DBS to meet with each Lehman-product holder
Updated: 2008-10-24 07:10
By Joey Kwok(HK Edition)
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DBS will start meeting with customers soon who purchased Lehman Brothers-related products, and the payout could be as high as HK$414 million. Zhang Ting |
DBS bank will meet with customers who have invested in Lehman Brothers-related products such as minibonds to discuss the amount of compensation the bank will pay.
Based in Singapore, DBS guaranteed yesterday to pay out compensation of between HK$362 million and HK$414 million to customers in Hong Kong and Singapore who bought derivative investment products of the bankrupted US investment bank.
Glendy Chu, senior vice president of strategic marketing and communications for DBS, said the bank will meet with investors individually to discuss the compensation.
"We do not have a specific schedule on finishing our discussion progress, as we have just started contacting our customers," Chu said, adding that the progress of meetings vary from case to case, depending on the adequacy of information.
Concerning the amount of compensation, Chu said: "It depends on different cases and situations. Not every customer can get the compensation".
When asked if DBS (Hong Kong) will follow the example of its Singapore offices by giving priority to vulnerable or elder customers, Chu said the bank is willing to speed up the progress of those cases.
"We will consider meeting with the customers with special needs first," Chu said.
DBS sold around HK$1.86-billion worth of Lehman Brothers structured products to 4,700 customers in Singapore and Hong Kong in the last 18 months.
DBS Chief Executive Richard Stanley said in a statement on Wednesday that he was "deeply concerned about the anguish the customers were experiencing", and he said the bank "will not hesitate to make cash compensation".
"We have found that a number of cases did not meet the standards DBS upholds," DBS said in its statement, adding that the unwinding process of the products is currently underway.
The bank said it will make a final announcement next week stating the final credit-redemption amount based on prevailing market conditions.
Under Secretary for Financial Services and the Treasury Julia Leung encouraged other local banks to take the initiative in contacting their customers.
"If banks discover the cases did not meet their upholding standards, they can compromise with their customers, instead of waiting for investigations by the Hong Kong Monetary Authority," Leung said.
DBS's announcement came after the Hong Kong Association of Banks agreed to start buying back the Lehman-related minibonds from investors at their current market value in early December.
DBS shares in Singapore fell to a five-year low yesterday, dragged by concerns that the bank's compensation to customers will reduce its profits.
(HK Edition 10/24/2008 page3)