Fitch gives United Overseas Bank debt BBB

Fitch Ratings said it assigned United Overseas Bank Ltd.’s (UOB) proposed Singapore dollar-denominated non-cumulative non-convertible perpetual capital securities an expected rating of BBB(EXP).

The securities are intended to qualify as Additional Tier 1 capital securities of the bank under the Basel III regime.

The securities are rated five notches below the bank’s aa- viability rating, comprising two notches for loss severity and three notches for non-performance risk, in accordance with Fitch's Global Bank Rating Criteria.

The loss severity is high in view of the securities' deep subordination status. In the event of any winding-up proceeding, holders of these securities and all other Additional Tier 1 securities of UOB will rank ahead of claims of only UOB's ordinary shareholders, and will rank below the bank's senior creditors, including covered bondholders and depositors, and holders of Tier 2 capital securities of the bank, in priority of claims, Fitch said.

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