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Financials

Bank regulator asks German unit of Turkey's Ziraat about balance sheet -sources

ISTANBUL/FRANKFURT, July 29 (Reuters) - Germany’s financial watchdog BaFin is in talks with Ziraat Bank’s German unit over concerns about some loan transactions and the bank’s balance sheet, three sources told Reuters.

“There are some ratios which don’t match in the bank’s balance sheet. BaFin is questioning the reason for these imbalances,” said a source close to the matter, speaking, like the others, on condition of anonymity.

BaFin and Ziraat Bank both declined to comment on the matter.

Ziraat Bank International AG operates in Germany as a subsidiary of state-owned Ziraat Bankası, Turkey’s largest by assets. It operates in seven cities including Berlin.

A Turkish government official with knowledge of the matter said the German regulator was “uneasy about some transactions” by Ziraat.

“They think that there is some imbalance related to some data... These subjects are being discussed. We expect these problems to be solved in the end,” the official said, without giving further details.

Sources said talks are ongoing. If they fail, the regulator has several options, one source with knowledge of the matter said: “BaFin may prohibit the bank from making large-scale loans, send a special inspector to review what has been done, or limit the bank’s few business areas.”

However, another banking source said it was unlikely that BaFin would resort to such actions against the bank, and the two institutions will probably agree a solution.

BaFin has also not approved the appointment of Ziraat Bank’s proposed general manager in Frankfurt, the sources said, but they added this was because the person did not meet some requirements and was not directly related to the other concerns.

BaFin and Ziraat Bank also both declined to comment on that matter. (Reporting by Ebru Tuncay in Istanbul and Patricia Uhlig in Frankfurt; Additional reporting by Orhan Coskun in Ankara; Editing by Dominic Evans, Kirsten Donovan)

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