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FINANCIAL SERVICES | Cesar Tordesillas, Hong Kong

Minibond investors to enjoy high level of recovery

PricewaterhouseCoopers, the Receivers of the Minibond collateral, announced the distribution of the underlying collateral for the Minibond series 10 to 12, 15 to 23 and 25 to 36 to nominal holders.


This was done via the Clearing Systems in accordance with the terms of the settlement agreement with Lehman Brothers Special Financing Inc.

The Securities and Futures Commission and the Hong Kong Monetary Authority noted that the recovery percentages on a weighted basis are on average 1.6% higher than the indicative recovery percentage stated in the announcement by the Receiver dated March 28, 2011. The recovery of collateral at a higher level, together with the additional ex-gratia payment by the 16 Lehman Brothers' Minibond distributing banks, will increase the level of recovery of eligible customers to between 85.7% to 97.5% of their initial investment.

The SFC's acting Chief Executive Officer, Mrs Alexa Lam said, "Today's announcements signal the final step to be taken by each of the 16 banks under the agreement reached in July 2009.  Since then, each of these banks has implemented a repurchase scheme at its expense, instituted internal re-engineering programmes for systems and controls governing the sale of structured products, implemented the enhanced complaints process and all 16 banks have created a fund out of their Minibond commission income to pay for the return of the collateral to the maximum possible extent. Now the collateral has returned to Hong Kong. The distribution will provide very substantial recovery, certainly much better than would have been achieved by any other means, at no cost to investor.  This is a good result for Hong Kong."

"We are pleased to note that the collateral recovery arrangement has been executed and the investors of the relevant Minibond series will benefit from the high level of recovery.  This is an important milestone which not only allows investors to avoid lengthy litigation and potentially costly fees and legal uncertainty, but also represents the concerted efforts among regulators, the participating banks and the relevant investors to recover the invested amount as far as practicable," the Deputy Chief Executive of HKMA, Mr Arthur Yuen said.

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