The privatisation of Sumerbank through a sale of 100 per cent of its shares to local textile concern Ipeks Iplik Tekstil Sanayi for $103.4 million was endorsed by the High Board of Privatisation on 11 September. This is the first denationalisation of a state bank in a privatisation programme embracing most state institutions.

The sale has generated more confidence in the privatisation programme. The government’s Privatisation Administration (OIB) recently deferred several large deals originally scheduled for 1995 into 1996, including refineries and a refined products distributor.

However, the OIB’s head, Ufuk Soylemez, claims the government can achieve most of a revised target of $2,700 million in privatisation receipts for the year (MEED 1:9:95). Conclusion of the sale of a state magnesite producer for around $108 million is expected soon (MEED 8:9:95).

Sumerbank’s purchaser, a subsidiary of the local Garipoglu group of companies, had submitted the highest of three bids. Three previous attempts to sell off the institution had failed, most recently in the first quarter.

Under the terms of the transaction, Iplik will pay half the price in cash, and the second half in two instalments spread over two years. Interest of 2.5 per cent over the London interbank offered rate (Libor) will be charged on the second half.

Sumerbank is a medium-size institution with 49 branches countrywide. Its net profits for the first half amounted to TL 287,000 million ($6.6 million), and for 1994 were TL 1.048 million million ($27.6 million). Its assets increased during the first half to TL 5.924 million million ($137 million), and its paid-in capital amounts to TL 1.6 million million ($37.2 million).

A framework privatisation law passed in November 1994 envisages the privatisation of all state banks, with the exception of the central bank, Ziraat Bankasi (Agricultural Bank), Halk Bank and Turk Eximbank. The next in line for sale is likely to be Etibank, another medium-size institution, although so far the OIB has not yet set a date.