Banks generally receptive to Lehman buyback proposal
Updated: 2008-10-11 07:40
By Lillian Liu(HK Edition)
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Most banks have given "positive response" to the government proposal on the buyback of Lehman Brothers minibonds from affected customers, Hong Kong Association of Banks (HKAB) saidFriday.
He Guangbei, chairman of the association, said "most banks are willing to consider the proposal and work closely with legal and financial advisers" to help the bond holders recover losses.
"The proposal will be a package of solutions and we expect every bank will adopt similar method to tackle the issue," He told reporters at a press briefing. "But I can't quantify the losses each bank would suffer; those minibonds need firstly to be re-valued."
Hong Kong government is hiring legal and financial advisers to oversee the bond redemption. An Australian law firm Mallesons Stephen Jaques is designated to be the legal adviser, while the recruitment of a financial adviser for the buyback is still under discussion.
He expects the name of the financial adviser will come out next week.
He said he couldn't comment on how long it will take to re-value the minibonds, but the redemption will be made as soon as possible. He used "unfortunate" to describe Lehman Brothers minibond holders.
Hong Kong investors bought a total of HK$15.6 billion in Lehman Brothers derivatives.
According to statistics from the Hong Kong Monetary Authority (HKMA), about 21 banks in Hong Kong have sold minibonds and similar products backed by Lehman Brothers, the former Wall Street powerhouse that filed for bankruptcy protection last month.
Investors have staged protests, with some complaining they lost millions of Hong Kong dollars in the minibonds tied to troubled Lehman Brothers. The HKMA said it is investigating nine banks over the sale of Lehman's minibonds that sparked protests.
The HKMA has received 7,730 complaints about the minibond sales and has opened 41 investigations.
Y K Choi, deputy chief executive of the HKMA, said most complaints they have received are investors accusing their agents of using misleading sales practices and dupe them to think their money was in safe hands.
He said there might be "inappropriate" practice in financial product selling in Hong Kong. But he is confident in Hong Kong's sound monetary and regulatory systems.
The HKMA says it is considering a ban on banks selling complex investment products such as minibonds. It is one of the possible measures to be taken to protect small retail investors.
(HK Edition 10/11/2008 page1)