Saturday, July 04, 2009

Hong Kong Minibond heading for possible settlement!

The power of democratic movement in applying great pressure to force both the administration authority and the 16 banks to provide settlement proposals for the Minibond issue is really amazing in Hong Kong.

Right after the 1st July protest march organized by the Hong Kong Minibond Victims Alliance, the 16 banks who are involved in the selling of the Minibond has made settlement proposal to the Hong Kong administration to settle once and for all the Minibond issue.

The key points are:

1) Those Minibond victims who are below 60 years old will get proposal to sell back their Minibond at 60% of their original value.

2) Those who are above 60 years old will get an offer of 70% of their original value.

The banks have made promises that if the value of the collaterals of these structured products are higher than the value offered after they were sold off, the excess amount will be given back to the Minibond victims!

This proposal is made using the key by-back proposal made by Bank of China earlier.

Although some analysts have stated that the buy back value is on the low side but in my view, this is a main big step gained after so many months of continuous street fighting by the Minibond Victims Alliance.

As stated in my earlier posting on this Minibond saga, investors will have to take part of the responsibility in making the investment decisions even though they have been misled. Getting 70% or 80% of the value back is reasonable in my opinion. 60% is on the low side.

I truly hope that the banks and authorities in Singapore could work towards some similar settlement proposal for every Minibond victims. If DBS bank in Hong Kong is willing to make such settlement proposal, I do not see why DBS bank in homeland Singapore should not make the same settlement proposal!

The unwillingness of banks and authority in Singapore to work for a universal settlement maybe due to the fact that Minibond victims in Singapore have not applied enough pressure on both the banks and MAS.

Goh Meng Seng

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