Singapore, Hong Kong investors lose US$240m after Lehman’s collapse

HONG KONG – A Singaporean bank says clients who bought 360 million Singapore dollars (US$240 million) in structured notes linked to Lehman Brothers will likely lose their investments, but the bank will offer them a fraction of the amount in compensation.

The collapse of the US investment bank has affected thousands of investors in Hong Kong and Singapore who bought financial products linked to the bank, including retirees who invested their life savings. In Hong Kong, the outstanding amount of the products is 20,2 billion Hong Kong dollars (US$2,6 billion), according to the Hong Kong Monetary Authority.Billions of dollars in souring debt forced Lehman Brothers Holdings, once the fourth-largest investment bank in the US, to file for bankruptcy last month amid the world’s worst financial crisis in decades.Singapore’s DBS Group said that 4 700 clients in Singapore and Hong Kong bought into Lehman-linked structured notes from the bank.The bank said it is still assessing their value and will announce the value next week, but added “our initial expectations of the worst-case scenario whereby investors will lose their entire principal investment amount is likely to materialise”.However, DBS said it will offer compensation to clients in cases where service standards were not met, with compensation totalling up to 80 million Singapore dollars (US$53,2 million).DBS spokeswoman Glendy Chu said yesterday that the bank will also issue compensation on the basis of financial need.Some investors have complained that sales staff at various banks selling Lehman-related products were misleading and did not fully explain the Lehman Brothers connection.Hong Kong regulators are investigating the allegations.In Hong Kong, the outstanding amount of the products is 20,2 billion Hong Kong dollars (US$2,6 billion), according to the Hong Kong Monetary Authority.Billions of dollars in souring debt forced Lehman Brothers Holdings, once the fourth-largest investment bank in the US, to file for bankruptcy last month amid the world’s worst financial crisis in decades.Singapore’s DBS Group said that 4 700 clients in Singapore and Hong Kong bought into Lehman-linked structured notes from the bank.The bank said it is still assessing their value and will announce the value next week, but added “our initial expectations of the worst-case scenario whereby investors will lose their entire principal investment amount is likely to materialise”.However, DBS said it will offer compensation to clients in cases where service standards were not met, with compensation totalling up to 80 million Singapore dollars (US$53,2 million).DBS spokeswoman Glendy Chu said yesterday that the bank will also issue compensation on the basis of financial need.Some investors have complained that sales staff at various banks selling Lehman-related products were misleading and did not fully explain the Lehman Brothers connection.Hong Kong regulators are investigating the allegations.