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

[Devilmaycry]

Statement of DBS Bank Ltd.

 

(Singapore: 22 October, 2008)

 

Since the collapse of Lehman Brothers on 15 September, we have been deeply concerned about DBS customers in Singapore and Hong Kong who have invested in structured notes with Lehman as a reference entity and understand the anguish they are facing. When DBS first distributed these notes a few years ago, the global financial landscape was very different. Nobody could have imagined the extent of the fallout from the US sub-prime crisis, nor the collapse of a venerable 158-year-old financial institution like Lehman and the toll this would take on investors.

 

DBS CEO Richard Stanley said: "I am deeply concerned about the anguish our customers are experiencing. I believe that it is important for DBS to do the right thing and we are treating this matter with the priority and importance it deserves. I assure you that my colleagues and I will work as hard as possible to resolve the situation. Every customer is important to us and in cases where our standards are not met, DBS will not hesitate to make cash compensation."

 

These notes were sold to 4,700 customers in Singapore and Hong Kong who invested a total of SGD 360 million (about HKD 1.86 billion). As all customers are important to us, our priority is to ensure that all who have raised genuine concerns are given a fair hearing. We will not be making a blanket settlement with any customer segment in particular, however, we will fast-track cases involving customers in unique and difficult circumstances.

 

As a matter of policy, we do not discuss individual cases. However, to-date we have found that a number of cases did not meet the standards DBS upholds and the Bank will be compensating these customers with effect from tomorrow. Based on the number of cases we have reviewed, we estimate that the total customer compensation in Singapore and Hong Kong will be in the range of SGD 70-80 million (about HKD 362 - 414 million).

 

The valuation process for the credit event redemption amount for the relevant series of the Constellation Structured Retail Notes is currently underway. Regrettably, our initial expectations of the worst-case scenario whereby investors will lose their entire principal investment amount is likely to materialise. DBS will not gain from this process and the Bank will make a final announcement next week when the final credit event redemption amount, based on prevailing market conditions, is determined.

 

We will continue to work closely with the HKMA to ensure that all cases are handled in a prompt and comprehensive manner.

 

- End -

 

 

DBS SECOND-QUARTER EARNINGS UP 1% TO SGD 668 MILLION

 

***

 

Steady revenues and cost discipline underpin resilient performance

amid challenging operating environment

 

 

 

SINGAPORE, 7 August 2008 - DBS Group Holdings today reported net earnings of

SGD 668 million for second quarter 2008, up 1% from a year ago. Compared to the previous quarter, earnings rose 11% as trading income recovered from a loss and total allowances were lower. First-half net profit of SGD 1.27 billion was down 1% from a year ago.

 

With the inclusion of one time charges totalling SGD 16 million, net earnings for the second quarter were SGD 652 million. This comprised an impairment charge for DBS' investment in TMB Bank, partially offset by gains from the sale of office buildings in

Hong Kong.

[Gearoil]

You think the banks want to allow this case to go to court?

 

The banks know that for a specific group of pple, they should not be sold the product in the first place if the advisory process stipulated by MAS had being strictly followed.

 

Somehow, the manager who was supposed to sign off with the salesperson, compliance dept, PFS Head, all were asleep on the job.

 

The last thing the banks want is for this to go to court because they know a certain group of customers have a chance of getting a court enforced compensation.

 

This will set the standard for all future selling (which banks are very keen to avoid). Better to self regulate than to be subjected to increased scrutiny.

 

So I find it difficult to buy the "goodwill" BS being spun by the bank's PR spin doctors. This move is out of self interest and fear that going to court will open a can of worms and drag their names through more mud.

 

Note that the banks did NOT voluntarily offer to compensate this group when this thing unfolded. The offer came only after they did a refresher on game theory.

 

If we only operate on the "It's your own $$, look after it youself", then why does MAS insist that banks even do any fact finding/ product suitablilty etc?

 

But if MAS does not hang some people for not doing their duty, another event of this nature will surface after the next round.

 

No ,you are wrong..MAS keeps their hands clean...you not happy as Pinky says..there are avenues for groups or individuals to take up on.

 

Which is ultimately the courts if they want to take it that far!

 

Even if that certain group of ppl you are referring to prefers to take this matter to court...they'll lose....plus there are big legal fees for them to foot.

 

And who has a deeper pocket than banks?

[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.

Did you buy?

Heng ah...No. Honestly, if i were approached back then, I would have considered putting in a small sum.

[Chrispie]

It is such a common thing that a typical RM hovers around the common ppl that visit banks like vultures. A few years ago i went to the bank just wanting to change my bankbook. The lady sees the balance, and there she is leading me to a RM. RM was still a pretty new concept 5 years ago and I was also blur.. In the end, i bought a lousy savings pdt. Sounds good to me at least when i was sitting there... It was only a couple of years later, when u get more savvy, you take the trouble to read it carefully then you realized it was a big mistake. Facing with the pressure of hitting sales target and also from the top asking you to push certain pdts, you just have to say what the prospects want to hear.

 

Happy, sign, case close, get the commission, and forget about you. Thinking back, who in the right mind will get anything from these RM's? Nothing beats having a financial advisor you trust, and let her/him handles everything for you. No duplication, no extra spending, and you are covered as much as possible based on your financial situation. That is what i call a win-win. If he/she is good, i refer ppl and that is what is call a sustainable biz for the advisor as well. These so call RM are just hit and run i will say.

 

I have a friend who was doing very well as a RM. But after a while, he was complaining to me that he cannot resolve ethics and income. He felt that many of the pdts he is selling are really crap pdts, but packaged in such a way to coerce unsuspecting aunties to take them up. Very often the target are those whose Fixed-D has matured. If you know how to talk, and keep on closing, these aunties are easy targets.

 

14 days cooling off period? Please, how many of them even know? For the typical commoner, i think it is still better to be safe than sorry. Just save them in the bank like any other, but buy enough insurance to cover yourself in times of illness or death. Clear cut. OF course everyone wants the 'MONEY TO WORK HARD FOR YOU' situation, but why should you trust a RM that you met for a few minutes?

 

Like the old investment wisdom says, 'If you are unsure, stay out.' They should teach that first in 'MoneySense' before anything else.(But knowing them, they will teach CPF contribution first.)

[Chrispie]

For the case of compensation and buy-back plans, it is very difficult to establish something fair and objective. For now, the only objective way to pay out is based on education level and such.

 

The other clauses are so subjective and almost impossible to enforce.

 

1. 'number of cases did not meet the standards DBS upholds' How to determine such cases? It is your words against my words.

 

2. 'Do the right thing." - sounds like some PR talk to me.

 

3. Proof of misrepresentation. - Same as point 1. Any c.o.c.k.pit recorder at every RM's table?

 

If DBS is to believe every single word these investors gg to say, they are dead.

If they dont, some ppl will keep protesting.

If they pay some, some others not paid will ask why, and it is impossible to justify to any satisfaction.

Even if they say they have paid, but since it will remain confidential, who knows who was paid?

 

Either way, DBS win.

Edited October 29, 2008 by Chrispie

[Sabian]

The banks will not want to go through the court. Most of the ""investors" have no case.

 

But for the group they are compensating. Even without admission of liability, the motivation behind the decision to compensate is obvious.

 

If the bank is on solid ground, I doubt they will cave in. Deep pockets or not, the last thing they want is to take a hit on their reputation because one or two old folks can be written off easily.

 

Bank tellers have been "trained' to guide customers' whose fat FD are due for renewal (like leading sheep to the slaughterhouse). RM will also have "reward arrangement" with teller for luring potential baits.

 

When you look at the size of the affected, no mis-selling?

 

It will be a hollow victory if it ever went to the court and the banks win. A victory in court will not exonerate them

So you see, the banks understand game theory very well.

[Sabian]

I tell my mom+ granny to ignore everyone in the bank, except the ops mgr (cos usually he/she got no sales target). My dad+grandpa hates bank staff (talk too much). They only like the ATM and CDM.

 

The rest are just mofo who will lead you to financial ruin.

 

After this episode, they lagi do not trust banks. even POSB is a DBS in disguise now.

Edited October 29, 2008 by Sabian