PREPARING STATE-OWNED COMMERCIAL BANKS FOR PRIVATIZATION: INSTITUTIONAL TRANSFORMATION, CORPORATE GOVERNANCE, AND CAPITAL MARKET READINESS IN UZBEKISTAN

Abstract

The privatization of state-owned commercial banks represents a critical component of Uzbekistan’s banking-
sector transformation and its transition toward a more competitive, market-oriented financial system. The institutional,
financial, and managerial processes required to prepare state-owned commercial banks for effective privatization are
examined, with particular attention to corporate governance, asset quality, risk management, financial transparency,
digital transformation, ESG principles, and capital-market readiness. The study employs comparative and institutional
analysis, financial assessment, and case-study methods, with particular emphasis on the transformation experience of
Turonbank JSC. A conceptual framework for assessing the privatization readiness of state-owned banks is developed
across eight dimensions: financial stability, asset quality, corporate governance, risk management, digital transformation,
IFRS-based financial reporting and transparency, ESG readiness, and capital-market preparedness. The findings indicate
that successful privatization extends beyond the transfer of state ownership and requires comprehensive pre-privatization
transformation aimed at improving banks’ financial condition, strengthening corporate governance mechanisms, reducing
dependence on directed lending, enhancing transparency, and increasing investor confidence. A phased privatization
model combining strategic investor participation with a subsequent public offering is proposed as an approach to reducing
transition risks and creating conditions for sustainable private-sector participation. The experience of Turonbank JSC
demonstrates the importance of international financial standards, institutional transformation, enhanced risk management,
and international credit ratings in increasing investment attractiveness. The proposed framework can serve as an
analytical instrument for assessing the privatization readiness of state-owned banks in Uzbekistan and for designing more
transparent and economically efficient privatization policies