difficult for unfriendly bidders to gain control of the company.

The board of directors announced yesterday it had set up a shareholders rights plan which would be put in effect only when someone or an institution had acquired 15 percent or more of the bank's shares.

The plan would have the effect of allowing shareholders to buy shares at a cheap price, thereby diluting the total shareholdings of the unwanted suitor.

"The rights plan, together with other provisions adopted by the bank is intended to discourage coercive or unfair takeover tactics and to otherwise enhance the board's bargaining power and flexibility to deal with third part acquiriers, thereby assisting the board in its efforts to maximise values for all shareholders.

It will be up to the board whether to implement the plan. The provision only applies when a single entity holds 15 percent or more shares. The plan stipulates once the board finds out any one entity has reached the 15 percent mark, it must make a public announcement. After ten days the rights will be distributed, one for each common share, warrant, or option held by an investor.

It would then be up to the board to decide when a "flip in provision'' takes effect. Once in effect the provision allows shareholders to buy shares at half price under certain conditions, thereby diluting the hostile bidders holdings and making it more expensive to gain control.

Another provision would take effect only when a hostile bidder attempted to merge the bank with another company, force the exchange of shares for another company or transfer more than 50 percent of the assets or earning power of the bank.

"As was discussed during the special general meeting last June, the bank has several reasons for taking measures to protect against an unfriendly take-over,'' bank chairman Eldon Trimingham stated in a letter to shareholders. "At the time, the bank's bye-laws did not envision an environment in which an unfriendly entity might seek to gain control of the bank to the disadvantage of the existing shareholders. It was also noted that the bank was in an increasingly vulnerable position of attracting an unwanted suitor. This was due to a combination of our success in building a world class financial institution and the fact that the intrinsic value that has been created by this success has not been fully reflected in our share price.'' A spokeswoman said the bank did not want to speculate on what its share price might be but at $28.50 it was considered to be trading cheaply. According to an investment analyst the bank's shares were currently trading at 1.5 times book value. At current multiples on an overseas stock exchange the shares would be trading at between $40 to $50.

The bank announced on June 26 the board of directors were considering whether to seek a secondary listing on an overseas stock exchange.

The spokeswoman also said the board was not aware of anyone currently seeking control of the bank. There are currently no individuals or institutions which hold more than three percent of the total issued shares, except for a charitable trust, she said.