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Let's see what Tharman and co does for Singaporeans. If DBS HK pays the Hongkongers back, will DBS SG do the same? One can argue that they are separate corporate entities under different country governance. HK banks to repay Lehman minibond investors HONG KONG: Hong Kong banks that sold minibonds linked to now-bankrupt Lehman Brothers have agreed to repay tens of thousands of investors up to 96.5 per cent of their investment, regulators said Sunday. The 16 banks will buy back a large chunk of the financial products at the centre of a major scandal in Hong Kong, after they were sold to more than 40,000 investors before their value tanked when the US bank went bankrupt in 2008. Investors ploughed a total of HK$15.7 billion ($2 billion) of their savings into minibonds and other complex products backed by Lehman Brothers. Welcoming the deal the Securities and Futures Commission (SFC) and Hong Kong Monetary Authority said the agreement "will provide substantial recoveries for all customers" holding the products. "This outcome would have been seen as impossible in the months following the collapse of Lehman and demonstrates the value of good regulators responding efficiently and robustly when things go wrong," SFC chief executive Martin Wheatley said in a statement. The HKMA said investors would recover 85 to 96.5 per cent of their initial investment, up from 60 to 70 per cent in an earlier agreement. The deal must first be approved by at least 75 per cent of noteholders at meetings expected to be held in May, receivers PricewaterhouseCoopers said in a statement on its website. The move should draw a line under a saga over compensation for the thousands of investors -- many of them retirees -- who bought the minibonds on the understanding their money was safe. Investors accused the banks of misselling the complex products, sparking a protracted tussle between customers, regulators and the banks over the minibonds buyback. The 16 banks include Bank of China (Hong Kong), Bank of Communications Co. (Hong Kong) and the Bank of East Asia. A spokesman for Hong Kong's government said: "The government is pleased with the high rate of recovery in the value of the Minibond collateral." Former Wall Street behemoth Lehman Brothers collapsed in September 2008 under mountains of debt, leaving investors reeling and sending shockwave across the global financial system. -AFP/wk

http://www.reuters.com/article/rbssFinanci...UST585520090722 HONG KONG, July 22 (Reuters) - Hong Kong's securities watchdog said on Wednesday that 16 banks had agreed to pay about HK$6.3 billion ($813 million) to compensate eligible investors who lost money on structured products or minibonds offered by collapsed U.S. bank Lehman Brothers. "The agreement that we have reached today will enable the vast majority of investors who hold minibonds to receive a substantial return of their capital," said Securities and Futures Commission Chairman Martin Wheatley. "The total amount that they'll receive will be equal to or greater than what they could otherwise recover at current market values," he told reporters following an SFC meeting with the banks. More than 30,000 Hong Kong residents ploughed nearly $2.5 billion into the derivative products which failed as Lehman Brothers collapsed last September. If the agreement is accepted by investors, "the vast majority of them will be able to get back 70 percent or more of their original investments," Financial Secretary John Tsang said in a statement following the SFC announcement. The agreement will put an end to more than 10 months of distress for investors, and will also enable the banks to resume their normal operation, Tsang added. Many of the investors blamed the Hong Kong Monetary Authority (HKMA) for allowing local banks to sell the products without making investors aware they were risky products. They took to the streets, staging a number of protests in the past year and prompting a government inquiry. The HKMA and the Securities and Futures Commission have since made separate recommendations on how to better protect investors. They include forcing banks to separate their deposit-taking and retail investment businesses. Minibond distributors Sun Hung Kai Financial (0086.HK) and KGI Asia earlier this year agreed to compensate investors in full. Investors in Singapore and Indonesia also lost money on the products. Singapore investors have only been compensated for about a third of their investments. (US$1 = HK$7.75) (Reporting by Nerilyn Tenorio, Donny Kwok and Susan Fenton , Editing by Tomasz Janowski)

Business Times - 19 Sep 2008 By R SIVANITHY IF YOU want a front-row lesson in first-class financial obfuscation for structured products, then look no further than the way the recently collapsed Minibond Series 3 notes was packaged and marketed. Up to $200 million of these notes were sold to a gullible retail public who probably thought they were buying a five-year bond issued by six leading banks that paid a 5 per cent coupon per year but were in reality, not only exposed to the US housing market but also to a complex credit default swap arrangement whose substantive party was the now-bankrupt Lehman Brothers. The cover of the Pricing Document prominently stated that the issue was credit-linked to six financial institutions, namely Barclays Bank, Citigroup, Deutsche Bank, Goldman Sachs, UBS and UOB - these banks being defined as Reference Entities or REs. Much was made of the fact that the viability of the notes depended on whether these six banks or REs would go bankrupt and there are repeated warnings to this effect throughout the document. Investors were given plenty of information on the credit ratings of these six REs and links to their websites while Lehman is listed only as the Arranger in small print. The fine print at the bottom of the cover, however, states that Lehman is also Swap Counterparty, besides being the arranger. Not many retail investors would have seen this, and if they had, few would probably have understood the importance of this information. More on this later. Investors, however, were urged to read the Base Prospectus in conjunction with the Pricing Statement. In the former's page 24, it is stated that 'the Notes are intended to provide investors with a coupon for assuming exposure to the credit risks of companies or of sovereign states, that is, the Reference Entities'. 'By acquiring the Notes, investors can gain exposure to the credit risks of the REs without directly holding debt obligations of the REs, for example, bonds issued by the REs.' Note that the language used creates the impression that gaining exposure to the credit risks of the six REs is something desirable - and, by extension, this suggests that the notes are good investments - when in reality, the key to the whole issue is in the words 'without directly holding debt obligations' of the REs. In other words, the six REs are not participants in the notes, receive no money from the issue and are not issuers of the notes. Instead, the next sentence reveals all: 'This (exposure) is achieved by linking payment of the principal and/or interest on the Notes to an RE's default.' Who provides this link? In all the documents, this is given as Minibond Ltd but this is a special purpose vehicle with only US$1,000 in capital. The substantive party behind Minibond Ltd is most likely Lehman Brothers. Here's how it works. Lehman most probably owned securities in the six REs. In order to hedge itself against a default by any of these REs, it set up Minibond to offer notes to the public. Minibond offered these notes with attractive terms and because of clever marketing and pricing, collects a certain amount of cash from retail investors. This money is then used to buy securities - in the case of Series 3, it was collateralised debt obligations (CDOs), most probably on US mortgage instruments. Minibond then collects the cash flows from these CDOs. In order to pay investors the quarterly coupon and to ensure no problems with currency/interest rate fluctuations, it swaps these cash flows with a counterparty, which is Lehman. It is stated elsewhere that if the swap deals fail in addition to an RE default, the whole issue will be terminated. Thus, since Lehman has failed, so has the issue. The crux of the entire deal appears on page 17 under Credit Default Swap where it is stated that Minibond has an agreement with Lehman in which Lehman pays Minibond a premium for insuring Lehman against credit losses on the REs. In effect, the money that Singapore retail investors exchanged for the notes were not for any bonds issued by the six names that appeared on the cover of the prospectus but instead, went towards insuring Lehman against losses in its portfolio. The quarterly coupon investors received was not interest from the six REs but instead, Lehman paying an insurance premium, partly financed by cash obtained from CDOs. In short, Lehman structured a synthetic derivative product to hedge its own exposure to various instruments and linked it to the default likelihood of six major banks. Should the true nature of the instrument have been disclosed upfront? Yes, especially since it was marketed to retail investors - though it has to be said that many other notes and products have been sold in a similar manner and the only reason that the poor disclosure of this particular series of notes surfaced is that Lehman went bust. Had it not, or had it been rescued, the coupon payments would have continued as per normal and no one would have been the wiser. Moreover, while it is possible to piece together the actual substance of these notes from the documents available, it is a tedious process and arguably not within the ability of the average retail investor. There are many issues also unresolved - for one thing, how many other similar products are out there? How could the authorities allow the conflicts of interest inherent in one party from being the arranger, issuer and swap counterparty? How is it that, if Lehman alone performed all these functions, there was virtually no disclosure of Lehman's financial position or credit rating? Instead, investors' attention was focused on the six REs - wrongly, as it turned out. Finally, if disclosure was weak, then so was knowledge among distributors. Some brokers did not understand the true nature of the instrument and sold it as a bond. Maybe the name had something to do with it, though as investors have now found out painfully, what they had bought was not a bond but a convoluted swap-based instrument. Thus, should such products be allowed to continue to come into the retail market?

Hi All bros and Sis, Anyone same plight as me ? My mum saving for all these years normally in the bank FD... but somehow 2007 when she renew the FD, the consultant managed to pursue her to switch to minibond... which is under Lehman ... i think her saving is all gone... 40k plus.. my mum only earning 800 per month think of tat make me cry... I dun dare to tell my mum her saving might be all gone... i afraid she will break down if she know about it ... She cant read english so i told a lies to her its ok inside... I planning to save the money for her... after 4yrs then return her say bank return her the principal $. I saw that MAS is going to help those old and cant read english one... anyone has more news about it ?? anyone same situation as me can contact me ...

my mother in law bought some of these from HSBC, unfortunately. Would like to check with bros out here, on what is the likelihood of getting some money back? what is the next course of action, besides praying hard? thanks