China Daily:More deals reached in Lehman debacle

11 Nov 2009

HONG KONG: Some 16 banks have agreed to settle all complaints arising from the sale of Lehman Brothers non-minibond products by March next year, a Legislative Council's subcommittee heard yesterday.

Choi Yiu-kwan, the Monetary Authority's deputy chief executive, unveiled the latest agreement with the banks at a hearing of the subcommittee on the debacle arising from the sale of Lehman Brothers financial products.

In a payout plan proposed in July by the Securities and Futures Commission, the authority and the 16 banks, minibond holders can redeem at least 60 percent of the value of their initial investments.

The deal also required the banks to immediately put improved complaint-handling procedures in place to resolve complaints on the sale of structured financial products other than minibonds.

Choi said before the proposal of the payout deal on July 22, the authority completed an average of 130 complaints about the sale of non-minibond products a month.

Since the introduction of the deal, it has finished some 550 investigations into complaints about the sale of non-minbond products every month on average, he said.

But he added that some 4,450 complaints about the sale of non-minbond products and about 1,000 about the sale of minibonds are still under the authority's investigation.

He expected the regulator can complete a monthly average of at least 1,000 investigations into the sale of non-minibond products in the near future.

Choi said it is now difficult to tell whether a payment deal can be bargained for Lehman Brothers non-minibond holders, but he has the idea in mind.

Lawmaker Starry Lee Wai-king urged the financial regulator to hold regular talks with complainants to update them concerning progress on the investigation.

But Choi said holding regular meetings with individual investors will place a huge demand on manpower. He said such a commitment may slow down the progress of investigations.

To help monitor the business of local banks, Choi said the authority holds meetings with each local bank's board of directors once a year to analyze how well the firms perform compared with other institutions of similar levels and advise them on their management, especially in the area of risk management.