A glimmer of hope has emerged for anxious investors who fear they have lost everything after sinking cash into the troubled DBS High Notes 5 product.
After days of uncertainty, DBS Bank yesterday raised the possibility that investors may get at least something back.
The High Notes 5 investment product was linked to the collapsed US investment bank Lehman Brothers.
However, it is set to be mid-October before DBS completes a valuation process to determine if there is any money left. Investors sank a minimum of $25,000 into the product - others quite a lot more.
The bank's comments come after a week when many investors were told by relationship managers and bank staff that they had lost their entire investment.
Some customers also say they were not properly warned of the risks of the product. DBS is inviting customers to lodge complaints if they feel that DBS misrepresented the product
One investor, a retiree in his 60s, Mr K. Tay said: 'I just wanted make a fixed deposit at DBS after I withdrew my CPF funds, but the bank staff told me to invest in this low-risk product that could give me higher returns.
'Had I known that I can actually lose my entire lifetime of savings, I would have not invested the money in this product,' he added.
Mr Rajan Raju, head of DBS' consumer banking group said: 'If customers feel that our relationship managers or staff have misrepresented the product, they can come to our branches, call or e-mail us to raise those issues.
'I assure customers that we already have an independent system in place to investigate such complaints,' he said.
DBS told The Straits Times yesterday that while it regrets this drastic turn of events, it has always been transparent about the product's risks for investors.
Still, it said that it is too soon to declare a total wipe-out of investor funds. A process to unwind the structure of the notes was initiated on Sept 17.
'There is a period to do that, and that is a market determined period. So we will work closely with the various participants to agree upon the valuation of the notes,' Mr Raju said .
He said returning any residual value of the notes is now the bank's priority.
'Whatever the valuation that we get, we will pass on to our clients. That is our primary objective at this time,' he said.
DBS says the valuation process will take about 30 business days and the moment the bank completes the process and ascertains the final valuation, customers will be informed as soon as possible.
'Once the monies come in...we will move that money, whatever we get, into the client's account.' Still, DBS maintains that capital invested in High Notes 5 was never protected or guaranteed.
'In a worst case when we get nothing by the time we get the valuation out, we will make sure we tell our clients about it,' he said. 'We will have an auditor to help us in terms of determining a very clear account of the valuation process and make the report available for them.'
Many shell-shocked investors are still coming to terms with how quickly their investments turned bad.
'I just received a letter from DBS, telling me that although there is a downward rating on the notes, I will only suffer a paper loss and not actual loss,' said a High Notes 5 investor who only wanted to be known as Mrs Lim. She produced the letter from DBS when she met with The Straits Times on Wednesday.
'The letter was dated June 27 and in July, my investment of $25,000 was halved but yet I chose to hold on to it because the letter said that the product was designed to be held to maturity - I feel cheated,' said the 59 year-old retiree.
Many like Mrs Lim felt that they were not properly advised by their relationship managers on the risks involved in the product and some have even said that they were 'oversold' on High Notes 5.
The Association of Banks in Singapore also issued a statement yesterday encouraging investors to 'constantly review their investments'. It also said that customers should contact their banks if they have any concerns as the 'financial markets are in unprecedented turmoil'.
This article was first published in The Straits Times on September 20, 2008.
