* Deal financed by QNB’s own funds

* Latest overseas acquisition by QNB

* Deal implies price-to-tangible book value of around 1

* NGB will use proceeds to pay back state aid (Adds additional detail on pricing, CEO quote, context)

DUBAI/ATHENS, Dec 22 (Reuters) - Qatar National Bank (QNB), the Gulf Arab region’s largest bank, has agreed to buy Turkey’s Finansbank from National Bank of Greece for 2.7 billion euros ($2.95 billion), as it steps up its search for larger markets overseas.

The Greek bank had to put its Turkish subsidiary up for sale to plug a capital shortfall identified by European Central Bank (ECB) stress tests in October.

Deal-hungry QNB, half-owned by Qatar’s sovereign wealth fund, has previously set out ambitions to become the largest bank in the Middle East and Africa by 2017. It had said it was interested in buying Finansbank in October.

“This transaction is a significant milestone in QNB’s vision to becoming a MEA [Middle East, Africa] icon by 2017 and a leading global bank by 2030,” QNB Chief Executive Ali Ahmed al-Kuwari said in a statement on Tuesday.

As part of its aim to overtake the region’s top lender, Africa Standard Bank, it bought Societe Generale’s Egyptian business for $2 billion in 2013, and last year acquired a 23.5 percent stake in pan-African lender Ecobank International.

Finansbank is the fifth largest privately owned bank by assets, deposits and loans in Turkey and has one of the highest capital adequacy ratios among Turkish banks.

National Bank of Greece’s plan to sell down its Turkish business faced a series of hurdles as elections in both countries earlier this year rocked the markets.

NGB, 40 percent owned by the country’s bank rescue fund, said the sale price implied a price-to-tangible book value of around 1, representing a premium to the average market value of Turkish banks.

The Greek bank will use the proceeds to pay back 2 billion euros of aid from the Hellenic Financial Stability Fund, cutting its annual costs by 150 million euros. It will also reduce its reliance on the more costly emergency liquidity assistance from the Greek central bank.

The sale will boost National Bank’s core equity Tier 1 ratio by 600 basis points to 19.6 percent, “the highest among peers”, it said.

QNB said it will finance the purchase of the 99.81 percent stake through its own funds and will remain strongly capitalised after the acquisition. The bank had a total capital adequacy ratio of 14.0 percent at the end of September.

The closing of the transaction, which is subject to regulatory approval, is expected to be complete in the first half of 2016, QNB said.

The deal has been approved by the board of directors of both banks as well as the General Council of the Hellenic Financial Stability Fund, QNB said. (Reporting by Tom Arnold in Dubai and Angeliki Koutantou and George Georgiopoulos in Athens, editing by Sami Aboudi and Louise Heavens)