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National Bank of Abu Dhabi (NBAD) says it plans to set up a greenfield operation in Turkey after giving up on hopes of finding an acquisition target there. The plan is another example of a wave of investment from the Gulf region into the Turkish banking sector.

"Turkey is a very important market for us," CEO Michael Tomalin said on April 24, according to Bloomberg. However, the second-largest United Arab Emirates lender has failed to find the right acquisition target. Hence it is applying to set up an office in Turkey, and plans to expand into the country "as a bank in trade finance, as a bank in capital markets, as an investment bank," Tomalin said.

NBAD plans to enter Turkey "with our corporate, wholesale model; in other words where we can intermediate trade flows and capital flows between the Middle East and Turkey," the CEO added.

"Turkey is a market where you have to be big if you are going to be in retail," he continued. The emirates bank did have an option to buy a Turkish bank with about 70 branches, he claims, but opted against the acquisition because it would have struggled to compete with local lenders that operate thousands.

Whilst European banks remain mired in crisis, Turkey's financial sector continues to hold one of the highest appeals in the world given the rapid economic growth, with large investors from other emerging markets in the region, as well as Russia, leading a rush for acquisitions and market share. That trend does little to depress Ankara's ambition to turn Istanbul into a global financial center.

In March, Commercial Bank of Qatar announced it had sealed a deal to buy a 70.8% stake in Alternatifbank - at two-times the book value. That high price reminded investors of a Fitch report released in January that suggested it expects to see an upturn in M&A among mid-sized Turkish banks this year, noting that Qatari banks in particular are likely suspects to make acquisitions. The country's biggest lender - the Qatar National Bank - expressed its interest in acquiring a top ten Turkish bank early this year.

Meanwhile, Russia's state-owned Sberbank this month clinched a deal to buy out the Turkish retail arm of US giant Citi, which is retreating in a cost cutting exercise. The Russian lender - which entered via an acquisition of Denizbank last year - is reported to have beaten off local banks Garanti and Fibabanka, as well as potential bidders from the Middle East and Arab countries.