Bank of Bermuda Millennium warrants, issued five and a half years ago, expire at the end of this month.

The warrants, which were issued in August 1994, are similar to a stock option and gave the holder the right to buy another common share at a fixed price, $25, anytime between December 31, 1996 and 3 p.m. on January 31, 2000.

The Bank of Bermuda warrants originally went on the market at $2.25, when common shares were trading between $18 and $20. Yesterday the warrants closed at $6.50, and common shares at $29.10. Warrant holders now have the option to buy common shares at $25 which is $4.10 less than the market price or they can trade them on the open market. If holders let them expire, a bank trustee will be appointed to deal with them.

`Fluctuated wildly' Since their release, prices for the warrants have fluctuated wildly, from an all time low of 75 cents in 1996 to rise two years later to an all time high of $16.25.

At the time the warrants were expected to raise at least $20 million in new capital. The money was to be used internationally in establishing operations in Dublin as well as the financing of the purchase of Standard Chartered Equitor Group institutional and private trust business in Europe and the Far East bought in 1994.

The warrants will expire at the end of January, but can be converted to common shares, currently trading at $29.10.

Trading in the warrants, however will be suspended at the close of business on Wednesday, January 26, 2000 to allow settlement of outstanding trades. All other transfers will be accepted until 3 p.m. on January 31.

In a letter to shareholders, the Bank said: "We wish to remind you that the above warrants will expire at 3.00 p.m. on 31st January, 200. We would like to encourage you to take advantage of this final opportunity to convert your warrant to common shares at a considerable discount to current market value.'' In the case of warrant holders who want to allow them to expire, the bank will appoint a trustee who can exercise the spent warrants and sell the resulting shares and distribute the proceeds to the holder.

But the cost subscription price and expenses will be deducted from the cash left over.

The letter to the shareholders warned: "You should be aware that the return to expired warrant holders in this scenario will be dependent on market prices during the period that the trustee is required to sell the shares.

"In addition, this return may be adversely affected if a large number of holders allow their warrants to expire and, as a result, the trustee has considerable number of shares to sell on the marketplace.'' Last week 6,650 shares traded price and the warrant price closed at $5.50.

In the last year the highest price for the warrants was $10, the lowest $4.00.

For the first two years the Bank of Bermuda warrants traded for between $2.00 and $3.50, plummeting 62 percent in November 1996 to close at 75 cents.

But the market once again became buoyant and by September 1997 Bank of Bermuda warrants had risen to $5, closing that year at $5.50.

From there the stock prices continued to rise, in January to $6.88 and then roared ahead 63 percent to $13 in February as investors anticipated further gains in the stock. By March they were worth $14 -- an all time high.

Prices began slipping in April 1998 to $12, but rose again to a record price of $16.25.

But the volatile market pushed prices down and stock fell to $10 by July 1998, and closed the year at $9.00. By April 1999 the rot had set in and the warrants traded for $6.00, rising to $9.00 in August, and falling again to $7.00 in December.