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Singapore DBS: Lehman-linked notes worthless

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October 30, 2008

Credit Crisis Impact:
Singapore DBS: Lehman-linked notes worthless

Singapore's DBS Group said 103 million Singapore dollars ($68 million) of structured notes linked to bankrupt US brokerage Lehman Brothers Holdings are now worthless, reported Reuters.

That's about a quarter of the amount of Lehman-linked securities sold to clients in Singapore and Hong Kong.

The notes, known as High Notes 5, were linked to the risk of a bankruptcy occurring to one of the reference entities, such as Lehman, DBS said in a letter to 1,004 investors posted on its Web site Tuesday. DBS said it valued the notes by calculating, "among other factors, the price of the reference obligation of the reference entity."

The letter did not specify what the reference obligation was.

DBS said last week that 4,700 clients in Singapore and Hong Kong bought SG$360 million ($239 million) in Lehman-linked structured notes from the bank.

In Hong Kong, the total outstanding amount of the Lehman-linked products sold by all banks is 20.2 billion Hong Kong dollars ($2.6 billion) while Singapore investors bought around $400 million.

DBS said last week it would pay up to SG$80 million ($53 million) in compensation to investors who received poor service, but Tuesday's letter did say anything about this. Singaporean investors, including retirees, have said bank officials did not properly explain the nature of the notes.

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