But by January this year, rumours of Lehman's troubles were already brewing in the financial market.

A former head of an investment bank here said that those working in the financial market had all been aware of Lehman's problem 'for some time'.

'The collapse of Bear Stearns in March, which was also active as an issurer in structured products, should have made DBS more aware of such issuer risks,' he added.

But Mr Rajan Raju, DBS Bank's head of consumer banking group, played down the market talk.

'People keep asking us, could we have predicted this? Yes, there was Bear Stearns, Fannie Mae, Freddie Mac, but nothing had gone under,' he told The Sunday Times in an interview at the bank's headquarters last Friday.

'Even the independent rating agencies hadn't downgraded the entire global or US economy.'

An investor who wanted to be known only as Mrs Tay, 49, claimed she had had a bad feeling shortly after putting $200,000 of her retirement fund into DBS High Notes5 in April last year.

She had shown the prospectus to a lawyer friend and another in finance. Both told her that contrary to what she said she was led to believe, she could get nothing if any one of the eight reference entities bombed.

'I'm the aunty who queues up at POSB with my passbook. I don't even dare to try Internet banking because I'm so scared of losing my money,' said the teacher of her zero-risk appetite.

But she said her relationship manager had ticked 'growth' under her risk profile - just one category shy of 'aggressive'.

The first-time investor had since been watching her Notes' performance with jitters.

'When Freddie Mac, Fannie Mae and Bear Stearns had their meltdowns, I called DBS. I found to my horror the underlying collaterals had these things in it. But they said, don't worry, the basket is intact,' she said.

In June, when she heard rumours that Lehman was ailing, she called her relationship manager who assured her that her investment was still 'A grade'.

While many others like Mrs Tay were also concerned about an impending crisis, some like Mrs S. K. Lim, 59, decided to keep faith with DBS.

After all, she had received letters from the bank, which repeatedly assured her and other High Notes5 investors that the declining prices of the notes until then represented only 'a paper and not actual loss'.

The letters also reiterated that the notes were 'designed to be held to maturity' along with the kicker that regular coupons or interest would still be 'paid along the way'.

The retired secretary, who invested $25,000 of her retirement funds in High Notes5, received two such letters this year alone.

'They sent one in March and another in June,' she said. 'I understood from both letters and others before that if I held on to the notes, somehow there would be a way out.'

Hold on she did. But by July, her $25,000 had been reduced to about $12,000.

'My July statement came and I saw the losses but yet I held on because of the letters. But now they tell me, my investment is zero,' she said.