Bank Handlowy Mails Letter to Shareholders Discussing Benefits of Merger With BRE Bank.

WARSAW, Poland--(BUSINESS WIRE)--Nov. 3, 1999--

Bank Handlowy w Warszawie SA (BHWZ PW) announced today that it mailed a letter to Bank Handlowy shareholders from Cezary Stypulkowski, President and Chief Executive Officer, providing an update on the progress to date and discussing the benefits of Bank Handlowy's proposed merger with BRE Bank SA (BRE PW). The complete text of the letter follows:

"Dear Fellow Shareholders:

I am writing to you on behalf of the Management Board of Bank Handlowy w Warszawie SA. The purpose of this letter is to update you on the progress to date on our proposed merger with BRE Bank SA and to discuss the benefits of this combination for all Bank Handlowy shareholders.

PROGRESS TO DATE -0-

--   Bank Handlowy's Supervisory Board has approved the merger with
     BRE at an exchange ratio of 2.4

--   Goldman Sachs & Co. has rendered its opinion that the 2.4
     exchange ratio is fair, from a financial point of view

--   The Polish Central Bank's Supervision Committee and the
     Anti-Monopoly Office have approved the merger

--   KPMG has completed its due diligence on BRE's financial condition
     and has rendered its opinion in support of the merger

--   White & Case has completed its due diligence on BRE's legal
     condition and has rendered an opinion confirming that there are
     no significant legal risks related to the planned merger

--   Oliver Wyman & Company has completed its assessment of BRE's risk
     management systems and has rendered its opinion in favor of the
     merger

--   The Extraordinary Meeting of Bank Handlowy Shareholders to
     approve the merger has been scheduled to take place on December
     9, 1999.

-0-

THE REVISED EXCHANGE RATIO OF 2.4 REPRESENTS AN ATTRACTIVE

OPPORTUNITY FOR BANK HANDLOWY SHAREHOLDERS

On October 23, 1999, the Supervisory Board of Bank Handlowy approved the merger with BRE Bank at an exchange ratio of 2.4 shares of Bank Handlowy for each share of BRE. We continue to believe that this transaction is the best alternative for all Handlowy shareholders and presents a compelling financial opportunity.

The final exchange ratio is based on various standard methodologies borne out by the relative contributions of both banks to the new institution and the work of several internationally renowned institutions. In making its determination, the Supervisory Board relied upon, among other things, the work of Goldman Sachs & Co., KPMG, White & Case and Oliver Wyman & Company. Goldman Sachs provided to the Supervisory Board an independent opinion as to the fairness, from a financial point of view, on the terms of the transaction. KPMG and Oliver Wyman & Company, who were retained to conduct due diligence on the financial condition of BRE and conduct an assessment of BRE's risk management systems, respectively, have completed their due diligence and have rendered opinions in support of the merger. White & Case, retained to conduct due diligence on BRE's legal condition, has completed its work and rendered an opinion confirming that there are no significant legal risks related to the planned merger.

THE MERGER WITH BRE WILL ENABLE HANDLOWY TO COMPETE MORE

EFFECTIVELY AND PROFITABLY IN AN EVOLVING MARKET

Throughout the world, the effects of greater foreign competition, a more stable macroeconomy and lower interest rates, have created much tougher conditions for banks to operate in. The same factors have significantly changed the banking environment in Poland from what it was even two years ago. These changes will likely continue at a further accelerated pace. Such an environment favors institutions which can benefit from economies of scale, employ leading edge technology, hire and retain the best people, and meet the evolving needs of their clients.

Since our privatization two years ago there has been much progress made at Bank Handlowy. We have improved our risk management; rolled out a high technology retail banking operation; increased our efficiency; broadened our customer base and expanded our points of contact with our clients. More still remains to be done. The merger with BRE will help us to do it better and faster.

The new Bank Handlowy starts with important credentials. Our new Handlowy management team will consist of Poland's most experienced bankers and managers. The bank will be number one in all of its core businesses and serve a majority of the high net worth individuals; its clients will be virtually all of Poland's top 500 corporates; it will have the largest equity base of any bank in the region. Its loan portfolio will be more diversified and its asset quality enhanced. We will be able to offer a broader range of products at more competitive prices as we leverage our technology investments and accelerate the rollout of our already successful retail bank.

This will be a bank worth banking on.

SIGNIFICANT BENEFITS FOR ALL SHAREHOLDERS

When the merger was announced three months ago, I stated that I expected this deal to generate double digit earnings per share accretion in the first full year and better accretion thereafter.

This estimate was based on the high potential for cost savings because of the overlap in businesses of our two institutions, the consolidation of our technology platforms and the efficiency-maximizing culture of both management teams. The increase in earnings provides equal benefits to all shareholders, small and large.

Since then the two management teams have developed an integration plan and have completed their respective due diligence exercises. This work has validated our assumption that substantial cost savings could be realized quickly. Our close collaboration with BRE reinforced my confidence in the compatibility of our management cultures and our ability to realize the cost savings.

Our estimates of earnings per share accretion do not take into account revenue gains -- which we expect -- or cost reductions from longer term structural or organizational changes. Our estimates of earnings per share accretion are realizable estimates based on conservative assumptions.

In addition, it is the intention of the new Bank Handlowy management to distribute to all new Bank Handlowy shareholders a substantial portion of the combined 1999 net profits in the form of a special dividend, upon approval at the annual shareholders' meeting.

Moreover, the new Bank Handlowy will have one of the largest share floats on the Warsaw Stock Exchange and its shares will be one of the most liquid.

We believe the new Bank Handlowy will be a more valuable investment holding for all shareholders.

THIS MERGER IS THE BEST ALTERNATIVE AVAILABLE TODAY

As with any strategic decision of this magnitude, a variety of alternatives were carefully considered prior to our detailed merger talks with BRE. The Polish banking sector has been evolving rapidly and there have been a variety of foreign banks entering or expressing interest to enter or to increase their position in Poland. Bank Handlowy participated in some of those discussions, and as you may be aware, made a bid last year to acquire a controlling interest in Pekao S.A., which was not successful.

It is the responsibility of the Management team to evaluate thoroughly all proposals and market opportunities as the financial sector continues to evolve. In our view, the merger with BRE is compelling from a strategic, as well as a financial point of view. We believe there is no alternative as good as this merger.

THE CORE SHAREHOLDERS SUPPORT THE MERGER FULLY

Bank Handlowy's core shareholders are J.P. Morgan, Swedbank and Zurich Insurance. These are internationally respected institutions with impressive records of completing acquisitions of their own, and a strong knowledge of Bank Handlowy and Poland. They have had an opportunity to consider this deal carefully and to share their assessment with Management. They welcome the addition of Commerzbank as a fourth core shareholder. They too have concluded that this transaction presents Bank Handlowy with a unique and realizable opportunity to enhance shareholder value and secure its market and strategic position in Poland. The core shareholders fully support this merger.

Our proposed merger between two privately owned and publicly listed banks is the first such merger in Poland. All aspects of this transaction will be disclosed with ample time for you to consider them before the shareholder vote. It has been a practice of Bank Handlowy to be transparent and complete in its communication with shareholders and this merger will be no exception.

I look forward to further discussing the transaction with you over the coming weeks. In the meantime if you have any questions, please get in touch with me or my colleagues in Bank Handlowy's investor relations.

I have attached a few summary pages providing additional detail on some of the matters I have touched on in this letter.

Yours sincerely,

/s/ Cezary Stypulkowski

Cezary Stypulkowski

-0-

Exhibits:


1.       Market Position in Key Businesses

2.       EPS Accretion for Bank Handlowy


Exhibit 1:

Market Position in Key Businesses



Product / Business area                     Rank
--------------------------------------------------------------
Money Market                                 1
Bond Activity                                1
Brokerage                                    1
Custody Business                             1
M&A                                          1
Mutual Funds                                 2
Derivative Products                          1
Project Finance                              1
Corporate Deposits                           1
Foreign Trade Settlement                     1
Loan Syndication                             1
Corporate Loans                              2
Factoring                                    1
Electronic Banking                           1



Exhibit 2:


EPS Accretion for Bank Handlowy1

                               2000E                2001E
--------------------------------------------------------------
 (PLN MM)
 BHW Net Income                       459                 527
 BRE Net Income                       311                 374
 Cost Savings (After Tax)2             78                 113
                               -------------------------------
   Pro Forma Net Income               848               1,014
--------------------------------------------------------------
(PLN)
 Stand Alone BHW EPS                 4.94                5.67
 Stand Alone BRE EPS                13.64               16.40
 Pro Forma EPS                       5.74                6.86
   BHW EPS Accretion                16.3%               21.1%
   BRE EPS Accretion                 1.0%                0.4%
--------------------------------------------------------------



Sensitivity of Accretion/(Dilution) to Assumed Cost Savings1

                             ----------------------------------------
                                     12.5%                15.0%
                             ----------------------------------------
 (PLN MM, unless
otherwise stated)           2000E       2001E     2000E     2001E
----------------------------------------------------------------------

 Cost Savings (Pre Tax)      138          138       165       165
 BHW EPS Accretion         16.3%        21.1%     18.5%     23.8%
 BRE EPS Accretion          1.0%         0.4%      2.9%      2.6%

----------------------------------------------------------------------

--------

1    Based on the 2.4 exchange ratio of new Bank Handlowy shares for
     each BRE share approved by Bank Handlowy's Supervisory Board on
     October 23, 1999. Accretion based on management profit
     projections for 2000 and 2001.

2    Cost Savings based on a 12.5% reduction in the combined 1999E
     expenses; assumed tax rate of 34.0% in 2000 and 32.0% in 2001;
     75% phased in by 2000, 100% phased in by 2001.