UPDATE 1-Qatar's QNB buys Greek NBG's Finansbank for 2.7 bln euros

DUBAI/ATHENS, Dec 22 (Reuters) - Qatar National Bank SAQ , the Gulf Arab region’s largest bank, reached an agreement with National Bank of Greece to acquire the latter’s entire 99.81 percent stake in Turkey’s Finansbank AS for 2.7 billion euros ($2.95 billion), the two banks said on Tuesday.

National Bank planned the sale of its Turkish unit to plug a capital shortfall identified in European Central Bank (ECB) stress tests in October.

The closing of the transaction, which is subject to regulatory approvals and other customary closing conditions, is expected to be complete in the first half of 2016, Qatar National Bank said.

National Bank said that Qatar National Bank would also pay Finansbank’s $910 million debt to the Greek lender.

National Bank will use the proceeds to pay back 2 billion euros of aid it received from Greece’s bank rescue fund by issuing contingent convertible bonds (CoCos), saving about 150 million euros annually, officials at National Bank said.

The deal will also help the Greek lender to reduce its dependence on emergency liquidity assistance from the Greek central bank, which is more costly than normal lending, the officials said.

“Finansbank’s sale confirms the commitment made by National Bank’s management to implement the bank’s restructuring plan consistently, as well as its long-term strategy to use its capital effectively to the benefit of the Greek economy,” National Bank said in a statement.

The transaction had been approved by the board of directors of both banks and the General Council of Greece’s bank rescue fund -- the Hellenic Financial Stability Fund -- QNB said in a statement. (Reporting by Tom Arnold and Angeliki Koutantou, editing by Sami Aboudi and Subhranshu Sahu)