Hong Kong banks to buy back Lehman minibonds
Reuters
Friday, October 17, 2008
HONG KONG: Hong Kong banks will buy back minibonds offered by the collapsed investment bank Lehman Brothers from holders at market value, as proposed by the government, the chairman of the Hong Kong Association of Banks chairman, He Guangbei, said Friday.
The association, which includes HSBC and Bank of China, has appointed accountants Ernst & Young as the independent financial adviser responsible for the buyback process, including valuation of the minibond, He told reporters after a meeting with the Hong Kong Monetary Authority, the city's central bank.
"Because the market situation is volatile, it's very difficult and hard to wait until the end of the liquidation process," He said. "We are still working on a timetable with independent financial advisers. For the time being, I don't have a deadline."
He said the price should be decided according to a methodology acceptable to banks.
The Hong Kong government had proposed a way to let investors recoup some of the losses from a reported $2 billion in securities linked to failed bank Lehman Brothers, urging distributing banks to buy the bonds back.
More than 30,000 Hong Kong investors lost money on Lehman credit-linked notes, known as minibonds, after the investment bank collapsed in the wake of the global financial crisis.
"The banks have been spending a lot of time doing this," said Chan Ka-keung, secretary for the financial services and the treasury. "I thank the banks for giving the government such a quick response. This plan can really help many mini-bond holders,"
Hong Kong Monetary Authority said Friday that it had referred 24 complaints of alleged misconduct in the sale of Lehman products to the Hong Kong Securities and Futures Commission. They involved accusations of improper selling by two Hong Kong banks, the authority said.
Investors in the product have protested outside banks in recent weeks demanding compensation, with some claiming the bonds were sold as low-risk products when they were actually complex derivatives.
Investors in Singapore who bought Lehman products have staged similar protests.
Hong Kong and Singapore both have rules stipulating banks must ensure that clients purchase investment products that are consistent with their needs and risk profiles.
Reuters
Friday, October 17, 2008
HONG KONG: Hong Kong banks will buy back minibonds offered by the collapsed investment bank Lehman Brothers from holders at market value, as proposed by the government, the chairman of the Hong Kong Association of Banks chairman, He Guangbei, said Friday.
The association, which includes HSBC and Bank of China, has appointed accountants Ernst & Young as the independent financial adviser responsible for the buyback process, including valuation of the minibond, He told reporters after a meeting with the Hong Kong Monetary Authority, the city's central bank.
"Because the market situation is volatile, it's very difficult and hard to wait until the end of the liquidation process," He said. "We are still working on a timetable with independent financial advisers. For the time being, I don't have a deadline."
He said the price should be decided according to a methodology acceptable to banks.
The Hong Kong government had proposed a way to let investors recoup some of the losses from a reported $2 billion in securities linked to failed bank Lehman Brothers, urging distributing banks to buy the bonds back.
More than 30,000 Hong Kong investors lost money on Lehman credit-linked notes, known as minibonds, after the investment bank collapsed in the wake of the global financial crisis.
"The banks have been spending a lot of time doing this," said Chan Ka-keung, secretary for the financial services and the treasury. "I thank the banks for giving the government such a quick response. This plan can really help many mini-bond holders,"
Hong Kong Monetary Authority said Friday that it had referred 24 complaints of alleged misconduct in the sale of Lehman products to the Hong Kong Securities and Futures Commission. They involved accusations of improper selling by two Hong Kong banks, the authority said.
Investors in the product have protested outside banks in recent weeks demanding compensation, with some claiming the bonds were sold as low-risk products when they were actually complex derivatives.
Investors in Singapore who bought Lehman products have staged similar protests.
Hong Kong and Singapore both have rules stipulating banks must ensure that clients purchase investment products that are consistent with their needs and risk profiles.
