By Orhan Coskun, Ebru Tuncay and Tom Arnold
ANKARA/DUBAI (Reuters) - Emirates NBD could agree to buy Turkey's Denizbank within weeks, sources said, after intense lobbying by the Turkish bank to convince President Tayyip Erdogan of the benefits of the potential $5.3 billion deal despite a diplomatic rift.
Dubai's biggest bank, Emirates NBD (DU:ENBD) said it was in preliminary talks to buy Denizbank (IS:DENIZ) from Russia's Sberbank (MM:SBER) in January, but the plan has met resistance from Erdogan, four sources told Reuters.
While Erdogan does not have direct control over Turkey's banks, the president could potentially block any deal by telling the country's BDDK banking watchdog not to approve it.
Repeated efforts by Denizbank's chief executive to persuade Erdogan of the case for the takeover illustrate the president's important role in sealing major deals in Turkey.
Although it still requires approval, the deal is expected to be agreed in "the next few weeks", one of the sources said.
The BDDK did not respond to a request for comment.
Turkish relations with the Gulf states have been strained since Ankara stood by Qatar after the UAE, Saudi Arabia and others accused Doha of supporting terrorism, a charge it denies.
The United Arab Emirates, of which Dubai is part, also regards Erdogan's AK Party as a friend of Islamist forces it opposes across the Arab world and last week the UAE's foreign minister said it faced challenges from Iran, Israel and Turkey.
And earlier this month the Arab world's largest private broadcaster stopped showing Turkish television programs.
"I'm not saying this deal will fall through, but it wouldn't be realistic to say these developments are supportive of the negotiations," one senior official in Ankara said.
Emirates NBD, Sberbank and Denizbank all declined to comment, as did Erdogan's office.
POSITIVE IMPACT
Denizbank Chief Executive Hakan Ates has met Erdogan and other senior officials in Ankara over the past month in an attempt to convince them that the deal would be positive for Turkey's banking system, several sources said.
It was not clear how successful Ates, who declined to comment, had been, but one source said there was an acknowledgement in Ankara that Turkey's tensions were with Abu Dhabi, not Dubai - meaning with the UAE's policy makers, not the region's main commercial and financial hub.
The cities are run by two close, but separate, families.
"There is a lot of scepticism about the Emiratis but investment is something else," said the source.
Denizbank is Turkey's ninth-largest lender by assets, making it a relatively small player in a fast-growing market. Sberbank, which is selling Denizbank as part of a broader regional strategy shift, paid around $3.5 billion for it in 2012.
Shares in Denizbank have risen around 70 percent this year, helped by news of the talks, giving it a $5.3 billion market value.
Emirates NBD, which previously acquired BNP Paribas' Egyptian business, has been scouting for opportunities in the Turkish banking sector for several years as part of its international expansion.