DUESSELDORF, Germany - Citicorp's German subsidiary said it is setting up a holding company to make it easier to comply with that country's new capital requirements.
The holding company, Citibank Beteiligungen, will begin operations on Saturday. It will be parent of three units: Citibank AG; Citibank Privatkunden, a private banking unit; and Citicorp Kartenservice, a credit card company.
The minority shareholders of Citibank Privatkunden, who own a 2% interest, will have the option of taking a cash payment of 1,120 marks ($784) per share or swapping their holdings for shares in Citibank Beteiligungen.
A considerable increase in Citibank Privatkunden's business was also behind the reorganization of its German units, Citicorp said.
It would raise nominal capital of Citibank Privatkunden to more than one billion marks (about $700 million) from 632 million ($442 million) to cope with the new regulation, which would limit credit extensions to 12.5 times capital from 18.
A spokesman at Citibank AG said trading in Citicorp Privatkunden's stock would be resumed in Duesseldorf today. Trading was suspended Monday pending the reorganization announcement.