The rejection of the highest bid, which came from National Bank of Greece and valued the bank at $2.05bn, or 4.1 times book value, was taken by analysts as a sign that governments are expecting far too much from bidders.

A financial adviser who has worked on privatisation programmes in the region says: “Banks have been going for crazy multiples, but with the current financial crisis banks have become much more wary of overpaying.”

The most significant achievement in the region has been the sale of Libya’s Wahda Bank, which was sold at a multiple of 9.4 times book value. The last Egyptian banks to be privatised, Bank of Alexandria and Al Watany, went for 6.1 and 5 times book value respectively.

However, analysts at Egyptian investment bank Beltone Financial have said they view the offer from National Bank of Greece as implying a fair valuation.

Mohamed Barakat, chairman of the Banque du Caire, says “The auction did not reach the price set by the evaluating committee.”

He adds that the intention to privatise the bank remained, but there was no timetable to restart the process.

Of the four other shortlisted bidders, the two favourites, Standard Chartered and Samba, were disqualified for undisclosed reasons. Mashreqbank bid $1.3bn and a consortium of Arab Bank and Arab National Bank bid $1.2bn.