SCMP:Minibonds meeting ends in recriminations

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8 Nov 2008
Ambrose Leung

A meeting between bankers and lawmakers over how to resolve the Lehman Brothers minibonds saga ended with complaints on both sides yesterday, with some politicians saying “no sincerity” had been shown at the gathering.

Representatives of Hong Kong’s leading banks, who initiated the meeting, also complained about pressure on them to compensate affected investors ahead of next week’s vote, when lawmakers will decide on whether to invoke the Legislative Council (Powers and Privileges) Ordinance to investigate the issue.

The two-hour meeting at a private club in Central, which was organised by banking-sector lawmaker David Li Kwok-po, was attended by all major political parties and banks.
But several lawmakers, including Democrat Kam Nai- wai, Liberal Party chairwoman Miriam Lau Kinyee and Starry Lee Wai-king of the Democratic Alliance for the Betterment and Progress of Hong Kong, walked out after 20 minutes. “We cannot accept the bankers’ culture of chatting in a clubhouse,” Mr Kam said. “Unlike a social function, such an important issue must be discussed over a conference table.”

Financial services lawmaker Chim Pui-chung said he had hoped to discuss the steps banks would take to buy back the minibonds, but had been disappointed.

In the meeting, He Guangbei, chairman of the Hong Kong Association of Banks, said the banking sector was very concerned over the plight of small investors and had been working to resolve the issue.

“Everybody knows that the seriousness and wide-reaching effects of the financial tsunami are unprecedented and the banks were at the forefront of the wave when it hit. But even under these circumstances, the banks have still deployed huge resources and manpower to give priority to the Lehman Brothers incident,” Mr He said.

About 43,700 Hongkongers invested HK$15.7 billion in Lehmanlinked derivatives sold by local banks and stockbrokers. Most bought minibonds – which are not corporate bonds but high- risk investments deriving part of their value from the performance of underlying assets.

Civic Party leader Audrey Eu Yuetmee said: “During the entire meeting, not one banker stood up to say that if Legco invokes its special investigative powers it would affect their operations,” she said.

Lawmakers will vote on Wednesday to decide on whether a special subcommittee set up last month should be empowered to investigate the minibonds incident.