SIXTEEN Hong Kong banks have agreed on a deal to enable investors in structured products of the now bankrupt Lehman Brothers recover a majority of their investments.
Investors in Hong Kong lost nearly HK$2.5bn (£199m) on structured products, called “minibonds” offered by US investment bank Lehman Brothers, which collapsed in 2008.
A statement from receivers PricewaterhouseCoopers yesterday said the agreement was to result in most of Lehman’s minibond investors recovering over 80 per cent of their original investment from the underlying collateral.
He Guangbei, BOC Hong Kong chief executive and the chairman of the Hong Kong Association of Banks, said that, under the new compensation package, minibond investors will receive up to 96.5 per cent of the principle amount they invested.
Distribution to minibond investors by the 16 banks, including Bank of China Hong Kong and Bank of Communications Hong Kong, is set for June this year. The resolution is likely to put an end to the long-running negotiation for compensation to the minibond investors, who had complained they were misled that the products were safe.
Asian-focused lender Standard Chartered agreed to buy back HK$1.48bn worth of equity-linked products guaranteed by Lehman, Hong Kong regulators said earlier this month.
City A.M. Reporter