Hong Kong banks to repay Lehman bondholders

Hong Kong investors in retail minibond products issued by Lehman Brothers are to be repaid almost in full by banks in the city.

Sixteen Hong Kong banks that sold the bonds have agreed to repay investors who bought them and lost their money when Lehmans collapsed.

They will buy back the bonds at 96.5 per cent of their value, a jump upward from the 60 per cent repayment agreed in 2009.

Minibonds are smaller bonds designed for retail investors and priced and marketed to smaller investors, but the Lehmans bonds lost most of their value following the collapse.

Investors had complained that the banks should repay 100 per cent of the bonds, as they knew better than the purchasers of the risks involved.

The repayment offer needs the approval of 75 per cent of investors to proceed and meetings will take place between investors and the banks over coming months.

The offer follows a conditional settlement deal between Lehman Brothers Holdings and its trustees to return some of the bank’s remaining funds to bondholders.