The past six months saw a drop of some 30% in the Iranian stock market's value.
The government offered investors a total of 656 million of its bank shares. The price of each share was set at 1,050 Iranian rials (about 12 American cents). Thus, the overall value of the shares offered for sale reached about $79 million.
According to the original plan, an additional 10% of the bank's shares were to be offered for sale later this year, but the plan may not be materialized due to the unenthusiastic response of investors, who only purchased about half of the shares.
Bank Mellat is one of Iran's biggest commercial banks. It was established at the end of 1979 following the nationalization of 10 local banks. The bank has a chain of 1,800 branches in Iran and other countries.
The main reason for the privatization's failure was the timing, as Tehran's stock exchange has been crashing in the past few months in light of the drop in the prices of oil in the global market.
In January, for example, only $202 million were traded on the Iranian stock exchange, a 74% decline compared to December 2008. The market value at the end of last month reached $48.61 billion, a drop of close to 1% compared to December 2008, when its value stood at $49.94 billion.
Dr. Gil Feiler is founder and managing director of Info-Prod Research (Middle East) Ltd , and Doron Peskin is head of research