October 27 Protest

To give our viewers first hand information on the development of the Lehman Brothers minibond scandal, we have attended the protest held this morning at Central.

Protesters gathered at the Hang Seng Bank Headquarters and went to Public Bank(Hong Kong), Chiyu Bank, Industrial and Commercial Bank of China (Asia) and Bank of China to express their discontent on these banks' reactions to the Lehman Brothers minibond incident.

We were able to interview investors who put their money in Nanyang Commercial Bank for their comments on this incident.

Our interviewees showed us the promotion brochures of these minibonds.

300 investors who purchased derivative investment products at DBS attended a meeting this morning.

Kam Nai-wai claimed he was told that some investors has reached an agreement with their banks.

"Some banks have approached us and expressed that they do not wish that the case would be brought to courts," he said. "But I personally think that the whole process would speed up if we go to courts."

The Secretary for Economy and Finance, Francis Tam Pak-yuen stated that they have received over 1200 complaints, worth over HK$700 million.

Angry investors protest

Around 100 investors protested to the Monetary Authority and the Securities and Futures Commission this morning.

They include customers of Citic Ka Wah Bank, Chong Hing Bank, DBS Bank, Citibank, Standard Chartered Bank, ABN Amro, Royal Bank of Scotland and Dai Sang Bank.

The customers expressed that the banks had deceived them into putting their life savings into the high-risk investment products and urged the banks to make full repayments.

Although DBS has announced that they will notify clients about their compensation, protester Wong Kam-chuen, who invested over HK$2 million in the bank's retail structured notes, claimed he heard nothing from DBS.
"The bank staff could not tell me when the investigation will finish. I really have no idea of when I can have my money back," said Mr Wong.

Investors do not accept DBS pay-out

DBS is willing to give a pay-out to investors but they are not accepting it because it is far less than the total amount of investment.

The bank will compensate the full amount of investments to some of the investors but it is believed that most of them will not get all their money back.

DBS will be sending out the first batch of compensation letters to some of the investors (the total number of investors who bought the Lehman Brothers minibond in Hong Kong and Singapore amounts to 7700 people). After the investors accept the pay-out, they would deposit the money into their accounts next week.

DBS will pay out $414M

DBS will begin paying up to HK$414 million to investors who have invested about HK$1.86 billion in Lehman Brothers-linked derivative investment products after investigating that the way these were sold did not meet the bank's standards.

It was important for DBS to 'do the right thing' and 'in cases where our standards are not met DBS will not hesitate to make cash compensation', said Richard Stanley, chief executive of DBS (Hong Kong).

The bank would not comment on what the breakdown of the refund would be and which clients (if any) would have priority or what criteria it would use.

More scandals on promotion methods

After a meeting between investors and banks, more scandals, especially on the promotion methods of the bank, are uncovered.

Reports show that consumer banking staff of various banks encouraged investors to apply for personal loans to purchase the Lehman Brothers derivatives. Now, these people not only lost their principal and the interest pay-out, but they also carry a large amount of debt under their names!

Investors vow to carry on with the fight

Many holders of the Lehman Brothers minibonds were not impressed by the banks' offer to buy them back at current market prices.

They vowed to carry on fighting for a full refund, while others said they would not accept any buy-back that values their investment at less than 70% of their purchase price.

"Before, the estimated value averaged between 60 to 70%," said Peter Chan Kwong-yue who represents many Lehman minibond holders. "Later, this average may be 50% or may fall to 20% because there is no indication as to how long the buy-back process is going to take."

"Such a buy-back is worthless," said Siu Kwai-ching, 50, who invested around $6 million in these minibonds through Bank of China (Hong Kong). "We are not backing off."

On the other hand, some investors are considering a buy-back. "It depends on how they value my investment," said Mr Chan Hong-yuk, 63, who spent around HK$1.2 million on the minibonds and would accept a buy-back at 70 to 80% of what he paid. "A low valuation of say, 10 or 20%, would certainly be unacceptable...I had some sleepless nights. I worked hard for all my life and the investment is almost all the money I have."