Overseas Chinese Banking Corporation (OCBC Bank)

[ghchua]

There is no need to call anybody. You can transact odd lots through the unit share market on online platforms.

[Temperament]

Yes no need to call anybody. Sooner or later most Newbies (especially the DIY types) will migrate to online platform if they can become "stock investors for life".

[felixleong]

yeah nowadays almost more than 90% of investors are using online platform because of the cheaper fees.
For odd lot transaction do note that the min fees still apply.. (something like $25 depending on which house u use)

[ghchua]

I use POEMS and the minimum is $10 only.
http://www.poems.com.sg/index.php?option...05&lang=en

[Temperament]

I use POEMS and the minimum is $10 only.
http://www.poems.com.sg/index.php?option...05&lang=en

Ah....POEMS . i use POEMS for DIY odd lots too as she is the cheapest for trading odd lots, i think. Normal trade i use L. & T.

[felixleong]

Btw guys just to check, for ocbc 10% discount script dividends, did they always practise this? Or sometimes dividends sometimes have the script option?

[orangetea]

I think this is not the first time

From initial search i found

"3.5 Issue Price
For the purposes of the application of the Scheme to the FY08 Final Dividend, the price at which each New Share is to be issued (the “Issue Price”) will be set at a 10% discount to the average of the last dealt prices of the Shares during the price determination period between 24 April 2009 and 28 April 2009 (both dates inclusive) (being the period commencing on the date on which the Shares are first traded on an ex-basis and ending on the Books Closure Date).
The Bank will announce the Issue Price on 29 April 2009."

and musicwhiz posted this

http://www.valuebuddies.com/thread-1542-...l#pid14934

Take a close, hard look at scrip dividends
The Straits Times
Oct 30, 2011
small change
Take a close, hard look at scrip dividends
When markets are volatile, it may be better to go for cash payouts rather than discounted shares

By Lee Su Shyan

The lyrics from the song, You Can Run But You Can't Hide, certainly seem to apply to how the gloom has affected my approach towards investing.

Cash - eroded by inflation. Stocks and shares - battered and bruised. Currencies - far too volatile. Investment property - too big an outlay and who knows if there will be any tenants.

In the past few months, the only movement on my stock portfolio has been the award of scrip dividend shares to my account.

OCBC Bank, among several other companies, has a scrip dividend scheme, which allows shareholders to take their dividend in the form of shares or cash. It has always been a good bet, I believe.

This is how it works: Assume I own 1,000 shares. Based on OCBC's final dividend for last year, which was 15 cents per share, that works out to a $150 dividend. Based on the current share price, the bank issues new shares at a discount.

The new shares were issued at $8.45 apiece, a discount of 10 per cent to the price over a few days during that period, giving an investor 18 shares for each 1,000 shares he owns. If I do opt for the scrip, my shareholding would rise to 1,018 shares.

Some shareholders are loath to deal with odd lots, so they don't opt for the scrip.

But I have always been in favour of taking it. Firstly, I get the shares at a discount. Secondly, given $150 in cash, I'm more than likely to fritter it away because the amount is too small to invest, so at least by taking scrip, I'm investing rather than spending. Thirdly, I'd also save on brokerage charges, assuming that I would have tried to buy the equivalent on the market.

More importantly, there's the power of compounding. I now have 1,018 shares, which will attract a larger dividend the following time round.

I've also gained a decent enough yield on the year. Last year, OCBC's total dividend was 30 cents which, based on an average price of $8.90, works out to 3.3 per cent. If I had the money in the bank, it would be getting not much above 0 per cent.

But in this volatile market, even this option does not appear to be such a sure-fire win.

Take my latest grant of shares from OCBC's interim dividend recently. The issue price for the new shares was $8.07.

At the point when I elected to accept the scrip, the shares were trading above $8.07. Subsequently, the shares fell to a low of $7.68. For about a week, the shares were below the $8.07 price.

In hindsight, it would have made more sense to take the cash, then buy the shares later.

In the case of DBS' latest interim dividend, the shares were trading below the issue price even during the period when the offer was open.

The issue price for the new shares was $13.14. During the run-up to the Sept 8 deadline, the stock market was hit by jitters and DBS shares fell below $13.14 and even below $13 on some days.

Both DBS and OCBC shares have bounced back since then, so it was a temporary scare.

To be on the safe side, one should not automatically opt for scrip. Instead, assess each offer that is made, based on the current share price and the outlook for the share price.

Detractors of scrip dividend schemes say they benefit the company and not the shareholder. After all, the company can conserve cash by not paying a dividend. With a participation rate by investors in this latest round at 83.1 per cent, OCBC would have saved a pretty penny from not dishing out that much cash.

With such a scheme in place, if I opt for cash and stick with my 1,000 shares, my stake is proportionately lower since the company is issuing new shares to other people. Still, owning 1,000 shares - or even a few thousand out of the millions of shares out there - means any decision I make is negligible.

The scrip choice works for someone who is a long-term shareholder, confident of the company and happy to build up his stake slowly rather than take the regular dividend payout in cash.

On the other hand, it represents a fairly cautious attitude, since the shareholder is raising his stake very slowly, rather than buying a few thousand shares in one shot.

Scrip dividend schemes have caught on among listed companies. Among the larger companies offering such schemes is DBS Group Holdings while the smaller firms include China Fishery and MTQ.

Assess each tranche of dividend by taking it as an investment decision to avoid being caught out.

In times of volatile markets, which is the situation now, anyone caught napping will be punished severely.

sushyan@sph.com.sg

[felixleong]

Thanks for the article its pretty interesting.

http://www.ocbc.com.sg/group/investors/s...story.html

http://www.ocbc.com.sg/group/investors/s...htbox.html

btw I dug further and found out that OCBC has been offering scrip dividends since 2008 but not all the time, its kinda weird.

like from 2011 final to 2013 interim, scrip dividends was not offered. (a total of 4 payouts without scrip, only cash)

If I have to think of the reason why they are suddenly activating scrip dividends again, I think it could be possibly the need of cash to fund the Wing Hang acquisition. If I have to guess, I would say 90% we would see this acquisition completed and probably announced in march or so.

From 2009 and 2010 OCBC did scrip dividends and later made the acquisition of ING PB (later renamed Bank of Singapore)

For value buddy investors, do u guys like scrip dividends?

I personally feel it a bit troublesome getting odd lots... however the 10% discount is really too tempting to not take it

[AlphaQuant]

If I have to think of the reason why they are suddenly activating scrip dividends again, I think it could be possibly the need of cash to fund the Wing Hang acquisition.

i think so as well.

The good thing abt this scrip dividend, however, is that the book closure date is in 30Apr so after the decision on WingHang (expiry of exclusive talks on 3Mar) and hopefully by then we have more info on the price paid and the means of financing.

[felixleong]

HONG KONG -- Oversea-Chinese Banking Corp and Hong Kong’s Wing Hang Bank said Friday they have extended the exclusivity period for their deal talks until the end of March, the second time they’ve pushed out the deadline for completing the deal, the Dow Jones news agency reported.

OCBC and Wing Hang will continue to engage exclusively during this period to finalize the terms of the offer. OCBC has been negotiating with Wing Hang to buy the Hong Kong-based bank for around US$5 billion (S$6.3 billion), a person familiar with the matter told The Wall Street Journal previously.

The deal would significantly increase OCBC’s exposure to Greater China, raising Chinese loans to 25 per cent of its total from around 15 per cent currently, UBS analysts estimate. It would also give OCBC a foothold in Macau, which generates around 15 per cent of Wing Hang’s pretax profit, as well as access to Greater China trade flows, particularly from Southeast Asia