Oversea-Chinese Banking Corporation Limited (OCBC Bank)  announced yesterday that it will launch a US$500 bond issue to institutional and sophisticated investors. The Notes are expected to have a 10-year maturity (year 2019) and a call option 5 years from the issue date, with a step-up in the fixed rate coupon after the 5th year if the Notes are not called by OCBC Bank.

The proposed bond issue is part of OCBC Bank’s ongoing capital management plan to improve the mix of its Tier 1 and Tier 2 capital instruments, so as to enhance the efficiency of its capital structure. As of 30 September 2009, OCBC Group’s Tier 2 capital was fully offset by deductions from capital and its eligible total capital comprised entirely of eligible Tier 1 capital. Both the Group’s Tier 1 and total capital adequacy ratios were 15.2% as of 30 September 2009.

The net proceeds from the issue of the bonds will be used for general corporate purposes of OCBC Bank. The proposed issue is unrelated to the funding of the proposed acquisition of ING Asia Private Bank Limited and its affiliated entities, announced on 15 October 2009.

OCBC Bank, Credit Suisse (Singapore) Limited, Morgan Stanley Asia (Singapore) and Goldman Sachs (Singapore) are joint lead managers and joint bookrunners for the proposed issue.

The OCBC bonds will pay a coupon of 4.25% p.a. for the first five years. If the Notes are not redeemed or purchased and cancelled after 5 years, the interest rate from then to the maturity date on 18 November 2019 will be reset to a fixed rate per annum equal to the aggregate of the relevant 5-year US Treasury benchmark rate and 2.997%.

Our three local banks – DBS, UOB and OCBC have been the target of scammers/phishers recently.

Computer trojan programs installed into infected computers can trick users into revealing their internet banking passwords. 

The login page looks very similar to the actual one, except are a minor difference. 

Here’s how the fake DBS login page looks like:

Notice that you are prompted to enter your token pin on the first login page. The request for the token pin is usually done on the second page.

If you observe the url of the fake site, it is identical to the real one. Even users who bookmark the normal login page can be taken to a fake site if your computer is infected with the trojan.

Do update your anti-virus software carefully and if you detect anything suspicious, do not hesitate to contact your bank.

In a joint press statement issued by MAS and Ministry of Finance yesterday night, the Singapore government announced that it would guarantee all Singdollar and foreign currency deposits of individual and non-bank customers in licensed banks, finance companies and merchant banks. 

The guarantee of up to S$150 billion will be more than enough to cover possible liabilities arising from the failure of any financial institution. It takes immediate effect and will remain in place until 31 December 2010.

This announcement came in the light of other countries also providing similar guarantees. Not following in their footsteps might mean an outflow of funds from Singapore banks.

As a sign of how much fear there is in the market right now, my friend told me his mum was frantically telling him that OCBC was collapsing. A rumour triggered no doubt by this announcement.

And I cheekily turned to my friend and said, “Look, here’s another sign that the market is close to a bottom.“

Soon after the recent OCBC preference shares issuance, OCBC has decided to issue more preference shares to further balance its capital base.

This time round, they will be issuing 10,000,000 preferences share at a price of $100 each. If demand is good, this might be increased to 15,000,000 shares.

Out of these 10,000,000 OCBC preference shares, 2,500,000 will be offered to retail investors while the rest will be offered to institutions.

The retail application will be available via ATM application of Singapore’s three local banks starting from 9am today, until 12 noon on 26th August. The ATM subscription will be subjected to balloting if demand exceeds supply. Since the minimum subsciption this time round is 100 shares (compared to 200 shares previously), more people might be able to apply for it.

The preference shares will provided a dividend of 5.1% per annum which will be paid semi-annually in March and September till 20th September 2018. They are perpertual securities with no fixed maturity dates. They may however, be redeemed by OCBC on 20th September 2018 and each dividend date thereafter (subject to MAS’s approval).

After 20th September 2018, the dividend rate will no longer be fixed at 5.1% p.a. Instead, the rate will be tied to the 3-month Singapore dollar swap offer rate plus 2.5%. Dividends from that point onwards will be payable every 3 months.

The 3-month swap offer rate is a rate that is slightly higher than the 3-month SIBOR. You can find out the historical SIBOR rates from MAS’s financial database. Refer to “interbank 3-month”. For current rates, you can refer to a copy of The Business Times.

The OCBC preference shares are expected to list on SGX from 28th August 2008. More details on the OCBC preference shares offering can be downloaded here:

OCBC preference shares

The ATM application for the $50 million second tranche of OCBC preference shares opens from 9am today until noon on 28th July. You can apply for them through the ATM of the 3 local banks – DBS, UOB and OCBC.

Each application requires a minimum subscription of 200 shares priced at $100 each. Additional shares are in multiplies of 100.

Unlike the first tranche which was on a first-come-first-served basis, this ATM tranche will be allocated by balloting if the total subscription exceeds 500,000 shares. That means you do not need to rush down to an ATM machine to apply at 9am today.

However, if you are interested in applying for the shares, it is wise not to wait too long as OCBC might close the tranche anytime if overwhelming demand is received.