Like the Lehman Brothers minibond scandal in Hong Kong, the selling techniques used by banks to sell sophisticated products to ordinary and sometimes novice investors is now under the spotlight.

After the 18-month contract ran its course in March, Ms Huang was told no withdrawals were allowed as trading in one of the stocks, Gome Electronics, had been suspended. Repeated requests for details about her investment have been brushed off by her client manager at the Shanghai-based SCB China.

'The last and only time so far I was informed of the market net worth of my investment was in November when a special notice delivered by the bank said it had lost 70 per cent and counting,' Ms Huang said.

'I do receive bank statements every month [since I bought in], but the balance always shows I still have US$100,000.'

She said she was ready to launch a lawsuit against SCB China for providing misinformation on the scheme as well as for mis-selling. If she goes to court, it would be at least the fifth formal legal battle waged against foreign-owned banks in the past few months by retail investors over complicated wealth management products backed by overseas assets.

Once a hit among small investors, they are now gaining a nasty reputation. On April 17, two retail investors sued Bank of East Asia in a Beijing court for 'false advertising' in relation to the sale of qualified domestic institutional investors (QDII) wealth management products initially worth a combined 1 million yuan (HK$1.14 million). They have so far lost more than 80 per cent of the value of their investment. A trial is scheduled to open on May 17 in Shanghai over a similar suit involving BEA.

Earlier last month, a Ms Lin filed a lawsuit in a Shanghai court demanding an early exit from her 9.73 million yuan investment in another SCB-sold structured wealth management product through the QDII scheme. In January, Shanghai's Pudong People's Court rejected a similar request of early redemption by another investor who had about 100,000 yuan at stake.

Most of these bank-sold wealth management products are highly illiquid with a lock-in period varying from six months to two years.

A communications manager at SCB China said 'the bank conducts its [wealth management] business in a law-abiding manner', but would not elaborate on specific cases.

BEA was not available for comment yesterday.

Although some lawyers and financial analysts questioned the legal grounds of these cases, they agreed the high-profile nature of the actions would further make a dent on foreign lenders' expansion on the mainland.

'These high-profile disputes don't bode well for foreign lenders' future personal business in China,' said Chen Jinhong at consultancy Shanghai Puyi Wealth. 'They have marketed aggressively to well-heeled mainland clients ever since being granted entry into the Chinese market in 2006 and the personal wealth management business turned out to be a major source of growth.'

A survey carried out by Nielsen last year shows only 6 per cent of Chinese bank users favoured foreign brands over local ones, half the 12 per cent in the same survey in 2007.

A recent report by China Merchants Bank revealed that 70 per cent of wealthy bank customers surveyed said they would take a more cautious approach in trusting their money to the 70 plus foreign-owned banks operating on the mainland.

Ms Chen said the declining popularity of foreign banks was directly linked to the carnage in the once popular QDII wealth management products. Of the 337 products in the mainland market, 291 were issued by foreign-owned banks and only five had their net worth in positive territory, according to research by Puyi Wealth.

Guo Tianyong, a professor with the Central University of Finance and Economics, said foreign-owned banks got carried away with their expansion plans, lured by potentially mouth-watering returns from the mainland wealth management market. However, the banks had fallen short in sufficiently notifying investors of the risk involved in their products.

'A strengthened risk-management mechanism is needed both within the banks and from the state-backed regulators,' said Professor Guo.

But lawyers say the chances are slim that judges will rule in retail investors' favour, citing difficulties in collecting evidence against the banks as well as regulatory loopholes.

'To be honest, it's unrealistic for individual investors to win such cases under the current circumstances,' said Zhou Minjian, a lawyer in settlement talks with SCB China on behalf of 12 individual clients. 'Our priority is to stop the bleeding for the time being. On the other hand, I think the Chinese investors themselves should shoulder part of the blame for being unsophisticated.'