MEDIA STATEMENT
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Since the collapse of Lehman Brothers on 15 September, we have been deeply concerned about DBS customers in Singapore and Hong Kong who have invested in structured products with Lehman as a reference entity and understand the anguish they are facing. When DBS first distributed these products over 18 months ago, the global financial landscape was very different. Nobody could have imagined the extent of the fallout from the US sub-prime crisis, or the collapse of a venerable 158-year-old financial institution like Lehman and the toll this would take on investors.
DBS CEO Richard Stanley said: "I am deeply concerned about the anguish our customers are experiencing. DBS is committed to doing the right thing and my colleagues and I are working as hard as possible to resolve the situation. Every customer is important to us and in cases where our standards are not met, DBS will not hesitate to make cash compensation."
These products were sold to 4700 customers in Singapore and Hong Kong who invested a total of SGD 360 million. In Singapore specifically, 1400 DBS customers invested a total of SGD 103 million in High Notes 5. Of these customers, two thirds are from DBS Treasures, which caters to customers with a minimum of SGD 200,000 cash and/or investments, and 80% are below age 60. We will give every single case individual attention and hearing. We agree with MAS on the need to give priority to vulnerable customers and are fast-tracking such cases.
As a matter of policy, we do not discuss individual cases. However, to-date we have found that a number of cases did not meet the standards DBS upholds and the Bank will be compensating these customers with effect from tomorrow. Based on the number of cases we've reviewed, we estimate that the total customer compensation in Singapore and Hong Kong will be in the range of SGD 70 - 80 million.
The unwinding process of the products is currently underway. Regrettably, our initial expectation of the worst-case scenario whereby investors will lose their entire principal investment amount is likely to materialise. DBS will not gain from this process and the Bank will make a final announcement next week when the final credit redemption amount, based on prevailing market conditions, is determined.
We will continue to work closely with the MAS to ensure that all cases are handled in a prompt and comprehensive manner.
About DBS
DBS is one of the largest financial services groups in Asia with operations in 16 markets. Headquartered in Singapore, DBS is the largest bank in the country as measured by assets, and a leading bank in Hong Kong. DBS' "AA-" and "Aa1" credit ratings are among the highest in the Asia-Pacific region.
As a bank that specialises in Asia, DBS leverages its deep understanding of the region, local culture and insights to serve and build lasting relationships with its clients. DBS provides the full range of services in corporate, SME, consumer and wholesale banking activities across Asia and the Middle East. The bank is committed to expand its pan-Asia franchise by leveraging its growing presence in mainland China, Hong Kong and Taiwan to intermediate the increasing trade and investment flows between these markets. Likewise, DBS is focused on extending its end-to-end services to facilitate capital within fast-growing countries in Indonesia and India.
DBS acknowledges the passion, commitment and can-do spirit in each of its 15,000 staff, representing over 30 nationalities. For more information, please visit www.dbs.com.