Operating expenses at Bank of China (Hong Kong) soared 48.6 per cent in the first nine months of last year after it spent HK$3.24 billion to partly settle claims related to the Lehman Brothers minibond debacle.
The local subsidiary of the mainland's second-largest lender saw operating expenses rise to HK$9.17 billion from HK$6.17 billion a year earlier, BOCHK said in a statement filed with the stock exchange yesterday.
The bank was the largest local distributor of minibonds, and the payout disclosed yesterday was part of a HK$6.3 billion settlement agreement reached in July last year between 16 local lenders and the Securities and Futures Commission and the Hong Kong Monetary Authority.
Regulators brokered the deal on behalf of investors who lost money after buying the complex Lehman products. Under the terms of the agreement, they received payments equal to 60 to 70 per cent of the nominal value of the minibonds they bought.
Despite the rise in costs because of the minibond payments, BOCHK said net profit for the nine months to September rose 35.6 per cent to HK$9.47 billion from HK$6.99 billion in 2008.
The improvement was driven by a large decline in impairment charges, which fell to HK$21 million from HK$5.87 billion.