By Fiona Chan

DBS Bank will pay $70 million to $80 million in compensation to customers in Singapore and Hong Kong who bought its Lehman Brothers-related structured products, now almost worthless because they were linked to the collapsed investment bank.

'To date, we have found that a number of cases did not meet the standards DBS upholds and the bank will be compensating these customers with effect from tomorrow,' it said in a statement last night.

Some investors stand to get all their money back, while others may only get a partial payment.

But there are others who may get nothing back at all, the bank cautioned. 'Regrettably, our initial expectation of the worst-case scenario whereby investors will lose their entire principal investment amount is likely to materialise,' it said.

DBS' statement, released at about 10.30pm, came in a flurry of similar statements from Maybank and Hong Leong Finance, all announcing action to help investors stuck with Lehman-linked products.

DBS was the only one to give a total expected compensation figure, as well as some details about customers who had invested in one particular product, High Notes 5.

For Singapore and Hong Kong as a whole, 4,700 customers invested a total of $360 million in Lehman-related notes.

In Singapore, 1,400 customers invested a total of $103 million in High Notes 5, the bank said.

Of these, 80 per cent were below the age of 60, and two-thirds were DBS Treasures customers who typically have at least $200,000 in cash, investments or both.

'We will give every single case individual attention and hearing,' the bank said. 'We agree with MAS on the need to give priority to vulnerable customers and are fast-tracking such cases.'

DBS chief executive Richard Stanley said in the statement that the bank was committed to doing the right thing and working as hard as possible to resolve the situation.

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

ABN Amro banking analyst Trevor Kalcic welcomed DBS' move last night, saying it would help the bank regain the goodwill of the general public and regulators in Singapore and Hong Kong.

'The big question is of course whether this will be adequate to satisfy the disgruntled customers,' he added.

In its statement, Hong Leong Finance said it would buy back Minibond notes from customers with only primary school education and who are 62 years or older at the time of the investment.

The settlement amount will be the original investment made, minus all interest paid to date.

It pledged to review and deal with other customers 'in a fair and equitable manner, and as expeditiously as possible'.

Maybank promised full compensation to some 'deserving cases' of Minibond investors who will be told as soon as the bank has worked out the details.

It said it had called more than half the customers identified as 'vulnerable' investors, and conducted or scheduled interviews with 70 per cent of those who contacted the bank.

This article was first published in The Straits Times on October 23, 2008.