THE sharp rise in OCBC Bank's shares over the past couple of years has created one big group of winners - the 3,000 staff members in the bank's employee share purchase scheme.

The 2,000 shrewd staff who signed up when the plan began in 2004 have made collective gains of about $14 million.

Chief executive officer (CEO) David Conner started the scheme as a way of allowing employees to add to their wealth in tandem with the bank's progress and to feel a strong sense of ownership.

It operates like a savings plan but with a twist. Employees aged over 21 and with six months' service can contribute a part of their salary, a portion of their Central Provident Fund (CPF) contribution, or both each month.

The amount is capped at $3,000 a month or 20 per cent of an employee's salary, whichever is lower.

At the end of one year, the funds can be taken out and used to buy shares at a price set when the employee signs up for the plan.

In 2004, the share price was set at $5.05 for the first tranche. Last year, the second tranche was priced at $6.45. OCBC shares closed at $9.25 yesterday.

An employee could also wait two years and buy more shares or get cash plus interest.

He could earn interest at a preferential rate of 1 percentage point above the prevailing 12-month Singapore dollar fixed deposit rate. Or if he uses CPF, the interest paid is half a percentage point higher than the prevailing CPF interest rate for ordinary accounts.

The bank said that almost 100 people qualified for the maximum $3,000 contribution. Those making the maximum contribution who signed up in 2004 could have had almost $60,000 in capital gains at the end of two years.

This is based on the first tranche price of $5.05 and assuming that all the cash contributed went into shares.

The average employee contributed $600 a month to the plan and they would have gained about $12,000.

Three of the many winners are cluster manager Dennis Tan, group treasury assistant vice-president New Say Ping and bank officer Keline Tang.

Mr New, 30, and Mr Tan, 41, signed up for the two tranches launched so far and chipped in the maximum amount. Ms Tang, 35, missed out on the first tranche but signed up to contribute 10 per cent of her salary last year.

They declined to reveal details of their gains but agreed that it is a win-win situation.

'The scheme is unique as it encourages savings and helps grow our wealth,' said Mr Tan. Mr New agreed, saying: 'Either we get capital gains when the share price goes up, or we earn interest at a higher rate.'

Ms Tang regretted not committing more than 10 per cent of her salary: 'I will definitely come in again when the next tranche is offered.'

OCBC's head of corporate communications, Ms Koh Ching Ching, said 44 per cent of the bank's 8,000 employees have joined the plan, up from 33 per cent in the first year.

The bank's human resource senior vice-president, Mr Ernest Phang, said the plan augmented the more traditional share options and deferred share plans, which are linked to performance.

In May, OCBC enhanced its share option scheme by making it easier for staff to exercise options without an upfront cash payment.

Mr Phang said: 'These plans are the brainchild of our CEO. He wanted customers, shareholders and staff to grow their wealth with OCBC. For the staff, he especially wanted them to feel a sense of ownership for the bank.'

How plan works

• The scheme allows staff over the age of 21 with at least six months' service to contribute a part of their salary, a portion of their CPF contribution, or both each month.
• Capped at $3,000 or 20 per cent of monthly salary, whichever is lower, the funds can then be used to buy OCBC shares at a price set when the employee first signs up for the plan.
• In 2004, that price was set at $5.05 for the first tranche. Last year, the second tranche was priced at $6.45. OCBC's share price closed at $9.25 yesterday.
• At the end of one year, the funds can be used to buy shares at the set price.
• Alternatively, employees can wait till the end of two years and purchase more shares, or receive cash.

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