Hong Kong authorities have come to an agreement with DBS HK on the amount of compensation to customers who bought Lehman-Link notes structured by DBS. $651 million Hong Kong dollars or about S$115 million will be paid out to some clients who bought these products.
The 2160 low risk customers who accept the resolution scheme will receive their full investment back together with interest. The rest who have a higher risk profile will have their cases reviewed on a case by case basis.
In Singapore, some DBS customers were sold a product High Notes 5 that lost all its value when Lehman Brothers went under. According to a
July 2009 MAS report, a total of $103.7 million worth of HN5 were sold to 1,083 retail clients between 30 March and 30 April 2007.
The payout value of the various Minibond series was announced yesterday. Depending on which Minibond tranche you held, the percentage of recovery will range from 21.5% to 70.8%.
Tranche Series Percentage Recovery* (%)
Series 01 Tranche A (SGD Notes ) 21.5
Series 01 Tranche B (USD Notes) 24.0
Series 02 Tranche A (SGD Notes) 62.4
Series 02 Tranche B (USD Notes) 70.8
Series 03 Tranche A (SGD Notes) 55.9
Series 03 Tranche B (USD Notes) 64.0
Series 03 Tranche C (AUD Notes) 47.3
Series 05 (SGD Notes) 29.8
Series 06 (SGD Notes) 40.0
Series 07 (SGD Notes) 59.5
Series 08 (SGD Notes) 63.1
Series 09 (SGD Notes) 57.7
Series 10 (USD Notes) 62.4
I had expected about 50-60% recovery values for the different series and the majority indeed does fall into that range. Series 1 and 5 Minibond holders are the worst off in the amount they are getting. The series with the most number of investors are series 2, 3 and 5.
Payments to the noteholders will be made on 12 February 2010. The actual date that you receive your payment will depend on whether you hold a direct account with CDP or whether you hold the Notes through a nominee account.
In what must be the most positive news since the collapse of Lehman Brothers, the receivers of Lehman Minibonds, PwC, announced that they have reached an agreement with Lehman Brothers Special Financing (LBSF) to obtain the underlying collateral of the Minibond notes. This removes the need for any costly litigation.
PwC has started the process of realising the residual values of the Minibond notes and investors may be able to get back the residual value within a few months. The amount to be given to the noteholders will vary significantly, depending on the series and tranches held.
Investors who have accepted partial settlement offers as part of the dispute resolution process by the Financial Institutions (FI) or the Financial Industry Disputes Resolution Centre would have retained a portion of the notes, and will get to keep the residual value arising from those notes.
This news has no impact on those investors who accepted full settlement offers as they would have already received 100% of their principal investment amount.
Warren Buffett was recently interviewed by CNBC for his thoughts on the extraordinary events surrounding Lehman Brother’s collapse that happened a year ago and also his views on the economy today.
You can watch the video as well as download the transcripts of the entire interview below.
A lawsuit was filed in the high court on 9th September 2009 by the Minibond Investors Action Group (MIAG) against the issuer (Minibond Limited), arranger (Lehman Brothers Singapore Pte Ltd) and a distributor (Royal Bank of Scotland PLC (RBS)) of the Minibond Secured Note Programme (Minibond Programme).
You can read the press release of the lawsuit as well as the basis on which the MIAG is arguing their case here:
Minibond investors who have failed to get any form of settlement can contact the MIAG at their website if you wish to know more or be part of their legal action.
