The BIS announces the withdrawal of all shares held by its private shareholders against payment of CHF 16,000 per share
8 January 2001
The Extraordinary General Meeting (EGM) of the Bank for International Settlements (BIS), held today in Basel, approved the proposal of the Board of Directors announced on 11 September 2000 to restrict the ownership of BIS shares exclusively to central banks. All BIS shares currently held by private shareholders are being withdrawn against payment of compensation of CHF 16,000 (approximately USD 10 000 at today's exchange rate) per share.
Following this decision, BIS shares, trading in which was suspended today, will definitively cease to be negotiable and will be delisted in accordance with the procedures in force on the markets concerned.
Further information on this transaction can be found on the BIS's website (www.bis.org). Requests for information may also be addressed to the BIS:
|Tel:||(+41 61) 280 8188 (general information)|
|(+41 61) 280 8167 (information for shareholders)|
|Fax:||(+41 61) 280 9039|
Decision to withdraw the shares
The Extraordinary General Meeting (EGM) of the Bank for International Settlements (BIS), held today in Basel, approved the proposal of the Board of Directors announced on 11 September 2000 to restrict the ownership of BIS shares exclusively to central banks and to withdraw all BIS shares currently held by private shareholders against payment of compensation of CHF 16,000 per share. The EGM accordingly adopted amendments to Articles 6, 12 and 15 to 18 of the Statutes of the BIS and a new Article 18A containing provisions relating to the withdrawal. The text of the amended Statutes can be found on the BIS website (www.bis.org).
The operation was publicly announced on 11 September 2000, when the Board of Directors of the BIS proposed that the right to hold BIS shares be restricted, in future, exclusively to central banks and that all privately held shares be withdrawn against payment of compensation of CHF 16,000 per share. After re-examination, the draft decisions and the proposed text of the necessary amendments to the Statutes were approved by the Board of Directors on 18 December 2000 and placed on the agenda of the EGM held today.
Rationale for the transaction
The BIS is an international organisation whose principal object is to promote cooperation among central banks and thereby to contribute to international financial stability. Unlike a commercial bank, the primary objective of the BIS is not to maximise the return on the financial investment of its shareholders but rather to utilise its resources in fulfilling its public interest mission. The restriction of its shareholdership solely to central banks is therefore necessary to enable the BIS better to attain these objectives, all the more as the existence of a small number of private shareholders whose interest is essentially financial is no longer in conformity with the international role and future development of the organisation.
Compensation payable to the private shareholders
In accordance with the proposal of the Board of Directors of the BIS, the amount of compensation payable to the private shareholders was fixed by the EGM at CHF 16,000 per share. This amount is significantly higher than the price at which BIS shares were traded for a number of years prior to the announcement of the transaction: in particular, it represents a premium of 95%, 105% and 155% over the closing prices for the American, Belgian and French issues respectively on 8 September 2000 (the last trading day before the announcement of the proposed transaction). The price was determined on the basis of the valuations carried out by JP Morgan & Cie SA and the confirmation of the fairness of that price provided by the independent experts Arthur Andersen.
JP Morgan & Cie SA were charged by the Board of Directors of the BIS with conducting a valuation of the BIS shares held by private shareholders. On the basis of the valuation methods and recommendations of JP Morgan & Cie SA, the Board of Directors adopted a price of CHF 16,000 per share. In early December 2000, the Board of Directors asked JP Morgan & Cie SA to review their valuation in the light of the most recent market developments. JP Morgan & Cie SA confirmed their initial report, and in particular that under current market conditions, their calculations produced an equivalent result to the earlier valuation used by the Board to determine the compensation.
Arthur Andersen, acting as independent experts, confirmed that the valuation methods chosen were appropriate and that the compensation of CHF 16,000 per share was fair.
The conclusions of the work undertaken by the two firms of experts were summarised in the note to private shareholders of 15 September 2000 (which can be viewed on the BIS website).
The shares being withdrawn
The issued capital of the BIS is divided into 529,165 shares, of which 456,517 (or 86.27%) are currently held by central banks, which moreover exercise all voting rights.
The 72,648 shares (or 13.73%) that are held privately (ie not by central banks) stem from three non-fungible issues traded up until 5 January 2001 on two exchanges:
- 33,078 shares of the American issue, traded on the SWX Swiss Exchange in Zurich, security no 131553;
- 16,415 shares of the Belgian issue, also traded in Zurich, security no 131547;
- 23,155 shares of the French issue, traded on the Paris stock exchange (ParisBourse S.A.) security no 911085.
Practical and legal aspects of the transaction
Pursuant to Article 18A(1) of the Statutes, the registration of all private shareholders in the BIS's books has been cancelled. In place of their shares, these shareholders have acquired the statutory right to payment of compensation of CHF 16,000 per share. BIS shares are henceforth no longer traded on the Paris and Zurich exchanges and will be delisted in accordance with the procedures on these exchanges.
All private shareholders of the BIS will shortly be receiving a note setting out the details of the transaction, together with a "Declaration and payment instructions" form for particulars relating to payment of the compensation. This form should be completed and returned to the BIS to enable the compensation to be paid at the earliest possible date.
The transaction has been carried out in accordance with the BIS's special status under international law as laid down in particular in the Hague Agreement concerning the BIS of 20 January 1930, the Bank's Constituent Charter and its Statutes. This special status provides inter alia that disputes concerning the interpretation or application of the Bank's Statutes, in particular between the Bank and its shareholders, must be referred for final decision to the Arbitral Tribunal provided for under the Hague Agreement of 20 January 1930.
This press release is available in English, French and German from the Bank for International Settlements, PO Box, CH-4002 Basel, Switzerland, as well as on the Bank's website (www.bis.org). The latter also provides more detailed information on the transaction (see in particular the press release of 11 September 2000 and the note to private shareholders of 15 September 2000).