May 14, 2014 / 3:12 AM / 5 years ago

Fitch Rates UOB's Basel III Tier 2 Subordinated Notes 'A+(EXP)'

(The following statement was released by the rating agency) SINGAPORE, May 13 (Fitch) Fitch Ratings has assigned Singapore-based United Overseas Bank Limited's (UOB) proposed Singapore dollar-denominated Basel III-compliant Tier 2 subordinated notes an expected rating of 'A+(EXP)'. The notes will be issued under the bank's SGD10bn euro medium-term note (EMTN) programme. 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 necessary to restore the viability of the bank. A write-down of the Tier 2 notes will occur only after any Additional Tier 1 securities with loss-absorption features have been fully written off, after which the Tier 2 notes would be written down pro rata with other Tier 2 instruments that contain loss-absorption features. There are no write-back features on the securities. No additional notching has been ascribed to non-performance risk, which Fitch regards to be of minimal incremental risk relative to the VR assigned. The instruments will not qualify for equity credit under Fitch's criteria. In the event of any winding-up proceeding, 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. 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 Elaine Koh Director +65 6796 7239 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: Additional information is available at 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 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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