Russia's Sberbank on Friday clinched its largest deal, buying Turkey's DenizBank for 2.8 billion euros ($3.5 billion), expanding its footprint in emerging Europe and diversifying away from a home market that it dominates.

State-controlled Sberbank, Russia's largest bank, and Denizbank's owner Dexia entered exclusive talks two weeks ago after the latter rejected a bid from Qatar National Bank as too low.

The deal should close by the end of 2012, DenizBank said. The final price will be based on prevailing exchange rates and is expected to reach 7.09 billion lira, or 3.09 billion euros.

The acquistion will push Sberbank deeper into emerging Europe after its 505 million euro ($629 million) purchase of regional player VBI from Austrian lender Volksbanken AG , agreed in February.

Franco-Belgian Dexia, forced to divest businesses after its state rescue by Belgium, France and Luxembourg last October, is left only needing to find a buyer for its assets management arm to complete its conversion from lender to "bad bank" holding.

Belgium, which is a Dexia shareholder and its largest provider of funding guarantees, had been looking to raise 1.5 times DenizBank's book value of 4.9 billion Turkish lira, or almost $4 billion.

People familiar with the negotiations had previously said that Sberbank was offering between $3.3 billion and $3.7 billion.

Sberbank managed to push down the price of its VBI deal by 80 million euros from the original 585 million purchase price. A source told Reuters on Thursday Russian lender will try to cut the price on Denizbank as well.-Reuters