Citibank's surplus Handlowy shares may undermine price

Citibank has increased its stake in Bank Handlowy to 87.3%, which represents 61.4 million of the company's shares. Currently, only a little over 5% of Handlowy's shares are being traded on the bourse. This means a sharp drop in its free-float. Handlowy's share-turnover amounted to only zl. 284,000 on Friday. With such a low turnover, rapid changes in the price of Handlowy shares is possible, but everything is now dependent on the decision of Citibank. For now, Citibank is only allowed to hold 66% of voting shares, but is seeking permission to hold 75% of them. This means that Citibank will not need 13% of the shares which it owns. It will also gain more shares in the future due to the merger of Citibank Polska with Handlowy. "If Citibank decides to sell Handlowy's shares on the floor, it is possible the price of these shares will go down very rapidly,"said DI BRE Bank analyst Hanna Kedziora. It is thought Citibank will opt for an alternative route to dispose of the unnecessary shares. Possible options include finding a partner to slowly dispose of the unwanted shares, widening its program of Global Depository Receipts (GDR) or just keeping the shares, as it will be unable to sell them without a loss. (Parkiet, July 29-31, page 1, 7) M.M.