By: La Papillion After chatting with a few guys over at the cbox, I realized that a better instrument for the person who wanted to buy OCBC (see my post on “Brief overview of Local banks") will be the preference shares that is also offered by the three banks. Preference shares goes by the funny stock name with many letters in it. Here’s the list of all the listed preference shares by the three local banks. 1. UOB 5.05% NCPS 100 2. DBS Bk 6% NCPS 10 3. OCBC Bk 4.2% NCPS 100 4. OCBC Bk 4.5% NCPS 100 5. OCBC Bk 5.1% NCPS 100 6. OCBC Cap 5.1% NCPS 100 7. OCBC Cap 3.93% Pref 10 In the process of finding out what those letters mean, I did some research and I emerged a little more knowledgeable on these preference shares. 1. NCPS – refers to non-convertible and/or non-cumulative preference shares. There are quite a lot of things to illuminate here. First of all, what is a preference share? Preference share is not the same as ordinary shares, the latter being the ordinary shares that are traded on SGX. Preference shares do not carry voting rights, unlike ordinary shares. However, preference shares are ranked higher than ordinary shares. With that, I mean that in the event of liquidation of the parent company, preferred shareholders will be paid out assets before the common shareholders (those who hold ordinary shares) but after debt holders (those who hold bonds issued by the company). Beside this, preference shares might have an option to convert them to ordinary shares at a prescribed price. This is called the ‘convertible’ option. However, for the preference shares issued by the banks, they are non-convertible and non-cumulative, hence the moniker NC. So what’s non-cumulative? Read more..