DBS BANK said yesterday it has started the process of compensating some customers facing losses from investment products linked to collapsed United States investment bank Lehman Brothers.

The compensation process was likely to be completed by the end of the year, a DBS spokesman said.

DBS and two other financial institutions, Maybank and Hong Leong Finance, said on Wednesday that they would be working to ensure that all deserving investors got their money back.

However, as recommended by the Monetary Authority of Singapore (MAS), they would be focusing on helping the 'highly vulnerable' including the elderly, retired and less educated.

In a statement last night, a DBS spokesman said that, after a review, 'we have found that a number of cases did not meet the standards DBS upholds'.

One investor told The Straits Times he had received a call from his DBS relationship manager yesterday.

'He hasn't called me in a while but this time, he hinted that I could be compensated, but I don't have the details just yet,' said the investor who bought $100,000 worth of High Notes 5.

DBS was in the process of unwinding the High Notes Series 5 in Singapore and Constellation Notes Series sold to customers in Hong Kong, the spokesman said.

Both were rendered almost worthless after the collapse of Lehman last month.

DBS is still assessing the final redemption credit amount, based on prevailing market conditions but estimated that it will pay out a total of $70 million to $80 million in the two markets.

In Singapore, cash compensation would be credited to customers' DBS or POSB accounts within a week of them signing to agree to the offer. They must sign a waiver agreeing not to take legal action against DBS for mis-selling.

As at last night, Maybank and Hong Leong had not provided an update on their progress on the compensation issue.

Another firm which sold Lehman-linked Minibonds, ABN AMRO, said yesterday that it was committed to resolve all complaint cases 'with fairness and speed'.

'Should there be proven cases of mis-representation, we will take appropriate responsibility,' a spokesman said.

The Minibond programme collected about $375 million from about 8,000 retail investors through nine distributors, while 1,400 investors bought $103 million worth of High Notes 5 from DBS.

Yesterday, some investors who did not fall into the 'vulnerable' category mentioned by DBS, Maybank and Hong Leong, expressed fears that their legitimate complaints might be overlooked.

One retiree, asking to be identified as Mr Tan, 52, who put $100,000 in DBS High Notes was concerned about his case.

Another investor, Mr Edward, 57, who bought $20,000 of Minibonds at Maybank is semi-retired. He wanted to know how his case would be dealt with.

Mr David Gerald, president and chief executive of the Securities Investors Association of Singapore said: 'The plight of the non-vulnerable group comes to my mind. Clearly the immediate group that needs help is the vulnerable group...but others may still not be satisfied.'

But other industry experts like Mr Albert Lam, an investment director with IPP Financial Advisers, said that investors must be realistic. 'There has to be a balanced approach where those who have been genuinely mis-sold should be compensated,' said Mr Lam.

'But those who have bought it knowing what they are buying should also take responsibility. That way, everyone is treated fairly.'

Another issue that vexed High Notes 5 investors was DBS' exposure in Hong Kong. Some investors like Mrs Tan, 45, were worried that DBS may end up spending more to compensate its Hong Kong customers due to pressure from the territory's central bank.

'There's talk that they may focus more on customers there, but I hope they will be fair,' said the Singaporean who invested $75,000 in High Notes 5.

Brokerages like OCBC Securities, which distribute, but do not advise investors on Minibonds, are also ready to address customer complaints.

'OCBC Securities has an existing complaints management framework that is in line with the MAS guidelines,' said Mr Yeow Chin Wee, executive director of OCBC Securities.

This article was first published in The Straits Times on October 24, 2008.