Hot on the heel of DBS, OCBC has announced that they will be issuing as much as $1.5 billion dollars worth of preference shares.
However, unlike DBS, OCBC’s offer will be open to retail investors. Back in 2003, it had done the same with the shares having a dividend yield of 4.2%.
The question to ponder is, “why are the banks raising capital at this time?”
At the end of March, OCBC had a healthy tier one capital ratio of 12.2%, DBS had 9.2% while UOB had 9.9%. The regulatory requirement for tier one capital is only 6%.
Perhaps they see a way to put the raised capital to some good use.