updated 4/3/2006 11:45:34 AM ET 2006-04-03T15:45:34

The National Bank of Greece announced Monday that it was buying a 46 percent stake in Turkey's Finansbank for $2.77 billion and would make a public offer to gain a controlling stake.

NBG said it would go ahead with a planned $3.62 billion rights issue to help pay for the acquisition. NBG, with assets of about $66.35 billion, is Greece's largest financial institution.

Finansbank is ranked fifth in Turkey by assets with $14 billion as of year end.

Takis Arapoglou, chairman and chief executive of NBG, said that with the deal, the Greek bank was "becoming a true regional player."

Shares in NBG were suspended from trading on the Athens exchange earlier Monday and Turkey's Finansbank AS stopped trading on the Istanbul Stock Exchange because negotiations were under way.

The deal is the largest overseas investment by a Greek company. And it's a major financial deal between traditional rivals, Greece and Turkey, which remain at odds over the war-divided island of Cyprus and territory in the Aegean Sea.

New York-based Citigroup Inc., the largest financial institution in the United States, had been said to be interested in Finansbank, too. Citigroup operates about two dozen branches in Turkey.

Copyright 2006 The Associated Press. All rights reserved. This material may not be published, broadcast, rewritten or redistributed.


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