Simple...u need a significant amount of money to even be considered for a chance to invest.
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Contest theory: More entries = More chances - Concept of Probability.
Time & Tide waits for no Man.

Aug 19, 2008
UOB 'to sell preference shares'
By Grace Ng
UNITED Overseas Bank (UOB) is said to be the latest local bank to raise funds from investors by selling preference shares - a generally popular investment option in uncertain times.

Retail investors are likely to get a bite of the offering which pays annual interest of 5.05 per cent, a whisker below OCBC Bank's 5.1 per cent preference shares offered earlier this month, sources said.

The bank is declining to confirm details of the offering.

The sources said UOB yesterday unveiled a 'soft launch' of the issue of securities for deep-pocketed investors priced at $50,000 per lot via several brokerages.

But the market sources say that the preference shares are also likely to be made available later in smaller amounts. They will be sold via UOB's channels and through an ATM tranche.

The bank is the third lender after rivals DBS and OCBC to offer preference shares to raise cash and strengthen its tier one regulatory capital base. This tier one capital is used as a buffer against the loans that a bank issues.

It is not clear how large the share issue will be. However, brokers reckon it is likely to be at least $1 billion, given that DBS Group Holdings had raised $1.5 billion earlier, while OCBC is looking to raise up to $2.5 billion in two separate offerings.

But a check with a few brokerages showed that the response had been rather muted yesterday.

Brokers noted that the appetite of wealthy investors for these perpetual securities had already been largely satisfied by the DBS and OCBC offerings, which dangled higher interest rates.

DBS' shares offer an annual rate of 5.75 per cent, while OCBC's pays 5.1 per cent a year. UOB's preference shares are understood to pay a fixed dividend of 5.05 per cent, payable twice a year. They may be redeemed by the bank in the fifth and 10th year, subject to approval from the Monetary Authority of Singapore, the sources said.

UOB refused to give details in response to The Straits Times' queries. A spokesman said only: 'We are always exploring opportunities and monitoring the market.'

www.straitstimes.com/print/Money/Story/STIStory_269526.html

I'm also curious how preference shares work? the 5% is guranteed?

As per quoted by Jason from PIAS,

Price of preference shares will react to the general movement of the interest rate in the market. If the market interest rate goes up, the price of the preference shares will fall, and vice versa. The price movements can be quite volatile.