Citicorp's offer to exchange common stock for two outstanding issues of preferred stock attracted 44% of the eligible shares, the bank said Wednesday.

While the offer failed to win over investors holding a majority of the shares, analysts said the reception surpassed expectation - considering that preferred stock paying relatively high dividends was exchanged for common shares that pay none.

"It was not a terribly successful exchange offer, but it's better than we expected," said Lawrence Cohn, analyst with PaineWebber Inc.

"We're very pleased with the results," said Nancy Newcomb, senior corporate officer for funding at Citicorp.

Citicorp common stock rose 50 cents Wednesday to $19.75 on volume of 3.8 million shares in trading apparently related to the expiration of the exchange offer. One source speculated that the heavy volume may be related to traders covering short positions.

Ms. Newcomb said the bank did not have a specific target for the exchange, which expired Tuesday night.

Citicorp will issue 9.3 million shares of common stock for 1.7 million shares of two classes of preferred stock. About 5.4 million preferred shares were eligible for the exchange. Citicorp will save about $15 million in annual dividend payments as a result of the exchange offer.

About $237 million will be added to common equity, raising the bank's ratio of common equity to assets by 11 basis points, to 3.53%, using first-quarter figures, Ms. Newcomb said.

Citicorp also wanted the option of issuing more preferred stock. It was nearing the 25% cap on preferred stock that can be included in Tier 1 capital.

The exchange would not affect other major capital ratios since both common and preferred stock count as Tier 1 capital.

"It's a small step in the right direction," said Raphael Soifer, bank analyst with Brown Brothers, Harriman & Co. "But the amount of common equity they raised here is insignificant compared with their overall requirements."

The exchange had some big hurdles to clear, analysts said. A number said the premiums offered to the preferred stockholders were too low.

"It was a little bit cheap," said Paul Mackey, analyst with Dean Witter Reynolds.

"Our assumption initially was that there would be limited interest by institutional investors because they'd be exchanging an instrument with dividend yield [preferred stock] for one with no yield [common stock]," said another analyst.

Citicorp offered holders of its second series adjustable-rate preferred stock 3.72 shares of common stock, worth $72.50 when the offer was announced last month, for each of their shares. Holders of the third series adjustable-rate preferred were offered 4.4 shares of common stock, then worth $85.80, for each share of its third series adjustable-rate preferred.

When the offer was announced May 12, the exchange equaled a $5.29 premium for the second series stockholders and a $6.30 premium for holders of the third series.

While both offers were at premiums to the market values of the stocks, the offers were still below the original $100 par value of the two stocks.

Because Citicorp is able to retire the preferred stock at levels below the $100 par values, it realized a gain on the transaction. As a result the exchange offered increases Citicorp's common equity by $25.55 for each new share of common stock sold.

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