CIMB-GK to buy back Lehman, Merrill Lynch-linked products

[Garlic]

Source: http://www.channelnewsasia.com/stories/sin.../386009/1/.html

 

 

SINGAPORE: CIMB-GK Securities has become the first brokerage house in Singapore to offer to buy back financial products that are linked to the recent American financial meltdown from investors.

 

CIMB-GK said in a statement released on Tuesday that it would buy over Lehman Minibond Series 3, 5 and 6 and Merrill Lynch Jubilee Series 3 LinkEarner Notes at the original investment amount, irrespective of interest earned.

 

But the scheme will first apply to what the company calls the "vulnerable investors". CIMB-GK said the group includes investors who are aged above 62, are less educated and have little investment experience.

 

The company did not say when or how the money will be paid, but it did say that interviews with vulnerable investors have already been conducted.

 

According to CIMB-GK's estimates, only 2 per cent of its total sales of S$19 million worth of Lehman Minibond and Merrill Lynch Jubilee Notes were made to vulnerable investors.

 

Those who fall outside the vulnerable category will be handled on a case-by-case basis. Some of these investors said compliance officers from CIMB-GK have already called them to arrange for an interview.

 

DBS Bank is also holding a dialogue session with affected investors on Thursday.

 

 

- CNA/so

[Scenic98]

well done...takes a smaller shop to step up. and i think CIMB is a Malaysian broking house that bought over GK Goh. really a slap on our rulers man.

[Modykoh]

i thought now all banks are doing the same ??

the next question come is what about the rest, outside these parameter??

[Chrispie]

Seriously i dun think any compensation is necessary, at least to those that can read and write.

 

You invest at your own risk, lose money? Just too bad. Misled? come on.. you should be at least be bothered to read the fine prints! Its a few hundred G's you are talking about, not like buying a spoilt vacume cleaner. If one cant be bothered with his own so called 'blood and sweat' money, why should the authorities care?

 

In my opinion, this is the best opportunity to educate the masses. What 'Moneysense'? That doesnt help. What has happened now is the best thing you can put in the textbooks to make ppl smarter.

 

With due respect, this is the stinking attitude of most singaporeans. When things goes bad, they just turn to govt and expect them to play god. No wonder we can never stand on our own as individuals.

 

My view may be rather extreme... but its my personal thoughts.

Edited October 29, 2008 by Chrispie

[Rickster]

I tot DBS has already done that last week?

[Rickster]

To a certain extent, I have to agree that we can't expect the govt to bear full responsilbility for everybody who invested in those mini-bonds.

 

But to help only those who have already retired and old folks who are guillible, I think its a reasonable move.

 

My mom also lost 110K in buying the minibonds thru hong leong finance, however, i don't bear any ill feeligns toward the garment for not helping her and only helping the "vulnerable" group.

 

This whole fiasco is already enough to be a big wake-up call for people who have been blindly trusting words that come from the banks.

[Gearoil]

Your views are not extreme...as a matter of fact ..they're are facts and are supposed to be accepted as reality.

 

Don't be too happy when you read 'propaganda' news like the above about compensation...when there is really no word from those 'compensated' on what they were compensated and who are those who really are compensated!

 

As a matter of fact, none should be compensated...simply becos I'm sure, before any of those affected signed on the dotted line and placed their money...there is a definite clause ( in very small print) termed something like this.....'including the possible loss of the principle amount'!

 

There you have it!

[Modykoh]

For sure, certain extend of help will be rendered to the retiree, illiterate. this is a small fraction and this is to claim the siatuation. there is no compensation but buy back.. principle wise is totally different. Their case may be real.

 

For these outside this parameter, may not be possible. Some wan need to bear the sxxt..is either the banks or the investors. If bank fails, the econ and country fails. Wat happen to the lenbro... the gov let them die, cos is the investor monies.

 

the next few months, we see how the bank handle the siutuation. trickly .

 

If u look at during the aisa crisis,in hong kong, the riot police were called in to dispease the ppl. look at them. they really protest, not for any political reason but purely their money. this is worst to handle...u see men and women.

 

The banks/MAS can not affort to treat the investor in this extreme "You invest at your own risk, lose money? Just too bad. Misled? come on.. .................."

 

In the forum, we can talk wat we can..but handling is a compete seperate matters.

Edited October 29, 2008 by Modykoh

[Pentium]

I strongly agree that vulnerable investors should be repaid as some of the mighty banks wipe out every single cent from the old folks and placed into a single product. From here we know that there is mis selling as ther is completely no diversification at all. Those who are educated, cannot claim that they don't know this and that and need the RM to read line by line and explain the whole damn prospectus.

[Hoppie24]

I agree totally with you, when things turn bad, they started to KPKB but what if the economic bloom? Their bonds goes up by 20% or more, you think they still will KPKB?

 

But there is 2 sided story here, some idiots in the bank just push without explaining properly and the idiots who got push never read properly (Greed comes into play).

 

I don't see anyone compensating me becuz my share price drop 81%, should i go MAS, no one tell me the share can drop more than 80% one!!! can i have back my principal? CRAP!

Edited October 29, 2008 by Hoppie24

[Chrispie]

Sorry to hear about your mum's case..

 

The key argument from the investors are that the RM sold the pdts as something being very SAFE, with very GOOD returns. If you look at it in context, i think what the RM sold was very right at the time of sale.

 

Say if you invested just last year, where it was a bull market, every damn thing is gg up. Even a dog can pick a winner. Put yourself in that period again, and someone tells you Lehman brothers is gg bankrupt next year, Merril is gg to be swallowed, AIG is gg to collapse. You will say that is a bunch of bullsh!t. Investing in these hundred year old banks which are literally the pride of american finance system? OF COURSE they are safe!

Good returns? Come on, the returns i must say IS pretty good with that kinda quarterly payouts. If i am a RM, i will think it is damn safe and damn good too!

 

Now when things turns bad.. ppl start to point fingers. I feel disgusted actually by these people and I am not apologetic to say that. No one can determine the future. No one can see the extent of the Subprime.. it is always easy to say on hindsight.

 

I also wonder why would anyone, no matter what the RM says, put ALL their life savings into such pdts. Even if it is 99% safe, the 1% will just clean you up. What are they thinking?? From the look of it, these investors are not those with high risk tolerance. So the only reason for them to invest everything is probably greed.

 

In any crisis, there must be some casualties. Lets hope these will serve as a precaution to everyone else. Now i tell my mum to avoid talking to any RM when she goes to the bank. We will see many RM out of jobs soon.

[Rickster]

In fact, my mom only bought the minibonds in september. 1 month before Lehman's collapse. When the news came out, my mom thought she was still quite safe as she did not buy Lehman's products but a bond from Hong Leong that is based on major banks in the region. She does not even know Lehman existed as my mom is not really an investor. She is the type who would buy govt bonds and only govt shares like SMRT & Singtel.

 

Thats y when her fixed deposit matured and she was taking it out of hong leong, the RM then immediately sold her the minibond structured product.

 

I would not use the word as greed as this thing really is a case-by-case issue.

 

If buying a bond/putting money in fexed deposit is considered greed, then who is not greedy?

[Chongster]

bonds do not go up 20%, unless you buy at discount to par.

 

the whole issue here is not compensating for risk. it's compensating for misrepresentation.

 

which is why the poor old lady who didn't understand the product, didn't pass PSLE, don't understand english, and who thought she is "putting money with the bank", will get compensated. the poor paraphelgic who got paralysed in a bike accident, who put his insurance payout in these minibonds to earn a wee bit more interest wouldn't.

[Chongster]

the so called very good returns come with a liquidity trap. it's better than fixed D but you lose the use of your money for 3-5 years. and at 3-4 percent with no liquidity, i wouldn't call it very good. it definitely is still below inflation.

 

i think greed is sunshine empire, greed is clob, greed is property, greed is china stock, greed is forex margin trading.

 

but i agree if the investors know what the product is, and was told it is something very safe with good return, then there should be no compensation. only investors who doesn't even know what the product is, who couldn't spell minibond, who only recognise lehman or merill through the logo (alamak, the ang kong is same as mine!) should be compensated.

Edited October 29, 2008 by Chongster

[Newbie_driver]

i tend to agree with you to a certain extent. Ultimately, the responsibility lies in the investors cos no one can force u to invest if you dun want to invest. Having say that, there are those so call "financial advisors" who use hard-sell or sweet-talk tactics to target the old people (uneducated on investment) to meet their numbers.

 

there are always 2 sides to the story, it really depend on which side u believe.

 

But one thing i notice which i find very disturbing is anything goes wrong find the gahman to solve the problem for you. It is like asking the gahman to bear all the risk of your doing, maybe it is with this kind of attitude that pple dun really bother about the risk and responsibilities that comes with the decision being made. this is just my personal opinion. you dun find pple going to the gahman to help them solve good things.

[Newbie_driver]

well, greed is the root of all evil. US already present u with a very classic case of greed with its own downfall.

[Newbie_driver]

There is no such thing as SAFE investment, if an investment is safe then it will not be call an investment at all. All those investors are just trying their luck to get back what they invest by coughing out whatever excuse they can come up with since now there is an avenue for them.

[Sabian]

Let's just say the banks ought to know better than to push aunties and uncles to be become part time credit insurers.

 

Indeed, one blogger wondered how the retired investors ended up as 'protection sellers' of these CDS.

 

His posting read: 'These financial institutions (FIs) pay a periodic 'premium' to these laymen, in return for 'protection' against any of the number of 'credit events'. How can our uncles and aunties end up as insurers (and still getting cut by those FIs), with their life savings used as collateral?'" (from Business Times article)

 

http://www.businesstimes.com.sg/sub/storyp...,303145,00.html? after 9pm free access.

 

Easy to say no one put gun to aunty head and aunty greedy so deserve it. If this is the kind of prevailing thought, then it is no different from the so called "greedy" US banks cos no one put the gun to the greedy banker and the greedy home buyer heads.

 

But the truth is the fallout hurts everyone as such irresponsible behaviour led to the mess today as it was left unchecked.

 

MAS requires the advisory process to be adhered to and some banks (from the RM to the Branch Manager/ Team Head to Compliance to the Financial Services Head) were sleeping on the job. Some pple thought that it will be business as usual but this time sh.it hits the fan.

 

If the process had been adhered to, the retirees (hence the term: vulnerable group) would never have been allowed to plonk in such a huge amount of their savings to become credit insurers.

 

This is like taking unwanted gunk from your used engine oil and conning your next door granny into believing the gunk is essence of chicken and when she is hurt after drinking your gunk, u say that no one put a gun to her head, only sweet talking involved. (u are lucky if u don't get lynched by a mob)

 

The banks foresaw the consequences if they did not make the first move before it goes to court and sets a restrictive precedent and MAS sanctions. In my opinion, the banks got off lightly.

 

For those who can read and write and become part time credit insurers, tough luck...

Edited October 29, 2008 by Sabian