China Daily, 10 Oct 2008, Lillian Liu
DBS said it will redeem 70 investors' Lehman Brothers-related products sold by the bank, making it the first financial institution in Hong Kong to compensate investors in response to the government's pledge to help the bond holders recover some losses quickly.
Some 21 banks in Hong Kong, according to the Hong Kong Monetary Authority (HKMA), have sold minibonds and similar products backed by Lehman Brothers, which was the fourth-largest investment bank in the US until its collapse last month.
A spokeswoman at DBS said the bank is only responsible for the structural bonds, while other bonds related to Lehman Brothers were issued by another firm.
She said the bank has designated accounting firm KPMG to revalue the products to be bought back and did not rule out the possibility that some bond buyers will be totally refunded.
Analysts said DBS set a good example for other banks having issued Lehman Brothers-related products, but noted that it may be a while before investors actually receive their compensation.
Tens of thousands of Hong Kong people invested a total of HK$15.6 billion in the Lehman Brothers-backed derivatives, and they all face substantial losses.
The number of complaints concerning Lehman Brothers-related products has increased sharply to 7,730 from 5,500, and will grow further, the HKMA said yesterday. The authority has opened an investigation into whether the banks misled investors into buying them, it said.
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