UPDATE 1-EBRD to sell Turkey bourse stake after former Halkbank exec named CEO -sources

Orhan Coskun

CEO -sources@ (Adds comments, details on Atilla, Halkbank, EBRD)

ANKARA, Oct 30 (Reuters) - The European Bank for Reconstruction and Development will sell its 10% stake in the Istanbul exchange after a former Halkbank executive who was jailed in the United States was named as the bourse's CEO, two people familiar with the plans said.

The EBRD has told Turkish authorities of its decision to sell as soon as possible, the two sources told Reuters on Wednesday. The EBRD declined to comment. Borsa Istanbul was not immediately available to comment.

Last week Reuters reported that the EBRD opposed Ankara's decision to name Hakan Atilla, the former Halkbank executive, as chief executive of Borsa Istanbul.

The sources, who requested anonymity, said the appointment was the latest concern EBRD has had with the direction of the exchange operator and it convinced it to sell its stake, the second-biggest behind that of Turkey's sovereign wealth fund.

"The EBRD informed the Turkish authorities that, because of Hakan Atilla, it will sell its entire 10% stake as soon as possible," one of the sources said.

Atilla was sentenced in 2018 to 32 months in a U.S. prison following his conviction for helping Iran evade U.S. sanctions. At the time, Turkish President Tayyip Erdogan condemned the case as a political attack on his government.

Atilla was released and returned to Turkey in July, and last week Finance Minister Berat Albayrak, Erdogan's son-in-law, named him CEO of the exchange.

After the appointment, the EBRD's managing director for communications, Jonathan Charles, said the EBRD was not consulted on the move and "has the right to exit its investment."

Separately, on Oct. 16, U.S. federal prosecutors charged Halkbank with taking part in a multi-billion-dollar scheme to evade U.S. sanctions on Iran. The state-owned lender said the charges were an extension of U.S. sanctions over Turkey's military incursion in Syria.

(Additional reporting by Jonathan Spicer; Editing by Dominic Evans and Timothy Heritage)