Tuesday, September 23, 2008

Lehman Minibond Saga : HKMA threatens to suspend banks' license...MAS..

"That would include a public reprimand, a fine, or both, or suspension of license,"

"The government is very sympathetic to the plight of retail investors. We have been in close contact with the related trustees and distributors since last week," Tsang HKMA.

'What really frustrates me is the subdued response from MAS. As the financial watchdog, I think it has been extremely reactive and it has so far distanced itself from blame'

-Mr Peter Lim, a Minibonds investor


MAS? MAS has decided to do nothing and asked investors to sort it out themselves with the bank : [Link]. See how calm MAS is in its response to the situation compared to the HKMA. Afterall, there is hardly any "sound" made by Singapore investors compared with Hong Kongers who organised a weekend protest. Now you know why protests are banned in Singapore - protests pushes authorities to take immediate and strong action....rather than reacting calmly and gradually to a situation. MAS asking individual investors to go to the bank to met a customer relationship officer to explain why is his life savings is now lost and that the bank has done no wrong etc after that he is suppose to accept the bank's explanation and go home satisfied?

Tan Kin Lian is organising a forum to gather everyone to find a way to move forward on this issue :[Link]. Please attend if you or your parents/relative have lost money in the minibonds or the more exotic DBS High Notes - spread the word. I'll probably be there.

I've been looking at the DBS High Notes 5 for a few days. It is really baffling. It was marketed as a safe product ....but the principal is completely wiped out if one of 8 reference entities go bust over within a period of 5 yrs. It is the risk of a bond multiplied by 8 times and liquidity is lost for 5 years. If this is safe, then crossing the road with your eyes closed is also safe.

Watch MAS' response to the unfolding saga of losses from these structured products. It will tell a lot about how this govt operate, where its interest lies, and whether it is a govt for the people. You will begin to find out how world class it is when it comes to regulating the banks and protecting the interests of the people.

11 comments:

Anonymous said...

no no no,

you are supposed to put the money in SAvings account to earn 0.25%.

anything above that is pure unadulaterated greed. Why Should MAS or govt bail them out?

If the government intervene here, if our GIC and Temasek Holding folds, our people would again demand government actions to prop up such private investment entities. Surely we know they are independant investment houses.

Government has clearly stated it would not be involved, and they should not.

Anonymous said...

"you are supposed to put the money in SAvings account to earn 0.25%."

Have always been baffled by the low interest rates of savings and even fixed deposit accounts in Singapore.

A quote from an article appearing in the Time magazine says it all:

"All of us are now paying the price for Wall Street's excesses. Some of the cost is being paid by prudent people, like retirees who have saved all their life. They're now getting ridiculously low rates of 2% or so on their savings because the Federal Reserve has cut short-term rates in an attempt to goose the economy and reassure financial markets."

Where in Singapore can you get interest rates of above 2% in savings or fixed deposit?

Anonymous said...

Hi Lucky Tan, would you have an electronic copy of the prospectus for either the High Notes 5 or the Minibond 3? I was working in structured products and am very interested in understanding the structure that was sold.

Anonymous said...

better still, one should put all his savings in CPF. you can then earn the current savings rate, while the govt uses that money to make money for itself.

Martin Lee said...

You can download the prospectus for minibonds here:

http://www.lioninvestor.com/minibonds-update/

Martin Lee said...

The previous link wasn't clickable. Here it is again:

Minibond details

Anonymous said...

crossing the road with your eyes closed in Singapore is safe. The cars will avoid you. Unless it is driven by a "Top Civil Servant", then you're fucked. You could be crossing at a traffic light with the lights in your favour, but if any "Top Civil Servants" hit you, then its your fault.
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