By Francis Chan

INVESTORS who lost huge sums in the High Notes 5 and Minibonds fiasco may get some - or even all - of their cash back after dramatic late-night moves by three financial institutions that sold the discredited products.

DBS Bank, Maybank and Hong Leong Finance said they are working hardest to help the 'highly vulnerable' investors, including the elderly and less educated.

They have fast-tracked handling such cases, contacting and meeting their affected customers to review their cases.

All three said that deserving investors may get all their money back. But such a settlement is not a sure thing for everyone.

Other Minibond investors could draw some hope from the news that two international institutions are interested in taking over the Minibond programme and letting these investment products run to maturity.

If either goes ahead, investors will likely have the choice of holding on or pulling out. The details are being finalised, the Monetary Authority of Singapore (MAS) said.

About 10,000 people sank over $500 million into the risky investment products which became virtually worthless after the American investment bank Lehman Brothers collapsed last month.

Weeks of unhappiness over their lost savings have seen them protesting at Speakers' Corner, signing petitions, and even consulting a lawyer on the possibility of taking out a class action lawsuit.

In a night of fast-moving events yesterday, Maybank was first to announce that it is giving priority to vulnerable customers and will take 'full responsibility in cases where the product was clearly inappropriate given the customer's profile and circumstances'.

This refers to 'mis-selling' of the risky product to the elderly or lowly educated.

Its management had 'reached a decision on deserving cases that warrant full compensation'. Affected investors would be told as soon as the details were worked out, it said.

Hong Leong Finance was next with its statement, saying it will buy back Lehman Minibonds from customers with only primary school education and over 62 years old when they invested.

DBS Group Holdings said it had found that 'a number of cases did not meet the standards DBS upholds and the bank will be compensating these customers' with effect from today.

It said the move could involve paying out $70 million to $80 million.

But it also said that for some, the worst-case outcome would hold true - they will lose the entire principal amount they invested.

The three institutions did not give exact details on the number of people affected.

Their action came five days after MAS managing director Heng Swee Keat urged banks to do the right thing by their unhappy customers who might have been mis-sold the products.

Last night, Mr Heng welcomed the news that the three were expediting efforts to help vulnerable investors.

It was right to give priority to such cases, he said, adding that MAS expected other financial institutions to take a similar approach.

He also said that MAS expected the financial institutions to deal with all remaining cases 'regardless of the background of the investors'.

DBS High Notes 5 was sold exclusively by the local bank while Minibonds were distributed by nine other institutions, including Maybank, Hong Leong Finance, ABN Amro and other brokerages.

Initially Minibond investors were told they might get back about 30 cents on the dollar, but over recent weeks that value was rumoured to have fallen to zero.

Some investors contacted last night were relieved to hear the news of the banks' action.

Mrs Cynthia Phua, MP for Aljunied GRC, said: 'This outcome is better than I expected. Full compensation is something that is beyond my expectation.

'The lower education level, I find that yes, that is a very good guideline. But the age of 62 could be more flexible. If investors are lower-educated, but younger, it could be their life savings as well.'

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