Fitch Rates UOB's Basel III Tier 2 Sub Debt Securities 'A+(EXP)'

Tue Mar 11, 2014 12:23am EDT

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(The following statement was released by the rating agency) SINGAPORE, March 10 (Fitch) Fitch Ratings has assigned Singapore-based United Overseas Bank Limited's (UOB) proposed US dollar-denominated Basel III-compliant Tier 2 capital securities an expected rating of 'A+(EXP)'. The final rating is subject to the receipt of final documentation conforming to information already received. KEY RATING DRIVERS The Basel III-compliant Tier 2 securities are rated one notch below UOB's 'aa-' Viability Rating (VR) to reflect their higher loss-severity risk relative to senior unsecured instruments due to their subordinated status, the presence of a non-viability clause and the partial rather than mandatory full write-down feature. The Monetary Authority of Singapore (MAS) has sole discretion in determining if UOB is non-viable, and if it does so, the securities may be written down in full or in part to the extent that MAS considers necessary to restore the viability of the bank. There are no write-back features on the securities. No additional notching has been ascribed to non-performance risk, despite the presence of non-viability terms, which Fitch regards to be of a minimal incremental risk relative to the VR assigned. The instruments will not qualify for equity credit under Fitch's criteria. Holders of these securities - and other Tier 2 securities of UOB - rank below the bank's senior creditors, including depositors, but above the bank's ordinary shareholders, preference shareholders, and holders of perpetual capital securities and existing Upper Tier 2 securities in priority of claims. 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 DBS, OCBC & UOB at 'AA-'; Outlook Stable", dated 23 October 2013, and UOB's full rating report, dated 29 April 2013, available at www.fitchratings.com. 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-' Contact: Primary Analyst Ambreesh Srivastava Senior Director +65 67967218 Fitch Ratings Singapore Pte Ltd 6 Temasek Boulevard #35-05 Suntec Tower Four Singapore 038986 Secondary Analyst Mikho Irawady Associate Director +65 6796 7230 Committee Chairperson Mark Young Managing Director +65 6796 7229 Media Relations: Leslie Tan, Singapore, Tel: +65 67 96 7234, Email: leslie.tan@fitchratings.com. Additional information is available at www.fitchratings.com. Applicable criteria, "Global Financial Institutions Rating Criteria", dated 31 January 2014, and "Assessing and Rating Bank Subordinated and Hybrid Securities", dated 31 January 2014, are available at www.fitchratings.com. Applicable Criteria and Related Research: Global Financial Institutions Rating Criteria here Assessing and Rating Bank Subordinated and Hybrid Securities Criteria 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.

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