OCBC prefers stock

OCBC strengthens its capital base with a planned preference share issue.

OCBC Bank announced plans to issue up to S$500 million $305 million of guaranteed preference shares yesterday January 13, in a move aimed a further strengthening its already robust capital base. The issue will qualify as tier 1 capital for the bank and be subordinate to deposits and other debts but above the bank's straight equity.

Like most preference shares, the new issue's dividends can be restricted in certain circumstances, mainly if the bank's capital ratios go below a certain level. However, with a total capital adequacy ratio of 17.6% and a tier 1 ratio of 12.5%, such an event looks a long way off. According to Fitch ratings -...

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