Government secures repurchase deal with Citibank

Repurchase offer’s total value to reach $1.06bn, covering about 92% of Citibank HK customers holding outstanding notes.

The Securities & Futures Commission and the Monetary Authority on Friday announced that an agreement has been reached with Citibank (Hong Kong) Limited on market-linked and equity-linked notes issued by Lehman Brothers between March 2007 and June 2008.

Without admitting any liability, Citibank HK has agreed to make a repurchase offer to eligible customers holding outstanding notes distributed by Citibank HK at a price equal to 80% of the total value of each eligible customer's investment in the notes.

The total value of Citibank HK's repurchase offer is estimated to be about $1.06 billion, covering about 92% of Citibank HK customers holding outstanding notes, as mentioned in a Securities & Futures Commission report.

The offer price will exclude the amount of coupon already paid to eligible customers, but include an additional amount representing the interest that would have been earned if the amount invested in the notes had been invested with Citibank HK in a fixed-term deposit.

Citibank HK will also pay top-up payments to those customers of outstanding notes with whom the bank has already entered into settlement agreements but would otherwise have been eligible to receive a repurchase offer.

In view of the repurchase scheme, the Securities & Futures Commission will not impose disciplinary sanctions against the bank and its current or former officers or employees in relation to the distribution of the notes, save for any acts of dishonesty, fraud, deception or criminal conduct.

The Monetary Authority does not intend to take any enforcement action against the bank’s executive officers nor individuals in connection with the sale of the notes to customers who have accepted the repurchase offers or the top-up payments, except for any acts of dishonesty, fraud, deception or criminal conduct.