia put Denizbank up for sale as part of a rescue plan undertaken by the French and Belgian governments. The firm is putting its most troubled assets into a so-called bad bank and trying to sell profitable units, including Denizbank, to raise cash.

* Ercan Ersoy and Matthew Campbell