As the closing chapter to the Lehman Brothers minibonds settlement, about 3,000 people who invested in the four series of minibonds directly issued by Lehman Brothers will get up to 70 per cent of their initial investment.
But those who received 70 per cent or more of their investment from their banks in a 2009 settlement would not get any more because the value of the collateral of their minibonds was too low, according to a statement issued by 13 banks that sold the minibonds, including Bank of China (Hong Kong), Bank of East Asia and Fubon. Next month investors will vote on the deal, which needs 75 per cent approval to go ahead.
This means investors who invested in series 5,6,7 and 9 will receive less than those who had the other minibond series. They have been paid up to 96.5 per cent of their investment because their minibond series' collateral values were higher.
After this last four series of settlement, all banks will have completed settlement arrangements with all investors.
Investors reportedly lost about US$2.5 billion on minibonds offered by Lehman Brothers, which were issued or guaranteed by the US lender, and the products became almost worthless when Lehman collapsed in September 2008.
Despite the name, minibonds are not corporate bonds, but risky derivatives linked to the credit of listed companies.
More than 30,000 investors complained to the Hong Kong Monetary Authority and Securities and Futures Commission, accusing the banks of not telling them about the risks.