Investors remain nervous over BPH-Pekao merger

If passed by the Sejm, this would remove the final obstacle against UniCredito taking over bank BPH within the framework agreed with the Polish government. The bill envisages allowing UniCredito to transfer part of BPH assets to Pekao, thus lowering BPH's capital. In return, BPH shareholders will be granted Pekao shares, to a sum equivalent to the value of the transferred assets. The market reacted negatively to the news and BPH shares, which are already depreciated, fell further, and this was only reversed when BPH president announced that this year's Q1 results are likely to be much better than the bank's 2005 Q1 results. According to the Commercial Code, small shareholders can demand that Pekao buy back their BPH shares if they find the BPH to Pekao shares conversion ratio unfair. (Parkiet, p.1) J.L.