Domestic banks yesterday rejected the Financial Supervisory Commission’s (FSC) proposal to raise the threshold for investors seeking compensation for losses on structured notes linked to the financially troubled US investment bank Lehman Brothers Holdings Inc.
Turning down the commission’s proposal that the threshold be raised from the current NT$500,000 to NT$5 million (US$156,000), banks only agreed to raise the cap to NT$1 million during a directors’ meeting at the Bankers Association of the ROC (銀行公會) yesterday, an association official said after the meeting.
“Bank representatives said at the meeting that they were willing to shoulder some responsibility over risk exposure through note investments,” Elton Li (李蔭棠), chief of the association’s consulting services center, said by telephone yesterday.
“But, for larger amounts of investments, banks would rather wait for a court decision,” Li said, while adding that banks should help clients file suit to pursue their claims.
After the consensus reached at yesterday’s meeting, the association will begin to accept customers’ applications for claims of under NT$1 million from each lossmaking structured note, Li said.
NO LARGE CLAIMS
However, the association will not accept applications filed by investors who plan to claim more than NT$1 million from each of the same lossmaking structured notes, he said.
That seems to suggest that investors who had put down more cash on their purchase of structured note investments are likely to suffer more and receive the least help from the banking association.
With the low threshold of NT$500,000 for filing claims, Li said the association had only received “tens of complaints” from investors, adding that the association would soon work with the FSC to overhaul the application filing mechanism.
Commission statistics showed that about 51,000 investors had bought such structured notes, issued or guaranteed by, or linked to Lehman Brothers.
The association yesterday also finalized a proposal to reshuffle its seven-member evaluation committee. It has invited independent experts to replace three bank representatives who had left because of conflicts of interest.
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