UOB yesterday announced the details of their preference shares offering. 10 million UOB preference shares will be opened to subsciption, with 2 million shares earmarked for the retail market.
UOB Preference Shares announcement
UOB Preference Shares FAQ
UOB Preference Shares Offer Information Statement
EAch share has an issue price of $100 and for the retail investors, the minimum subscription is 100 shares (or S$10,000). The shares will provide a fixed dividend of 5.05% p.a. payable semi-annually on 15 March and 15 September each year.
They may be redeemed by UOB on 15 September 2013, 15 September 2018, and thereafter on 15 March and 15 September each year.
The offering will open at 9am on 28 August 2008 and close at 12 noon on 12 September (subject to changes). The preference shares is expected to be listed on the SGX from 16 September 2008, tradable in board lots of 100 shares.
Subscription for the retail investors can be done via the ATMs of UOB, DBS (including POSB) and OCBC. If demand exceeds supply, balloting will be conducted.
12 comments
Alvin says:
August 28, 2008 at 2:06 pm (UTC 8)
what are the differences between OCBC and UOB PS?
Is UOB’s PS tax exempted?
Glorious Citizen says:
August 28, 2008 at 3:21 pm (UTC 8)
There’s just too many such preference shares of late. I hope this won’t turn out to be another “sub prime crisis” where banks sell a product (“promising” high interest rate) to retail investors and they cannot realize the promised returns…
By the way, I enjoyed reading your blog! Very informational! Thanks!
lioninvestor says:
August 29, 2008 at 12:02 am (UTC 8)
Hi Alvin,
It’s under a one tier system so there is no tax at your end. The recent tranche by OCBC has a slightly different yield.
http://www.martinlee.sg/ocbc-to-raise-preference-shares-again/
Hi Glorious Citizen,
Thanks for your feedback.
The only chance the dividend is not paid is either
1) the bank does not pay dividend to its ordinary shareholders; or
2) the bank goes under.
Marc says:
August 29, 2008 at 12:11 am (UTC 8)
Hi Lion Investor,
I noticed that the UOB preference shares are termed Class E shares. Can you enlighten me as to what this actually means?
Hope to hear from you soon. Thanks!
Marc
lioninvestor says:
August 29, 2008 at 8:31 am (UTC 8)
Hi Marc,
A different class of share is usually used to represent different rights (voting, dividends, etc).
As to why UOB uses E instead of B, I’m not exactly sure. Perhaps they already have Class B, C and D out there.
Jace says:
August 29, 2008 at 12:18 pm (UTC 8)
Hi, how can we buy the preference shares under ATM offer ( open for public)?
We need to open any account with CDB first? and any guide line?
lioninvestor says:
August 29, 2008 at 1:11 pm (UTC 8)
Hi Jace,
A CDP account is required to hold the shares.
http://www.cdp.com.sg
You can go down to their office or alternatively, open it via any of the brokerage firms in Singapore.
The atm steps can be found in Appendix G of the offer information statement.
http://www.martinlee.sg/code/uploads/uob-preference-shares-prospectus.pdf
Johnson says:
September 27, 2008 at 4:12 pm (UTC 8)
UOB preference shares, again is not capital protected or guarantee,you may lose part of your capitals.
Bessie Sim says:
September 27, 2008 at 5:35 pm (UTC 8)
How about the OCBC preference shares which were issued recently by OCBC bank that retail investors can buy via the ATM? Is that CAPITAL PROTECTED? guaranteed?
lioninvestor says:
September 28, 2008 at 12:51 am (UTC 8)
Preference shares are ok as long as the company doesn’t go bankrupt.
Just that there isn’t really a maturity date for you to exit should you want to. You have to either sell it on the secondary market, or depend on the bank to redeem from you (at their wishes).
FongFC says:
August 7, 2010 at 12:47 pm (UTC 8)
I got some questions on this statement – “fixed dividend of 5.05% p.a. payable semi-annually on 15 Mar and 15 Sep each year”
(1) How is the 5.05% payout calculated ? Is it 5.05% of the issue price of $100 ? The exisiting traded price during the semi-annual payout ?
(2) Since there are 2 payouts in a year, each payout will be 2.525% ?
lioninvestor says:
August 8, 2010 at 12:05 am (UTC 8)
(1) Based on issue price.
(2) Yes.