Fitch Rates UOB's Basel III Tier 1 Securities Final 'BBB'

Mon Jul 22, 2013 11:37pm EDT

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(The following statement was released by the rating agency) SINGAPORE, July 22 (Fitch) Fitch Ratings has assigned Singapore-based United Overseas Bank Limited's (UOB) SGD850m 4.9% non-cumulative non-convertible perpetual capital securities a final rating of 'BBB'. This follows the completion of the securities issue, as well as the receipt of final documents conforming to information previously received. The final rating is same as the expected rating assigned on 15 July 2013. Key Rating Drivers The securities are rated five notches below UOB's 'aa-' Viability Rating (VR), comprising two notches for loss severity and three notches for non-performance risk, in accordance with Fitch's criteria. The loss-severity risk is high in view of the securities' deep subordination status. The securities - together with other Tier 1 capital securities - rank senior in priority of claims only to UOB's ordinary shareholders, and rank below all senior creditors (including depositors) and holders of subordinated Lower and Upper Tier 2 capital securities of the bank. Non-performance risk arises from the fact that UOB and the Monetary Authority of Singapore have unrestricted discretion in cancelling any periodic distribution on the proposed securities. Absent of any cancellation, distribution is to be made semi-annually at a fixed rate, based on the prevailing principal amount. Rating Sensitivities A change in UOB's VR will have an impact on the securities rating. For more details on UOB's ratings and credit profile, see "Fitch Affirms Singapore's DBS, OCBC and UOB; Outlook Stable", dated 17 April 2013, and UOB's full rating report, dated 29 April 2013, available at UOB's other ratings are as follows: - Long-Term Issuer Default Rating 'AA-'; Outlook Stable - Short-Term Issuer Default Rating 'F1+' - Viability Rating 'aa-' - Support Rating '1' - Support Rating Floor 'A-' Contacts: Primary Analyst Alfred Chan Director +65 6796 7220 Fitch Ratings Singapore PTE Ltd 6 Temasek Boulevard #35-05 Suntec Tower Four Singapore 038986 Secondary Analyst Ambreesh Srivastava Senior Director +65 6796 7218 Committee Chairperson Mark Young Managing Director +65 6796 7229 Media Relations: Leslie Tan, Singapore, Tel: +65 67 96 7234, Email: Additional information is available at Applicable criteria, "Global Financial Institutions Rating Criteria", dated 15 August 2012, and "Assessing and Rating Bank Subordinated and Hybrid Securities", dated 5 December 2012, are available at Applicable Criteria and Related Research: Global Financial Institutions Rating Criteria here Assessing and Rating Bank Subordinated and Hybrid Securities here Additional Disclosure Solicitation Status here ALL FITCH CREDIT RATINGS ARE SUBJECT TO CERTAIN LIMITATIONS AND DISCLAIMERS. PLEASE READ THESE LIMITATIONS AND DISCLAIMERS BY FOLLOWING THIS LINK: here. IN ADDITION, RATING DEFINITIONS AND THE TERMS OF USE OF SUCH RATINGS ARE AVAILABLE ON THE AGENCY'S PUBLIC WEBSITE 'WWW.FITCHRATINGS.COM'. PUBLISHED RATINGS, CRITERIA AND METHODOLOGIES ARE AVAILABLE FROM THIS SITE AT ALL TIMES. FITCH'S CODE OF CONDUCT, CONFIDENTIALITY, CONFLICTS OF INTEREST, AFFILIATE FIREWALL, COMPLIANCE AND OTHER RELEVANT POLICIES AND PROCEDURES ARE ALSO AVAILABLE FROM THE 'CODE OF CONDUCT' SECTION OF THIS SITE. FITCH MAY HAVE PROVIDED ANOTHER PERMISSIBLE SERVICE TO THE RATED ENTITY OR ITS RELATED THIRD PARTIES. DETAILS OF THIS SERVICE FOR RATINGS FOR WHICH THE LEAD ANALYST IS BASED IN AN EU-REGISTERED ENTITY CAN BE FOUND ON THE ENTITY SUMMARY PAGE FOR THIS ISSUER ON THE FITCH WEBSITE.