Thursday, July 23, 2009

SCMP:How swift lobbying ended a dispute that had dragged on for 10 months

23 July 2009

A 20-day lobbying effort by government officials and bankers has ended a 10-month dispute between banks and investors over settling the Lehman Brothers minibonds issue.

"The past 10 months have been very tough - especially the last 20 days," a banking source said.

The 16 lenders yesterday sealed the HK$6.3 billion agreement with the Securities and Futures Commission and the Monetary Authority to pay back 29,000 investors.

The SFC, the HKMA and banking sources all denied that political pressure forced the agreement, although the Legislative Council is questioning the heads of both regulatory bodies and bankers over more than 20,000 complaints from investors about the conduct of banks in selling the minibonds.

Shortly after Lehman Brothers collapsed last September, the government proposed that banks buy back minibonds from investors - similar to the current agreement. But it took 10 months for the deal to unfold, as banks were initially concerned that it might attract legal challenges from the liquidators of Lehman Brothers.

Since then, the SFC persuaded two brokers - Sun Hung Kai Financial and KGI Asia - to repay investors fully. But until yesterday, it had yet to clinch a deal with the 16 banks that sold the minibonds.

The turning point came only 20 days ago, after Bank of China (Hong Kong) came up with an agreement similar to the deal agreed yesterday. Then the other 15 banks joined forces to negotiate with the SFC as a group.

Bankers said the sector's legislator, David Li Kwok-po, chairman and chief executive of the Bank of East Asia, was one of the most active in lobbying the SFC and the HKMA to accept the deal.

"This is the best deal possible, with the greatest sincerity from the banks. There is upside and no downside in this deal," one banker said. "We want to leave this all behind us, to move on and look forward."

Secretary for Financial Services and the Treasury Chan Ka-keung said: "I hope the settlement scheme {hellip} will help investors return to their normal lives."


Solomon said...

Yes, investor want to leave these all behind us and move forward, how about DBS?

Anonymous said...

I just don't understand why our SG govt or MAS didn't do anything for the Minibond victims when Hong Kong had done so much for them, both are also financial centre and SG govt is always Number One why this time SG govt lose out to them. Even Taiwan FI is also going to compensate the Minibond Victims.
I want to know who can we turn to for help. What about our TC they also lost quite a huge sum, did they do any negotiation with the FI.

Anonymous said...

"This is the best deal possible, with the greatest sincerity from the banks. There is upside and no downside in this deal," one banker said. "We want to leave this all behind us, to move on and look forward."

Sincerirt is very important. If they have no sincerity and just talk only, nothing can be achieved.

Anonymous said...

HK's authorities have been "pushed" by the huge response from the investors to act on. Furthermore, if I remembered correctly, this saga has claimed a life.
Spore's is probably so small scale that it can be swiftly and conveniently brushed under the carpet.

Anonymous said...

The difference is that HK is a real democracy while SG is not.

Anonymous said...

HK is definitely showing Singapore how to handle this fiasco in a proper way that is fair to investors


Anonymous said...

If banks like RBS/ABN AMRO decides to ignore Singaporean customers even as they compensate all their Hong Kong customers, Singaporeans will wake up to the fact that this is a bank we should not do business with. Why bank with RBS/ABN AMRO if they treat Singaporeans like second class customers. They don't give two hoots to us or our government. We should all boycott ABN AMRO. I am not sure if DBS also sold Minibond in Hong Kong. If they did and also decides to compensate Hong Kong customers and not Singaporeans, then I say it is a even greater shame on them being a Singapore bank. If that is the case, I will definitely boycott them and ask my family to cancel all our acccounts with them although I did not buy Minibond from them. I hope the banks don't further tarnish their reputation in Singapore. Will our government and MAS not even lift a finger to get fair dealings for Singaporeans? So far deafening silence from them.

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