Singapore investors decry losses from Lehman bonds

Alex Kennedy ,  The Associated Press ,  Singapore   |  Sun, 10/12/2008 8:47 AM  |  Business

Hundreds of distraught Singaporean investors flooded a park to express their anguish at losses from structured notes issued by Lehman Brothers Holdings Inc. that they say were sold to them by banks as safe investments.

Among the crowd that gathered Saturday were retired, middle class and working class investors who told a similar story. During the past few years as their other fixed-income instruments matured local bank officials pushed a five to seven-year bond that would yield about 5 percent, higher than the 0.5 percent interest rate banks pay on checking or savings account deposits.

"This wasn't some pyramid scheme, or so we were led to believe," said Lawrence Chin, a 62-year-old retired salesman who invested 50,000 Singapore dollars (US$33,760) in the bonds in 2006.

"Now they say they're toxic. I never knew a bond could be toxic," said Chin.

Small investors such as Chin are bearing part of the destruction wrought by a credit crisis that began last year with U.S. sub-prime mortgages and has since engulfed markets around the world. Investment bank giant Lehman declared bankruptcy last month.

The central bank, known as the Monetary Authority of Singapore, said about 8,000 people bought S$508 million (US$343 million) of Lehman-linked structured notes from nine banks and brokerages.

The bank said Friday the bonds' trustee, HSBC, "has not received firm proposals from potential new swap counterparties" and the notes' underlying securities would not be sold for at least two weeks.

"I'm afraid I could lose all my money," said taxi driver Tan Weng Yeow, 60. "I invested S$10,000 (US$6,752), which is a lot for someone like me. I'm really upset. I want the government or the bank to give me back some of my money."

On Wednesday, hundreds of angry investors protested in Hong Kong to demand a full refund of their investment in Lehman-backed bonds. The Hong Kong government proposed Monday a plan under which local banks and distributors of the bonds would buy back the products at a value to be decided on later.

However, most investors rejected the plan, which they said would only help recover a small part of their investments and said banks failed to explain to them the products were linked to the U.S. company.

Hong Kong's Securities and Futures Commission estimated investors owned about US$2 billion of outstanding Lehman-related investment products in the city.

Singaporean investors met in a park known as Speakers' Corner, the only outdoor space where the government allows limited protests and public gatherings. Protests are rare in Singapore, as the government enforces strict rules against public assembly and criticism.

"I came down here because I really don't know what to do and I wanted to talk to other people in my same situation," said a 45-year-old engineer who would only gave her surname of Lim. "I invested S$70,000 (US$47,265) and now my daughter is asking me if she can still go to university. It's terrible."

 

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