Regulators and banks reach buyback agreement on Minibonds

The Hong Kong Monetary Authority (HKMA) and Securities and Futures Commission (SFC) have finally reached an agreement with 16 banks that distributed Minibonds, including ABN Amro and the Bank of China, to repurchase the Lehman Brothers-backed products from investors at a fixed value.

Concluding an investigation which began in September 2008, the banks will now be obliged to make an offer to repurchase all outstanding Minibonds from customers at 60% of the value of the original investment for investors under 65, or at 70% for clients above 65 on July 1 2009. Any coupon payments already made to investors can be kept. However, the repurchase does not constitute an admission of liability on the part of the distributing banks.

The regulatory bodies have decreed that once banks