CALL them what you like - small investors, mum-and-dad investors, retail investors - but there was no doubt where the DBS Bank contingent were this week: out in the cold.

While the little guys looked on, DBS staged a financing coup by raising $1.5 billion in new capital from institutional investors in just a few hours last Thursday.

It was a stark testament to the great faith investors have in DBS during a period of tight credit, which has seen some of Wall Street's biggest guns having to pass the begging bowl around to get a cash infusion.

But while the champagne was popping in Shenton Way, miffed small investors could only stare hungrily at the bountiful feast DBS had served up to sophisticated investors such as insurance firms and wealthy individuals.

It had sold a type of securities called preference shares. They pay a 5.75 per cent dividend for the first 10 years, before becoming floating rate notes after that.

This is well above the paltry 0.25 per cent return a saver gets on his POSB savings account.

But the preference deal rankled in a deeper sense than just rates of return. For many miffed small investors who are also customers of the bank, DBS is not simply any bank. It is the people's bank - their bank, in other words.

It inherited the title 10 years ago when it took over the much- loved POSB, which then counted almost every adult Singaporean as a customer.

So, if goodies were to be dished out, why were they being excluded?

Given the many years of unstinting support these savers had given the bank, surely DBS could have found a means to tweak its preference share offering to include a retail tranche that could have been offered via its ATM network.

One reader - Mr Sia Cheong Yew - wrote to say that the exclusion of small investors simply meant DBS was not interested in them. 'So easy to give the shares to the big boys. Less of a hassle,' he noted.

But bank spokesman Karen Ngui told The Straits Times via e-mail that preference shares are not as easily traded as equities and would appeal more to institutional investors.

Many in the stockbroking industry would agree. After all, each tranche of DBS preference shares would cost an investor $250,000, putting it out of the reach of many.

Given the large sums involved, the preference shares are hardly likely to be traded. Investors may have to hold them in perpetuity, unless the bank redeems them.

Some also noted that DBS might have opted against a retail tranche because of the additional costs it would entail.

Why undertake a retail offering that may attract only $50 million to $100 million in subscription money from the public when the entire sum can easily be snapped up by a big insurance firm or a fund manager?

But others feel that it would have been a good public relations exercise that DBS might consider if it wants to raise funds again.

The 5.75 per cent yield offered on the preference shares is so attractive that DBS might be surprised by the response from its own savers - had the offer been opened to them.

And DBS has held similar fund-raising exercises involving retail investors before.

The POSB/DBS ATM offerings of new shares made by listed firms such as CapitaRetail China Trust and CapitaMall Trust were snapped up within minutes by small investors.

Then, there was also the happy precedent of the $1.1 billion preference share offering by DBS in 2001, which got an excellent response from retail investors.

Seven years later, this preference share, offered with a face value of $100 per unit, was trading at $108.70 last Friday on the Singapore Exchange. This is on top of giving its holder a healthy dividend of 6 per cent a year.

The experience of OCBC Bank and its various preference share offerings are worth relating as well.

The bank had received feedback that less wealthy investors would also be keen on such instruments after a preference share offer it made to sophisticated investors in 2003.

It responded by making an offer of such preference shares in lieu of a special cash dividend to shareholders that same year.

Because of the broad reach of investors it covered, this offering - it pays a 4.2 per cent dividend and costs just over $1,000 per lot - is actively traded to the tune of $500,000 or more daily.

This should silence the cynics who presume that retail investors are not interested in preference shares, and that this class of securities is not actively traded like equities.

So, while it is pleasing to know that DBS is a highly bankable name among investors when it needs to raise funds, the bank should not preclude giving its small savers and shareholders a bite of the cherry and live up to its name as the people's bank.

engyeow@sph.com.sg