OCBC bank will be issuing S$1 billion worth of preference shares.
The non-voting Class M preference shares will pay a semi-annual dividends at the rate of 4% per annum.
Investors will want to note that the dividends will be non-cumulative in nature. This means that if OCBC does not pay a dividend for any particular year, it does not need to make up for the “missed dividend” in subsequent years.
The OCBC preference shares will also be callable by the bank in 2018 and from 2022 onwards.
The initial offering of the preference shares will not be available to the general public. It will only be offered to institutional investors and private investors who are able to cough up a minimum of S$250,000. Which is just as well since the non-cumulative nature of the preference shares does not really appeal to me.
The issue is part of OCBC Bank’s ongoing capital management plan to further strengthen its capital base, and improve the mix of its Tier 1 and Tier 2 capital, in order to enhance capital efficiency.
The OCBC Class M Preference Shares are expected to be issued on 17 July 2012 and an application has been made for the listing of the Class M Preference Shares on the Singapore Exchange Securities Trading Limited.