Although the privatization process began in Turkey in the early 1980s, it has accelerated recently as a result of the IMF and World Bank-sponsored economic reform program. Within the framework of this program, a decree (the decree) was enacted in July to start the privatization of Türkiye Vakiflar Bankasi (Vakif Bank). This privatization is the first step in what is expected to be a radical restructuring of the public banks in Turkey.
Prior to the issuance of the decree, Vakif Bank's shares were divided into three groups: (i) the General Directorate of Foundations (GDF) held 55% (class A shares); (ii) foundations existing since the Ottoman Empire held 20% (class B shares); and (iii) individuals and legal entities held 25% (class C shares). During a subsequent share capital increase of the bank, the holders of class B shares did not exercise their preemption rights, so that 19.72% of their class B shares were transferred to the GDF. Consequently, the GDF now holds these additional class B shares, equaling a total of 74.72% of all shares.
According to the decree, the GDF's class B shares will be sold by public offering. However, no decision regarding the sale of class A shares, the authority for which falls under the Council of Ministers, will be made before completion of the sale of class B shares. According to the press conference held by minister Yüksel Yalova in June, the goal of offering the class B shares to the public in the first stage of the privatization process is to achieve the highest economic value possible for these shares, and to establish the real value of the class C shares.
There is a 60-day grace period after the publication date of the decree in the Official Gazette in which it may be cancelled by initiation of a lawsuit in the Constitutional Court by the president or certain political parties. However, minister Yalova expects the public offering to take place in October, and negotiations with intermediary institutions to manage the offering are underway.
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