23 June 2009
Talks between Bank of China (Hong Kong) (2388) and the Securities and Futures Commission have stalled over how much Lehman minibond investors should be compensated despite nearly two months of discussions.
BOCHK will not accede to the regulator's demands that it pay back 100 percent of the purchase value of the toxic investments and is suggesting a maximum offer of 70 percent, sources said.
Peter Chan Kwong-yue, chairman of the Allied Victims of Lehman Products, said he is disappointed by the development and demanded BOCHK take responsibility.
``They did not even show they felt sorry for the situation and it is not acceptable to just pay back 60 percent,'' he said.
Investors aged 65 or older would get up to 70 percent of their capital back. Everyone else would be offered 60 percent. Both offers are on the condition that BOCHK does not accept liability for misselling of the toxic products.
The government has no intention of intervening, The Standard has learned.
A government spokeswoman said: ``We hope the matter can be resolved as quickly as possible.''
BOCHK, the city's largest distributor of Lehman minibonds products in Hong Kong, has submitted a proposal to the SFC and is awaiting its response, sources said.
BOCHK's proposal was based on the government's buyout plan submitted last year with an ``additional premium,'' a source said.
The administration last November suggested banks refund 55 percent of the principal on all minibond products but this proposal was scrapped for legal reasons.
The SFC has insisted on pursuing the same 100 percent rebate for investors that it has already negotiated with Sun Hung Kai Investment and KGI Securities.
BOCHK led minibond sales in Hong Kong with 40 percent of the market. Dah Sing Financial was the second-biggest seller of the structured products, according to research.
BOCHK's settlement will set a precedent for other banks' negotiations with the SFC.
Its 60 percent proposal will cost it HK$2.52 billion, according to Citigroup Global Markets, while paying back 100 percent would cost HK$4.2 billion.
It has so far set aside HK$769 million in provisions.
Dah Sing Financial sold about HK$1.1 billion in Lehman minibonds. So far it has put aside HK$300 million in provisions, according to Citi.
Monday, June 22, 2009
Brain Workout (aka Intelligence Quiz)
I have got 5 orders through the website for my books now. Payment for 3 orders were made through ATM and 2 by internet banking transfer. The process is working smoothly. I will be offering more products through the website later.
Click on these links:
Play online
Order books
A customer called me today as she wanted the book urgently for her children. They love the puzzles which appeared in The New Paper on Sunday.
Click on these links:
Play online
Order books
A customer called me today as she wanted the book urgently for her children. They love the puzzles which appeared in The New Paper on Sunday.
Correct approach to select an insurance policy
Many people think that a good insurance policy provides the widest cover. This is not the correct approach.
A good insurance policy meets the following criteria:
a) Provides cover that is relevant to the needs
b) The cover is clearly defined (i.e. not ambigious)
c) The premium is computed fairly.
The consumer should avoid a policy that provides wide cover that is irrelevant to the needs, have a negligible chance of occurence, and are ambigiously defined. Many of the coverages provided under a critical illness policy fall into this category.
To ensure that the premium is computed fairly, the ratio of claims to premium should be at least 60% in the case of a policy that covers the risk and does not accummulate any savings. If the ratio is less than 60%, the premium is overcharged, and gives poor value to the consumer.
Many travel insurance policies have a claim ratio of less than 30%. A large part of the premium goes to commission, expenses and profit to the insurance company. Many Shield plans also have claims ratio of less than 50%.
Motor insurance has a claim ratio of more than 70%, due to intensive competition. It gives good value to the consumer, except that the claims are inflated due to incompetency in claims control.
When you buy an insurance policy, make sure that the coverage is clearly defined and that the claim ratio is more than 60% of the premiums.
Tan Kin Lian
A good insurance policy meets the following criteria:
a) Provides cover that is relevant to the needs
b) The cover is clearly defined (i.e. not ambigious)
c) The premium is computed fairly.
The consumer should avoid a policy that provides wide cover that is irrelevant to the needs, have a negligible chance of occurence, and are ambigiously defined. Many of the coverages provided under a critical illness policy fall into this category.
To ensure that the premium is computed fairly, the ratio of claims to premium should be at least 60% in the case of a policy that covers the risk and does not accummulate any savings. If the ratio is less than 60%, the premium is overcharged, and gives poor value to the consumer.
Many travel insurance policies have a claim ratio of less than 30%. A large part of the premium goes to commission, expenses and profit to the insurance company. Many Shield plans also have claims ratio of less than 50%.
Motor insurance has a claim ratio of more than 70%, due to intensive competition. It gives good value to the consumer, except that the claims are inflated due to incompetency in claims control.
When you buy an insurance policy, make sure that the coverage is clearly defined and that the claim ratio is more than 60% of the premiums.
Tan Kin Lian
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