Egypt cancelled the auction of a stake in its third-largest bank saying bids were too low, rejecting a National Bank of Greece offer valuing it at $2.025 billion.

The government planned to sell up to 67 percent of Banque du Caire in Egypt's largest bank privatisation since it sold 80 percent of Bank of Alexandria in 2006.

"The auction did not reach the price set by the evaluating committee," Banque du Caire chairman Mohamed Barakat told a news conference. "The intention to sell the bank is still there but no timing has been decided," he added.

Egypt's government expected the sale of up to 67 percent of the lender to raise at least $1.6 billion, the amount it raised from the sale of the stake in Bank of Alexandria.

National Bank's bid would have yielded about $1.36 billion if it bought the full 67 percent on offer. Barakat refused to say how much the committee had valued the lender at. He said Egypt also cancelled a plan to offer 28 percent of the bank in an initial public offering on the Egyptian stock exchange after the auction.

Banking sources said the National Bank of Greece out-bid Dubai-based Mashreqbank, which valued Banque du Caire at $1.3 billion, and a consortium of Arab National Bank and Arab Bank Group, which valued it at $1.2 billion.

"You cannot value the bank at the market levels at the time of the sale of the Bank of Alexandria," a source at one of the five bidding banks said. "It (Banque du Caire) is not that strong and markets change."    

Egyptian investment bank Beltone Financial said in a note the Greek bank's offer was fair, being equivalent to a multiple of 4.1 times the book value of Banque du Caire.

"The offer prices were not as high as those for Bank of Alexandria, because of the difference in the financial position between both banks," it said.

"Before selling Bank of Alexandria the government fully cleaned up its portfolio of non-performing loans, trained the staff and renovated the bank's branches," it added.

Bank of Alexandria sold at 6.1 times its book value and another bank, Al Watany Bank of Egypt, was sold to National Bank of Kuwait at five times book value in 2007, the most recent Egyptian bank sale.

A board member at Banque du Caire told Reuters earlier that UK-based Standard Chartered and Saudi Arabia's Samba Financial Group were disqualified.

Samba said in a statement it sent a letter to the lead manager on June 22 before the deadline for the submission of final bids saying it would not take part in the bidding process. - Reuters