DBS Group to pay out S$70m to S$80m compensation

By JOSEPH CHIN

PETALING JAYA: DBS Group Holdings Ltd estimates that it will have to pay out between S$70mil to S$80mil in compensation to investors in Singapore and Hong Kong for losses on structured notes tied to failed Lehman Brothers Holdings Inc.

In a press statement, DBS said yesterday since the collapse of Lehman Brothers on Sept 15, it was deeply concerned about DBS customers in Singapore and Hong Kong who had invested in the structured products as a reference entity.

It said nobody could have imagined the extent of the fallout from the US sub-prime crisis, or the collapse of the venerable 158-year-old institution like Lehman Brothers and the toll it would take on investors.

These products were sold to 4,700 customers in Singapore and Hong Kong who invested S$360mil. In Singapore, 1,400 DBS customers invested S$103mil in the notes, known as High notes 5.

Of these customers, two-thirds of them are from DBS Treasuries, which caters to customers with a minimum of S$200,000 cash and/or investments, and 80% below the age of 60.

DBS chief executive officer Richard Stanley said he was deeply anguished about the faced by the customers.

“Every customer is important to us and in casaes where our standards are not met, DBS will not hesitate to make cash compensation,” he said.

DBS said it had found a number of cases which did not meet DBS’ standards and the bank would compensate these customers from Friday.

“Based on the number of cases we have reviewed, we estimate the total customer compensation in Singapore and Hong Kong will be in the range of S$70mil to S$80mil,” it said.