Singapore says banks interested in Lehman bonds

  • Business
  • Thursday, 23 Oct 2008

SINGAPORE (AP) - Singapore's central bank said two banks have "shown interest'' in assuming obligations on 640 million Singapore dollars (US$432 million) of bonds linked to bankrupt U.S. brokerage Lehman Brothers Holdings Inc.

The central bank did not name the banks, but said they are international financial institutions licensed to operate in the city-state and they may seek to restructure the notes.

"The proposals are confidential at this stage, and the details are being finalized,'' the central bank, known as the Monetary Authority of Singapore, or MAS, said in a statement late Wednesday.

The MAS said last week that if another bank did not assume obligations on the bonds, the notes' underlying assets would be liquidated, exposing investors to huge losses.

Hundreds of anguished investors have gathered the last two weekends in Singapore in rare public protests, many saying they were misled by local bank officials about the nature of the investment.

The Lehman collapse led to a default on the dividend payment of some of the bonds, which have a maturity of 5 to 7 years and yield about 5 percent.

Heng Swee Keat, the central bank's managing director, said three of the banks that sold the bonds - DBS Bank, Hong Leong Finance and Maybank - were "expediting the resolution of cases involving vulnerable investors.''

"We understand that the financial institutions are finalizing the details of the settlement for these cases.'' Heng said in a statement late Wednesday.

"MAS expects other financial institutions to take a similar approach.''

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