SCMP:Investors want full refund, not 70pc

22 July 2009
Scores of minibond investors who lost their money when Lehman Brothers went bankrupt are holding out for full compensation of their principal sum and insist a proposed pay-off of up to 70 per cent is unacceptable.

A Ms Siu, 52, who declined to give her full name, purchased HK$6 million worth of Lehman minibonds from Bank of China (Hong Kong) and flatly rejected the proposal.

"This is not all right," she said. "I will continue to fight [for a full refund]."

She did not rule out accepting a 60 per cent pay-off and then taking the bank to court to recoup the rest of her investment. But she was not optimistic.

"Why can't the banks follow what Sun Hung Kai [Financial] did? How come the banks are not able to do something securities firms could?" she said.

Ms Siu said she planned to join about 100 investors at a protest at the Bank of China headquarters on Friday.

Bank of China sold most of the Lehman-linked minibonds in Hong Kong and many of the other banks are expected to follow whatever settlement terms are agreed by it. But a settlement deal offering just 60 to 70 per cent compensation is expected to be a tough sell to angry investors, who were emboldened in their fight by the 100 per cent pay-off arrangement agreed between more than 300 investors and brokerages Sun Hung Kai Financial and KGI Asia.

Democrat legislator Kam Nai-wai said whether the buy-back proposal was adopted would largely hinge on how many investors agreed to it. It was hard to predict how well received the settlement deal would be among the investors. Mr Kam said he planned to get their feedback on Sunday.

"As for the banks, if the proposed settlement cannot save them from trouble [from compensation seekers], it was not wise to take it," he said.

The Securities and Futures Commission should also explain why banks could escape from full responsibility while some securities firms could not, Mr Kam said.