ADR trading volumes reach new highs during first nine months, climbing 45% over same period last year, Citibank reports.

NEW YORK--(BUSINESS WIRE)--Oct. 2, 1995--Trading volumes for American Depositary Receipts (ADRs) hit new all-time highs for the first nine months of 1995, Citibank reported today.

ADRs are U.S. securities that represent shares of a non-U.S. company and trade in the U.S. financial markets similar to the way ordinary shares of U.S. companies do.

While there was continued heavy trading of ADRs by investors, the pace of new ADR offerings by companies outside the U.S. remained below last year's record levels, primarily a result of the widespread price declines that occurred in markets around the world earlier in the year.

Trading Volumes

The total number of ADR shares traded on U.S. stock exchanges (NYSE, Nasdaq and AMEX) during the first nine months jumped to 7.5 billion, representing an increase of 45% over the same period last year. The dollar value of first nine months trading volumes was $200.5 billion, a 9% increase over 1994. Citibank also reported that its ADR issuance and cancellation volumes were up during this period versus 1994.

"The strong trading activity we're seeing in ADRs is due in large part to the impact of last year's record number of companies who launched new ADR facilities," said Ralph Marinello, Citibank's director of ADR broker sales and services. These programs are maturing and generating increasing volumes. Also, regulatory and tax changes in certain local markets are making it more advantageous in some instances to hold ADRs versus the local ordinaries, and we saw a strong example of this in Latin America recently."

The number of companies choosing to launch new depositary receipt programs during the first three quarters remained below last year's record pace. At the end of the first nine months, 121 companies from 33 countries had launched new programs. Citibank continued to win a substantial share of the market with the bank acting as depositary for 40% of the issuers launching new programs during the period.

"Early in the year, potential ADR issuers were taking a wait and see approach, looking for some price recovery in their local markets before making the decision to come to the U.S.," said Mark A. Bach, Citibank's global sales director for depositary receipts. "Recently, however, the pipeline has been filling up and there's quite a long list of deals coming to market in the fourth quarter. Europe continues to have the biggest pipeline, but we're also seeing a reawakening in Latin America, particularly in Brazil, Chile and Argentina. In Asia, we expect Korea and Taiwan will see strong deal flow in the coming months."

Europe was the one region where the number of companies launching new ADR programs increased over the same period last year. These gains were offset by significantly fewer offerings out of Latin America and Asia for the first nine months versus the same period last year.

The most active issuing market during the first nine months was the UK -- with 22 companies establishing new depositary receipt programs. Other top markets where companies launched new programs were: Hong Kong (21); South Africa (10); Germany (7); Korea (5); and The Netherlands (4). Additional countries where companies established programs included: Australia, Austria, Brazil, Chile, China Columbia, Czech Republic, Finland, France, Ghana, Hungary, India, Indonesia, Ireland, Italy, Luxembourg, Mexico, Norway, Peru, Portugal, Singapore, Slovakia, Sweden, Switzerland, Taiwan, Trinidad and Turkey.

Capital Raised Through Depositary Receipts

Of the companies launching new depositary receipt programs, 54 used them to raise $4.9 billion in new capital. Fifty-eight percent of the capital raised came out of Europe; 33% from Asia; 5% from Africa and 4% from Latin America. The vast majority of capital raisings (84%) took place during the second and third quarters. Companies using ADRs to fund privatizations accounted for 22% of the capital raised, or $1.1 billion.

"Given the depressed state of world markets early in the year, many companies decided to postpone new offerings," said Bach. "However, we're now beginning to see a resurgence in depositary receipt programs that have a capital raising component, and we expect to see equity raisings through ADRs to come out of markets such as Brazil, Taiwan, Indonesia, Germany and Mexico, among others."

At the end of the third quarter, there were 1,506 depositary receipt programs in existence. Some 621 programs represent issuers in Asia/Pacific; 567 in Europe; 196 in Latin America and 122 in Africa. Banking and electronics were the most active industry segments with 11 companies from each of these segments launching new programs. They were followed by the telecommunications industry, which had nine companies launching new programs.

Citibank, which serves over 500 depositary receipt programs worldwide, began offering depositary receipt services to clients in 1928 and has been a market leader as well as the top market innovator in recent years. Citibank established the first Rule 144-A ADR facility, the first Global Depositary Receipt (GDR) and the first Side-by-side Depositary Receipt among other facilities. Last year, Citibank helped more companies launch exchange-listed and private placement depositary receipt programs than any other bank. With a local presence in 95 countries and unparalleled strength in delivering on-line information through its proprietary systems and network, Citibank is uniquely qualified to support the funding needs of companies around the world.

CONTACT: Citibank, N.A. New York 

Jarvis Cromwell, 212/657-0195 or 212/657-7517 (fax)