Citigroup Inc. confirmed Monday that it has applied to buy a majority stake in Poland's Bank Handlowy SA.

It would be the biggest foreign banking acquisition by Citigroup or its predecessor Citicorp.

A Citigroup spokeswoman in New York declined to elaborate on the application, which the Polish government disclosed nearly two weeks ago.

According to news reports from Warsaw, Citigroup could wind up paying as much as $840 million for a 75% stake in Handlowy, more than five times what it paid for Mexico's Banca Confia two years ago.

Though the U.S. company has studied several acquisitions in recent years in countries such as Thailand, it has so far failed to buy anything other than Confia. It lost a bid for Poland's Banka Kasa Opieki two years ago to Italy's Unicredito and the German insurance company Allianz.

Poland has a small but dynamic banking system, with about $100 billion in assets. Foreign banks and investors hold majorities in 27 Polish commercial banks. The government owns majority stakes in 15 commercial banks, which hold roughly half of all banking assets in the country. U.S. banks and investors, including Ford Motor Co. and General Motors Corp, Citigroup, GE Capital, and Bank of America, hold majority stakes in nine Polish banks.

Citigroup's bid for Handlowy pits it against Germany's Commerzbank AG, which already owns a majority stake in BRE Bank SA. The Polish government is said to be reluctant to let a Commerzbank buy control of Handlowy, fearing that would give the German bank too big a share of the Polish market.

Acquiring 130-year-old Handlowy and its 15,000 corporate clients and $2.3 billion of corporate loans would be a major coup for Citigroup, which has been trying for several years to expand a limited network of branches in Poland.

As part of the bid for Handlowy, Citigroup is expected to buy out J.P. Morgan & Co, Swedbank AB, and Zurich Insurance, which own a combined 24%. The Polish Treasury owns 6%; PZU, a state-controlled insurance company, owns 9.9% plus convertible bonds that would give it an additional 23.5% stake.

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