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Iran to start bank privatisation soon: minister

(Reuters)
Filed on May 22, 2007

TEHERAN - Iran plans to start privatising banks in a few months, Economy and Finance Minister Davoud Danesh-Jafari said on Tuesday, without giving details on which would be offered for sale.

The world’s fourth-largest oil exporter tried to revive stalled privatisation last year by ordering the stock market flotation of 80 percent of several firms, but said the upstream oil sector and key banks would remain in state hands.

“Privatising banks should start at the same time as (the privatisation of) other economic institutions,” Danesh-Jafari told state television.

“A few months from now, maybe three months, we would be ready to present the first shares of banks at the stock exchange,” he said.

Analysts see Iran’s planned privatisation programme as an attempt to breathe life into its uncompetitive and state-dominated industry, but say international fears over the country’s nuclear programme could deter foreign investors.

The United Nations has slapped two rounds of sanctions on Iran for refusing to halt sensitive nuclear work which the West believes is aimed at building atomic bombs. The latest steps included targeting Iran’s state-owned Bank Sepah.

The United States, which has led efforts to isolate the Islamic Republic, had earlier imposed sanctions on Bank Sepah and another state-run bank, Bank Saderat.

The head of the Teheran stock exchange, Ali Rahmani, SAID this year industries which will be privatised consist of 711 companies with a total value of $125 billion, including banks, insurance firms, telecommunications, mining and other sectors.

Forty percent of the shares would be transferred to low-income earners and the government would retain 20 percent, while the rest would be offered to foreign and domestic investors.

In a report in February, the International Monetary Fund said the private sector’s role in large-scale economic activity remained negligible. It said the planned privatisation programme had a “strong regional and social orientation”.


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