Thursday, November 13, 2008

Reuters: Financial crisis politically awakens Singapore investors

Fri Nov 7, 2008 6:01am EST
By Melanie Lee

SINGAPORE (Reuters) - Cancer patient Lim Qing Si was one of thousands of hard-working Singaporeans who lost their savings in the financial crisis, especially when Lehman Brothers collapsed and its secured products became virtually worthless.

"All this money is my husband and my retirement savings," said Lim, a 54-year-old retiree, who must now scramble together what's left of her savings to pay for cancer treatment after a malignant tumor was found in her leg.

In all, nearly 10,000 people in Singapore stand to lose over S$500 million ($338 million) due to the collapse of Lehman Brothers Holdings Inc, the central bank says.

The incident left many financially scarred but politically awakened in a city-state where protests are rare and street gatherings of five or more people require a permit.

Lim and others have taken advantage of a recent government move to create a forum for public protest, a "Speakers Corner," modeled on the Hyde Park bastion of free speech.

Since the financial crisis struck, hundreds of ordinary working-class people who have lost money have gathered each Saturday to air their grievances and call on the government to help recoup their losses.

"I hope the authorities, who are supposed to protect ordinary people, should be much more proactive," said Tan Kin Lian, the protest organizer and a former chief executive of a large Singapore insurer.

Following the weekly protests, the central bank said it would investigate alleged mis-selling of Lehman-linked products, such as DBS Group's "High Note 5" and Lehman Brothers mini-bonds sold by banks across the island state.

Singapore's biggest bank, the DBS Group, was among the banks that sold Lehman products to its customers, many of whom were simple, working-class people looking for safe investments for their retirement savings in a country without state pensions.

DBS has said it will pay up to S$80 million to compensate some investors. Maybank also said it has identified mini-bond investors for compensation, while smaller financial institution Hong Leong Finance said it will buy back Lehman-linked mini-bonds from elderly and less-educated customers.

These offers may ease public pressure, but the discontent Singaporeans feel has shaken their faith in a government that espoused a pro-investment culture, analysts said.

Singapore, which has been ruled by one party, the Peoples' Action Party, since its independence in 1965, has always been a promoter of investment, encouraging foreign firms to invest in the country and its compliant citizens to invest in their future by putting their savings in financial products.

Eugene Tan, a law lecturer at Singapore Management University, said the fiasco "puts the government's credibility at risk" and the government had to be seen to do more.

"The Lehman bonds incident affected a very vulnerable segment of Singapore's population," said Tan.

The involvement of the largest bank DBS "made the issue very germane and very alive," Tan added. DBS is partly owned by Temasek Holdings, which is a government linked company.

GOVERNMENT STEPS IN

While the country's marginalized opposition parties hope to take inspiration from neighboring Malaysia, where a resurgent opposition says it can win power after slashing the government's majority in March elections, analysts said the chance this incident will snowball into a larger political rift is slim.

The turnout at the Lehman protests is a far cry from previous protests led by political opposition party leaders, such as a demonstration of about 20 people in March against rising prices, for which 19 people have been charged for illegal assembly.

"There is this very sharp contrast. When you have someone trying to draw Singaporeans attention to the politics of human rights, people are generally apathetic," said Alan Chong, political scientist at the National University of Singapore.

"Singapore's political culture tends toward pragmatism -- this is largely a material pragmatism," Chong said.

The government, which relies on domestic stability to help attract foreign direct investment and to develop high-value sectors such as financial services and biomedical engineering, has told the banks to resolve the matter fairly.

"Where there has been mis-selling, it has to be put right," Singapore's Prime Minister Lee Hsien Loong was quoted as saying in the Straits Times newspaper.

However, not everyone is satisfied by the response and the protests will continue, according to Tan's blog: tankinlian.blogspot.com

"Singaporeans are being treated like sheep," said Jojobeach, the online monikor of someone who posted comments on local discussion forum sgforums.com.

18 comments:

  1. Mr Tan,

    You made history by having the biggest outdoor gathering weekly in Hong Lim Park and even in Singapore since 1965, excluding election rallies or outdoor concerts/entertainment/functions.
    Maybe the topic of money or loss of big money is the reason. Also at no time in Singapore's history has so many people lost so much money at the same time and involving banks. Except the Gemini Chit Fund scam in the 70s where the culprit was convicted and jailed for life.

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  2. Honestly i dont see anyone awakened.

    I only see tempers aroused.

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  3. Dear all ,

    Prime Minister of Belgium, Mr. Yves Leterme, is also victim of LM products. According to the following report, he is considering whether to join the ‘investor group’ to take legal action:

    雷曼破产,比利时总理2万欧元化水(香港)
    (2008-11-13)

      (联合早报网讯)香港大公报报道,美国第四大投资银行雷曼兄弟控股公司破产,已波及比利时总理勒德姆,并使他投资购买雷曼兄弟金融商品的两万欧元,至今已一毛不剩,全部泡汤。美国雷曼兄弟控股公司是在九月十五日申请破产保护。
      因为接获投资人控诉包括花旗银行在内的数家比利时境内银行,以不实广告销售雷曼兄弟公司的金融商品,比利时众院经济委员会目前正对这一控诉进行调查。
      据比利时媒体报道,许多投资人在向一些比利时银行购买雷曼兄弟金融商品时,并未被清楚告知投资的商品与雷曼兄弟公司有关。
      勒德姆今天在众院经济委员会回答质询时表示,他不知道有多少投资人受骗,但他指出,他自己在花旗银行有一个两万欧元的帐户,且显然的是被用来投资在雷曼兄弟的金融商品上,而这项投资也已一毛不剩。
      但勒德姆指出,他尚需进一步考虑,看看是否要加入投资人控诉相关金融机构的行列。

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  4. DBS has said it will pay up to S$80 million to compensate vulnerable investors.

    My parents has been identified as in vulnerable group and has been interviewed more than 1 month ago but no compensation yet. Have checked with DBS already and they say still under review and will get back to us. Never get back to us after that. Can someone help us? How to inform Gerald Ee?

    ReplyDelete
  5. "Anonymous said...

    DBS has said it will pay up to S$80 million to compensate vulnerable investors.

    My parents has been identified as in vulnerable group and has been interviewed more than 1 month ago but no compensation yet. Have checked with DBS already and they say still under review and will get back to us. Never get back to us after that. Can someone help us? How to inform Gerald Ee?

    4:16 PM"


    I dont think you get it do you


    NO ONE is getting ANYTHING.


    Words are just, words.

    ReplyDelete
  6. Last time bec they are so trusting, many close one eye, some even with both eyes closed (e.g. sign blindly, / hv blind faith).

    The minibomd saga has taught people a lesson. It is really an eye opener to many people!!!!

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  7. Dear all,

    Korea FSS asks Bank Woori to compensate one investor 50% of her investment loss. According to following report, the bank didn’t explain properly the ‘risk’ during the sale process. :

    韩友利银行被令赔偿 一买基金者投资损失
    (2008-11-13)

     (首尔法新电)韩国金融监管机构呼吁韩国友利银行(Woori)赔偿一名购买其基金的58岁投资者的投资损失。市场预期这一判决将引发更多投资金融产品而蒙受亏损银行客户的求偿。
      韩国金融监督管理局(FSS)表示,友利银行在向个人投资者销售该基金产品的时候,没有很好地解释风险。该投资者投资了5000万韩元(7万7000新元),承受25%的亏损。FSS要求友利银行负责其中一半的损失。
      这位女性投资者此前向FSS投诉,并要求其进行干预。

    ReplyDelete
  8. MAS finally admits its flawed model.. Caveat emptor doesn't mean lax regulation

    http://www.reuters.com/article/rbssFinancialServicesAndRealEstateNews/idUSSIN37602720081113

    REFILE-S'pore to tighten regulation on derivative sales-report
    Wed Nov 12, 2008 8:17pm EST
    (Refiles to correct typo in headline)

    SINGAPORE, Nov 13 (Reuters) - Singapore will introduce stricter measures for sales of structured products, a government minister was quoted as saying, after retail investors suffered hefty losses on products linked to collapsed bank Lehman Brothers.

    The measures will be introduced to protect investors who are less-knowledgeable, 938live radio quoted senior minister and chairman of the Monetary Authority of Singapore, Goh Chok Tong, as saying in Hong Kong.

    The statement came following protests from investors in Singapore and Hong Kong who owned structured products and which became worthless after the collapse of Lehman.

    The uproar forced regulatory authorities in the two cities to launch investigations on alleged mis-selling by banks, after many affected investors claimed they were told the investments were relatively safe.

    But Goh said central bank will not over-regulate in the wake of the financial crisis because it would be a step backwards for banks trying to innovate and for investors who have a higher risk appetite. (Reporting by Saeed Azhar; Editing by Kazunori Takada))

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  9. In the past, I always speak up for the government when ppl criticise the PAP. Hmm, now I am disappointed with the government. Though I am not an investor, I hope to see those who brought these toxic products, get some compensation. I just feel for them. If DBS don't pay, the anger and hatred will linger forever as investors feel hatred and betrayed by their trusted national bank.

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  10. Dear all ,

    I quote one paragraph from this Reuters’ report as follows:

    “....The uproar forced regulatory authorities in the two cities to launch investigations on alleged mis-selling by banks, after many affected investors claimed they were told the investments were relatively safe…..”

    Has the local regulatory authorities been forced to launch investigations on alleged mis-selling by banks?

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  11. Mr.Tan I don't think government can protect the citizens. I mean look at the news, many companies Temasek invested go bonker, like ShinCorp, ABC Learning and indonesian telecom company. Billions gone like that. I am losing faith with PAP. As a citizen, I am worried, if PAP can't manage, wat is Singapore's future?

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  12. Government is supposedly to protect the average people. Because average is more vulunerable comparing to big institutions.

    However, with Asian thinking, when government think of things, their first thought is to make sure that the average people would note mis-use /abuse the protection from government.
    Government never thought about that big and powerful institutions can mis-use/abuse their power. And when the big and powerful institutions mis-use/abuse their power, there are usually lots lots more damage to the victims and damages to the average people.
    Not to mention, Government also tends to protect big & power institutions and let a portion of average people falling into the victims.

    That's why Hong Kong and Singapore do not allow class action to prevent the law being misused by average people. But both governments do not set any rules to prevent big and powerful institutions from abusing their power.
    Both governments also want to do their best to protect the best interest of big and powerful instituions at the price of a percentage of average people.

    That's why banks deny their wrong doing in the minibond. Banks only go through complaints to cover the minimum for their PR image, in the name of not letting smarter-average taking advantage of banks. In fact, banks are taking advantage of average in the very beginning, until today.

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  13. "If ... don't pay, the anger and hatred will linger forever as investors feel hatred and betrayed by their trusted national bank."



    "Thank you for your feedback. We are pleased to be of service to you as our PAID customer."

    ReplyDelete
  14. The recent disastrous minibond and investment failures in ABC, US banks have really shaken my confidence in governments ability to make sound investments and governance. I do not believe these high-paying "talents" are up to mark as the government argued during the ministerial and civil service pay rise not long ago. I think these "talents" lost as much, if not more than the "vulnerable group". An Ah Pek could have cost less, lost less and still get back 100% compensation. I say fire these "talent"!

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  15. Words are just words.
    But trust DBS to be true to their words. They have to answer to the public, shareholders, Gerald Ee and MAS.

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  16. In reality, No one is answerable to Any One.

    That should quell concerns if any.

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  17. When I went in with my eyes opened
    I was greeted with painted picture
    of good returns and wonderful years ahead

    Now that i had my eyes closed
    I can’t vanquish the evil faces
    of man-made monster and pitiless world around

    I hear taunts that accuses :
    GREED! GREED! GREED!
    But there is only silence to :
    NEGLIGENT! MISREPRESENTATION! IRRESPONSIBLE!

    Why my friend, do you not see!
    In time like this,
    It is better to be borned blind
    Than not to “see” at all!

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  18. Have you ever heard of TWO CEOs buying a Hotel in London from Singapore?
    One is from Big National linked company. One is rich Hotel operator / owner of properties.

    The 2nd check in quietly as ordinary guest, he then ask the bell boys , the house keeping few questions....and he walk around and look see, touch things.. before he met the seller agent.

    THe powerful investor from Big company visit is notified and he was picked up from Airport with roll royce, treated with first class Guest. He see nothing bad, nothing bad about the services, everything is good. He then talk to the seller agent.
    The 1st said everything was good and he was offerred 80 mil pounds. The 2nd compliants and highlight many shortcoming..He was offered 50mil pounds.
    the 2nd did not buy the hotel, the 1st one done deal at 100 mil pounds...
    So you know why many had failed when crisis comes?
    Some people got too much money, they just spend.esy money.
    Some people earn money so hard, they are more careful.

    So may be we got too many CEOs, thinking too much easy money from VAT, Toll, everyday,every mins...

    WTF

    ReplyDelete