The deal, involving all 16 Hong Kong banks that distributed the Lehman Brothers-backed minibonds, would see investors get back as much as 96.5% of their initial investments, which is well above a 60% figure indicated back in 2009.
At least 75% of an estimated 31,000 investors must agree to the deal if it is to go ahead, according to a statement released this morning by the Hong Kong Securities & Futures Commission and the Hong Kong Monetary Authority.
Investors who have already settled their claims for compensation for money lost in Lehman minibonds will still be eligible for the new higher amount, according to an article in this morning’s South China Morning Post, which says the money is expected to be paid out in June.
SFC chief executive Martin Wheatley said the commission was "pleased that, subject to the necessary approvals, the strategy we set in motion back in July 2009 in the Minibond Agreement has worked" and that those affected by the collapse of Lehman and subsequent problems with their minibond investments now stand to recover "much higher amounts of their initial investments than would have been possible without this strategy in place”.
“This outcome would have been seen as impossible in the months following the collapse of Lehman, and demonstrates the value of good regulators responding efficiently and robustly when things go wrong, " Wheatley, who is to leave his post with the SFC in June, added.
"It is unlikely these recoveries could have been achieved by any other means. The SFC acknowledges the additional voluntary payments by the banks and their continuing support for the trustee which will further bolster the market’s confidence in Hong Kong’s financial institutions following the global financial crisis."
As reported here in July 2009, the 60% payment deal was thought to be the beginning of the end to the minibond saga, which badly shook the confidence of Hong Kong’s financial services industry, and has resulted in significant changes to its regulatory environment.
In total, Hong Kong investors lost as much as $2.5bn in the minibond debacle.
The 16 banks are: ABN Amro; Bank of China (Hong Kong); Bank of Communications Co; Bank of East Asia; Chiyu Banking Corporation; Chong Hing Bank; CITIC Ka Wah Bank; Dah Sing Bank; Fubon Bank (Hong Kong); Industrial and Commercial Bank of China (Asia); Mevas Bank Nanyang Commercial Bank; Public Bank (Hong Kong); Shanghai Commercial Bank; Wing Hang Bank; and Wing Lung Bank.
