* Sources say decision due to valuation concerns
* Say Turkish state bank Ziraat Bank interested in Asya
* Asya hit by deposit withdrawals
By Seda Sezer, Ebru Tuncay and David French
ISTANBUL/DUBAI, July 2 Qatar Islamic Bank (QIB)
and Turkey's Bank Asya have ended exclusive
talks over QIB acquiring a stake in the Turkish lender, four
sources close to the matter told Reuters, with valuation
concerns said to be behind the decision.
Turkish state bank Ziraat Bank may now be the most likely
partner for Bank Asya but the two banks have not officially
begun talks, three of the sources said.
Islamic lender Bank Asya has been under pressure to sell
assets, the sources said, after being hit by a power struggle
since late last year between Turkish Prime Minister Tayyip
Erdogan and U.S.-based Islamic cleric Fethullah Gulen, leading
major investors sympathetic to Erdogan to withdraw deposits.
"Talks with QIB ended. Bank Asya is going through tough
times since Dec. 17. They are in talks with Ziraat," one source
close to the deal said. It was not clear what size stake had
been under discussion.
The Qatari lender didn't respond to a request for comment.
Bank Asya and Ziraat declined to comment.
The talks with QIB faltered after the banks failed to agree
a price, the sources said. Turkish banks are a natural target as
Qatari banks expand overseas but price has become a highly
sensitive issue after the state's second-biggest bank by assets,
Commercial Bank of Qatar, was seen overpaying last year to
acquire a 70.8 percent stake in Turkey's Alternatifbank
It paid two-times book value, much higher than what Qatari
banks previously had offered to pay for Turkish assets.
"They (QIB) couldn't be seen to be overpaying for it as it's
a very sensitive issue in Qatar right now, especially for a
Turkish bank asset," said a senior Qatari banker with knowledge
of the matter.
Bank Asya said in March that it had started talks on a
strategic partnership with QIB and planned to complete the
Asya's founders include sympathisers of Gulen, a former ally
of Erdogan who has become his bitter rival, and state-owned
companies and institutional depositors loyal to Erdogan have
withdrawn 4 billion lira ($1.8 billion), or some 20 percent of
the bank's total deposits, according to Turkish media reports
earlier this year.
Media speculated the withdrawals were part of an
orchestrated backlash by the government following a graft probe
against Erdogan, which the premier blamed on Gulen, and which at
the time posed one of the biggest challenges to Erdogan's
Bank Asya's Chief Executive, Ahmet Beyaz, said in January
that the lender had weathered the mass deposit withdrawals and
was not at risk. The government has declined to comment. But the
sources said the bank needs to sell assets.
Its performance has been affected by the withdrawls, sources
said, with one of them adding that Bank Asya needed to do a deal
"urgently" to bring in a partner.
Three state-run Turkish banks, including Ziraat, have been
working on setting up Islamic banks over the past year.
($1 = 2.1260 Turkish liras)
(Additional reporting by Pamela Barbaglia in London; Editing by
Humeyra Pamuk and Susan Fenton)