March 9, 2016 / 7:18 AM / a year ago

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

(The following statement was released by the rating agency) SINGAPORE, March 09 (Fitch) Fitch Ratings has assigned Singapore-based United Overseas Bank Limited's (UOB) proposed US dollar-denominated Basel III-compliant Tier 2 subordinated notes an expected rating of 'A+(EXP)'. The notes will be issued under the bank's SGD15bn 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. This is due to their subordinated status, the presence of a non-viability clause and the partial rather than mandatory full write-down feature at the point of non-viability. 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 parity Tier 2 instruments that contain loss-absorption features. The write-down will be permanent. No additional notching has been ascribed to non-performance risk, as Fitch regards it to be minimal 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 - will rank below the bank's senior creditors, including covered bondholders and depositors, but above the bank's ordinary shareholders, preference shareholders and holders of perpetual capital securities in priority of claims. The notes will rank pari passu with all subordinated debts issued by UOB that qualify as Tier 2 capital securities. 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 Major Singaporean Banks at 'AA-', Outlook Stable" dated 14 August 2015 and its rating report dated 27 October 2015, which are 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-' Contacts: Primary Analyst Wee Siang Ng Senior Director +65 6796 7230 Fitch Ratings Singapore Pte Ltd 6 Temasek Boulevard #35-05 Suntec Tower Four Singapore 038986 Secondary Analyst Elaine Koh Director +65 6796 7239 Committee Chairperson Mark Young Managing Director +65 6796 7229 Date of the Relevant Rating Committee: 13 August 2015 Media Relations: Leslie Tan, Singapore, Tel: +65 67 96 7234, Email: leslie.tan@fitchratings.com. Additional information is available on www.fitchratings.com Applicable Criteria Global Bank Rating Criteria (pub. 20 Mar 2015) here Additional Disclosures Solicitation Status here Endorsement Policy here ail=31 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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