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SINGAPORE: Retail investors who still hold on to failed Lehman Minibond notes can expect to recover some money later this month.
From February 12, they can get back between 21.5 per cent and 70.8 per cent of the original amount invested. Letters with details will start going out next week.
This was announced by the receivers - three partners of PricewaterhouseCoopers - in charge of unwinding the structured notes, and the product's trustee HSBC Institutional Trust Services on Wednesday.
When Lehman Brothers collapsed, so too did the hopes of many retail investors who had put money into the Lehman Minibond notes. About 8,000 people in Singapore had sunk some S$376 million in Series 1 to 3 and 5 to 10 of the Minibond notes.
Some 12.2 per cent have since reached a full settlement with the financial institutions from which they bought the structured product. But others were still holding out.
Since October last year, the receivers have worked with HSBC Trust to liquidate the underlying collateral of the notes. After a complicated process involving four legal jurisdictions from Singapore to Cayman Islands and several sets of lawyers, the saga has now reached one conclusion.
But the payouts to investors will vary, depending on things - like how many years are left to run on the notes. Holders of Series 1A will get the lowest - at 21.5 per cent. So for every S$100 invested, they will get back S$21.50. Holders of Series 2B will get the most - at 70.8 per cent.
The Monetary Authority of Singapore (MAS) welcomed the announcement. It added that investors who had made partial settlement will still get the recovery value on the balance of the notes they are still holding on to. Those who had made a full settlement will get no further payments.
For 60-year-old cameraman Ismail Deen, Wednesday's announcement marks the end of a long and difficult period of uncertainty. He said: "In the first instance I was quite pessimistic. I did not think I would get even 5 per cent, but now it's more than I expected.
"I think I should be grateful to all the people and institutions who helped settle this matter for us." When asked if he would invest in such structured notes again, he said 'no'.
Lawyer Conrad Campos, representing about 170 investors in the Minibond Investors Action Group, meanwhile, said the payout amount is beyond expectation. They would definitely take this into account when deciding their next course of action.
MAS said that if one combines the settlements made earlier and the new round of recovery, 80 per cent of retail investors will receive half or more of their investment back.
In total, retail investors in the Minibond notes will receive 64.5 per cent of the total amount invested in the notes.
Tan Kin Lian, president of the Financial Services Consumers Association, who had advocated compensation for structured notes investors, said the figure of 64.5 per cent was comparable to the 60-70 per cent received by Hong Kong investors.
However, as some investors would receive much less, they would be disappointed.
He hoped that these investors could be given additional compensation to reduce their loss.
The Securities Investors Association of Singapore (SIAS) said that it is pleased to hear of the latest development and that the process now provides closure to the Minibond episode.
But SIAS president David Gerald added that investors must continue to identify risks in such investment products and walk away if needed.
- CNA/ir
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