TEHRAN, Dec 10: Iran will in the next months float shares in Bank Mellat on the stock market, making it the first state-owned bank to follow a privatisation plan aiming to reduce state ownership, officials said on Monday.

“We will probably start by quoting 5 per cent of the bank’s shares by the end of the current year (March 2008) to figure out the price of shares,” the managing director of Bank Mellat, Ali Divandari, told reporters.

The privatisation drive -- announced last year by supreme leader Ayatollah Ali Khamenei -- envisages selling off 80 per cent of state-owned stakes in companies in the banking, media, transportation and mineral sectors.

The base price of the shares, which are also open for purchase by foreign investors, will be decided by Iran’s Privatisation Organisation. They will be floated on the Tehran stock exchange.

“We have held talks with foreign investors from Middle East and Europe who have voiced readiness to buy” shares, Divandari said, without identifying the institutions.

The sale of 80 per cent of the bank’s shares under the privatisation plan would take place over a three-to-four-year period, said an official, who asked not to be named.

The privatisation drive is in line with Article 44 of Iran’s constitution which refers to the public and private sectors of the economy and speaks of private ownership in industry, agriculture and services.

The state currently has a grip on more than three-quarters of the Iranian economy.

Bank Mellat, the second largest bank in the country in terms of capital, was slapped with US sanctions in late October for providing banking services for Iran’s nuclear entities.

The United States has also been stepping up pressure against the entire Iranian financial system for a year, pushing European and Asian banks to cut their ties with Iran.

But Divandari insisted Bank Mellat had no problems. “We voluntarily cut off our dollar transactions at least a year ago... in order to reduce the magnitude of these problems.—AFP