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AGM WATCH

Banks expect big AGM turnout as shareholder base soars

Thursday, April 14, 2016 - 05:50

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The banks are preparing for a surge in shareholder attendance at their upcoming annual general meetings (AGMs) by switching to venues that can hold bigger crowds.

Singapore

THE banks are preparing for a surge in shareholder attendance at their upcoming annual general meetings (AGMs) by switching to venues that can hold bigger crowds.

This is because investor rolls at the three local banks have swelled with the reduction in minimum board-lot size; under this rule change in January last year, shareholders can now buy and trade shares in lots of 100, down from the previous 1,000.

This year's AGMs might be a logistical nightmare for those booking the rooms and catering the food, but company directors might also be in for a more trying time with newbie shareholders - arguably those with smaller pockets - asking tough questions.

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National University of Singapore associate professor Mak Yuen Teen, who is also a corporate governance advocate, said: "I fear that we might end up with questions like 'Why is there no ATM or bank branch near my house?', though I cannot blame them if this is the only time they get to ask such questions."

He added that questions could also be asked about the salaries of the banks' chief executive officers (CEOs), given that these are high by local and global standards.

The 2015 annual pay of the three local banks' CEOs ranged from S$9 million to S$11 million.

Prof Mak noted that the pay of the CEO of Citigroup, a truly global bank, was S$22 million last year, about twice that of Singapore bank CEOs. But in market capitalisation terms, Citigroup is at least four times larger than the local banks.

More pointedly, the HSBC CEO gets about S$14 million, while HSBC's market cap is more than four times the local banks'.

Meanwhile, in terms of shareholder growth, DBS Group has had the biggest increase by percentage - up almost 50 per cent to 66,011, says its latest annual report, from 44,227 a year ago.

By absolute numbers, OCBC Bank has had the largest jump, 26,936 new shareholders or 35 per cent more at 103,835.

United Overseas Bank, whose share price is the highest of the three banks, has 10,141 or 37 per cent more shareholders this year, taking its number to 37,731.

DBS and OCBC are coping with the expanded numbers by holding their AGMs at the Sands Expo and Convention Centre, which has South-east Asia's biggest ballroom.

Come April 28, DBS shareholders will use the Sands Heliconia main ballroom, which accommodates 1,576 people, to meet Singapore's highest-paid bank chief, Piyush Gupta, and may want to ask about his remuneration. The DBS chief executive enjoyed an 8 per cent pay rise to S$10.9 million last year, from S$10.1 million in 2014. DBS's 2015 net profit rose 10 per cent to a record S$4.5 billion.

Prof Mak also wondered whether DBS chairman Peter Seah would be asked about the nine-strong DBS board and their spouses flying first class to London for a board retreat last October; the retreat also included 20 members of senior management who flew business class, also with their spouses.

The bank's sixth annual "off-site" retreat, like previous such meetings, had included the spouses, in line with the bank's pro-family culture, which has contributed to its low staff turnover and high staff engagement, said Karen Ngui, DBS's then-spokeswoman.

OCBC will hold its April 22 AGM at Sands' two ballrooms Roselle and Simpor, which can take up to 2,000 people.

It is likely to carry on its tradition of the past several years - serving up food in bento boxes; last year, the bank fed 1,200 shareholders.

OCBC's shareholders may grill the bank about its latest acquisition - the third in a decade - the US$320 million cash for Barclays' private-bank business in Hong Kong and Singapore. While an important acquisition, this latest deal pales in size to the S$6 billion it paid for Hong Kong's Wing Hang Bank in 2014, and the US$1.4 billion it paid in 2009 for ING Asia Private Bank.

Facing OCBC shareholders will be chief executive Samuel Tsien, who was paid S$10.5 million last year, up 6.1 per cent.

The bank's net profit for the full year rose 2 per cent to S$3.9 billion.

UOB will stick to its Pan Pacific ballroom venue for its April 21 meeting, for which it is expecting 500 people, up from almost 400 who showed up last year.

The bank has been using the 500-capacity Pan Pacific ballroom for its AGM since 2009. It has hosted about 20 per cent more people each year in the last three years, and as before, its shareholders can expect a lavish buffet.

UOB shareholders could ask chief executive Wee Ee Cheong what the bank is doing to grow earnings. Mr Wee was paid S$9.22 million last year, down about 10 per cent.

UOB's full-year 2015 net earnings stood at S$3.21 billion, down 1.2 per cent.

Those working on the logistics of these mega meetings perhaps know too well to pay close attention to the food that is served, to ensure that the Daimler fiasco is not repeated. The AGM of the German luxury carmaker, held in Berlin a week ago, ended with the police being called in to quell a fight over sausages.

Reports said that a woman shareholder scolded a man, who she felt had helped himself to more sausages than he should have. The altercation descended into a brawl. A company spokesman said that Daimler had prepared 12,500 sausages (with other items) for its 5,500 shareholders.

UOB closed Wednesday up 53 cents at S$19.23; DBS rose 39 cents to S$15.47, and OCBC gained 26 cents to S$9.12.

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