Structured products like High Notes5 and Lehman-issued Minibonds have been gaining popularity in the last seven or eight years and were snatched up like hot cakes by investors in Singapore.

After all, the economy was sailing along nicely after getting over the Sars crisis of 2003.

Singaporeans were cash-rich from crazy en-bloc property sales. Early last year, around the time High Notes5 was launched, Leedon Heights in Holland Road smashed the record for the largest collective sale in the country with a whopping $835million.

Financial institutions were rolling out a dizzying array of products, all calling out for people's money. At bank branch offices from Hougang to Holland, well-mannered, well-groomed relationship managers staked out potential customers.

They were all armed with rehearsed speeches on why the public should put their money in perfectly safe financial instruments, instead of leaving it in fixed deposits with near-zero interest.

In April2006, Mr Chua Meng Teck, 40, was invited to OCBC Securities in OCBC Centre's South Tower. There, he and about 30 others were given a nice presentation by Lehman, a buffet spread and a 'marketing talk' about the investment bank's Minibonds.

Mr Chua, a financial controller and savvy investor, knows he is supposed to take marketing talks with a pinch of salt, but he was won over by the Minibonds.

They were supposed to give you fixed returns which were respectable but not too high, so how risky could it be, he thought.

He was not looking at striking rich with it anyway.

'I consciously bought it just to balance my equity investments because I didn't want to lose sleep over it. In case my shares go down, I still have this,' said Mr Chua, who sank in about $140,000.

Besides, investors were not required to monitor the performance of their investments hawkishly. They were told that they just needed to wait out the five years to get back their principal sum. It sounded pretty perfect.

Mr Chua was one of 8,000 people in Singapore who ended up buying an astonishing $375million worth of Lehman's Minibonds.

Whether DBS High Notes5 or Lehman Minibonds were being dangled, the man in the street with a humble stash of cash suddenly found himself the new darling of banks.

These banks took to modifying products - once the exclusive domain of the wealthy - and lowering the minimum investment sum.

For anything between $5,000 and $25,000, you could buy into structured products, equity-linked notes and hedge funds.

Banks say they introduced these products to meet the needs of increasingly affluent and sophisticated retail investors who were not satisfied parking their money in low-interest fixed deposits.

In Hong Kong, people were snapping up structured products, which they thought to be low-risk and linked to stocks and bonds, as early as 2002.

The Hong Kong market became so saturated - at its peak, six products were rolled out each month - that banks started turning their attention to Singapore and Taiwan.

Singapore, with some US$118billion (S$175billion) sitting in bank deposits in 2004, was ripe for the picking by structured product providers.

They were appealing, no doubt: Said to be marketed as an alternative to fixed deposits, they gave higher fixed returns at an average of 5per cent with a maturity period.

The reference entities trotted out were also highly rated players: century-old brand-name institutions like Lehman Brothers.

In fact, Lehman's Minibonds in Hong Kong and Singapore were named Best Credit Structured Deal last year by a Hong Kong-based financial magazine, The Asset.

Its treasury editor, Mr Rodney Diola, told The Sunday Times it used a scoring system based on such criteria as the product's relevance to investors and the capital market; the degree of transparency, simplicity and elegance, innovation and timeliness that characterised the product; and past performance.

'Lehman's Minibond products in Hong Kong enjoyed a well-established track record among investors,' he said in an e-mail interview.

Lehman launched 25 different Minibonds in Hong Kong after its first issue in 2003. By November 2006, the Minibonds had attracted at least US$1.1billion in investor funds around Asia, said Mr Diola.

He conceded that the product did require a sophisticated type of retail investor, and added: 'For this reason, distributors, together with the structurers, should exercise a high degree of responsibility when they are explaining the product to investors. We understand this may not always have been the case.'

Nearly 10 Minibonds were offered in Singapore, of which the values of Series5 and 6 have been determined to be zero.

HSBC Trustee, which is the trustee of the Minibonds programme, is currently trying to find a new swap counterparty to replace Lehman and is due to update investors this week of the results.

DBS Bank, too, said the climate at the time it launched High Notes5 was one of retail investors wanting in on higher-yield products.

It is a sentiment echoed by other financial institutions.

'We offer a suite of alternative investment products that range from government bonds to structured warrants with the aim of providing investors with varying solutions for diversifying their portfolios,' said OCBC Securities' executive director and general manager Yeow Chin Wee.

The firm distributed Minibonds.

And for a time, investors had nothing to complain about.

One investor who put $200,000 into High Notes5 remembers receiving payouts of $2,500 every three months since last year.