<TABLE cellSpacing=0 cellPadding=0 width="100%" border=0><TBODY><TR>High Notes saga: DBS Bank won't gain
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<!-- START OF : div id="storytext"--><!-- more than 4 paragraphs -->WE REFER to Mrs Rebecca Lee's letter on Wednesday, ('High Notes saga: Tell us who gains, who loses out and why'), and wish to address her concerns here.
DBS High Notes 5 is a 5.5-year structured, credit-linked note designed for investors seeking enhanced yield by providing exposure to a 'First to Default' (FTD) basket of geographically diversified investment grade credits consisting of eight Reference Entities (RE). High Notes 5 is not a 'low risk' product; it was clearly highlighted that in the worst case scenario, the investor could lose the entire investment amount. The structure and risk of the product was documented in the Pricing Statement which we gave to all our customers when they made their investments in High Notes 5.
As part of our investment sales process, we conduct a financial needs analysis to help us understand our customers' financial objectives, investment time horizon, risk-tolerance level and financial situation. In addition, a manager also calls every customer who is 62 years and above to confirm their understanding of the product. Our relationship managers are always available to answer questions about the investment, and where the questions are of a technical nature, our product experts are consulted.
When Lehman Brothers Holdings Inc., which was one of the eight REs, filed for bankruptcy protection on Sept 15, a credit event occurred in High Notes 5. This triggered the early termination of the Note as Lehman Brothers was one of the eight entities in the FTD Basket in High Notes 5. We have since been in constant contact, be it via phone, e-mail or face-to-face meetings with customers who have purchased investment products with exposure to Lehman.
DBS will act expeditiously as we unwind the Note. The final amount to be paid to the customer will be based on a formula that has been highlighted in the Pricing Statement. DBS will not benefit in this process. To provide added assurance that the bank will act in the customers' best interests, in addition to the bank's compliance and audit processes, DBS will also be appointing independent external consultants to review complaint handling and the final credit event redemption amount.
We thank Mrs Lee for giving us an opportunity to clarify this matter with her. Janet Mohan (Ms)
Vice-President
Customer Feedback & Service Management
Consumer Banking Group
DBS Bank
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<!-- START OF : div id="storytext"--><!-- more than 4 paragraphs -->WE REFER to Mrs Rebecca Lee's letter on Wednesday, ('High Notes saga: Tell us who gains, who loses out and why'), and wish to address her concerns here.
DBS High Notes 5 is a 5.5-year structured, credit-linked note designed for investors seeking enhanced yield by providing exposure to a 'First to Default' (FTD) basket of geographically diversified investment grade credits consisting of eight Reference Entities (RE). High Notes 5 is not a 'low risk' product; it was clearly highlighted that in the worst case scenario, the investor could lose the entire investment amount. The structure and risk of the product was documented in the Pricing Statement which we gave to all our customers when they made their investments in High Notes 5.
As part of our investment sales process, we conduct a financial needs analysis to help us understand our customers' financial objectives, investment time horizon, risk-tolerance level and financial situation. In addition, a manager also calls every customer who is 62 years and above to confirm their understanding of the product. Our relationship managers are always available to answer questions about the investment, and where the questions are of a technical nature, our product experts are consulted.
When Lehman Brothers Holdings Inc., which was one of the eight REs, filed for bankruptcy protection on Sept 15, a credit event occurred in High Notes 5. This triggered the early termination of the Note as Lehman Brothers was one of the eight entities in the FTD Basket in High Notes 5. We have since been in constant contact, be it via phone, e-mail or face-to-face meetings with customers who have purchased investment products with exposure to Lehman.
DBS will act expeditiously as we unwind the Note. The final amount to be paid to the customer will be based on a formula that has been highlighted in the Pricing Statement. DBS will not benefit in this process. To provide added assurance that the bank will act in the customers' best interests, in addition to the bank's compliance and audit processes, DBS will also be appointing independent external consultants to review complaint handling and the final credit event redemption amount.
We thank Mrs Lee for giving us an opportunity to clarify this matter with her. Janet Mohan (Ms)
Vice-President
Customer Feedback & Service Management
Consumer Banking Group
DBS Bank
