7th APRIL 2015 - Vol.XXXVIII No.018
Business News

Iran planning first banking stake sale

TEHRAN: Iran plans to offer five per cent of Bank Mellat to private investors on Wednesday, a Tehran Stock Exchange official said yesterday.

He said the sale was aimed at determining the level of demand and the share price ahead of the possible sale of more Bank Mellat shares if there was interest from buyers.

The plan comes in spite of a sharp fall in Iran stocks over the last six months.

Bank Mellat, Iran's second-largest bank after state-owned Bank Melli, is estimated to have a share of around 15pc of the country's banking industry.

"What we were told is (that the share launch will happen on) Wednesday," the official said.

Share prices in Iran, the world's fourth-largest crude producer, have tumbled in line with plunging oil prices. Market capitalisation is down by more than 30pc from a record $70 billion in August.

Fathali Khoshbin, who heads Bank Mellat's privatisation unit, earlier said the flotation would take place soon, but he did not give an exact date.

He told state radio on Wednesday that an additional 15pc of the bank would be offered by the end of the 2009-10 Iranian year, which begins next month.

Iran's oil-dependent economy is dominated by the state but the government has been seeking to speed up privatisations after an article in the constitution, which decreed that core infrastructure should remain state-run, was overturned.

The Tehran Stock Exchange official said he expected mainly domestic investors to take part in Wednesday's share sale.

"Even in these conditions, if the price is acceptable, there are buyers," he said, adding he did not yet know the price the Bank Mellat shares would be offered at.

London-based risk consultancy AKE representative Karabekir Akkoyunlu said developments in the privatisation programme were likely to be crucial for Iran, even though the issue had been overshadowed by its nuclear row with the West.

"There is no question that the state's heavy involvement in nearly all the key sectors has been an obstacle to Iran's economic development," he said.

"Most of Iran's state-controlled giants are in the red."

Iran's Finance Minister Shamseddin Hosseini hailed Bank Mellat as a "trailblazer" in the banking industry.

Bank Mellat's managing director Ali Divandari said it had 1,888 branches in Iran as well as offices in countries such as Turkey and Armenia.

Hosseini said two other state banks - Tejarat and Saderat - were next in line to be partly sold off but he did not say when this might happen, reports said.

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