50,000 over investors in HK bought USD 1bn worth of mini bonds from Lehman.
1,000 of them protested public to seek explanation from authorities.
Singapore - my guess, probably 60% of HK's problem
ie 30,000 investors, investing USD 600mn in mini bonds
ie 1bn SGD
DBS shareholder equity is SGD 23bn, net profit is 2bn SGD
So theoretically, they can repay the investors out of goodwill with little impact.
Eg. Repayment 20% over 5 yrs, SGD 200mn per yr -> 0.9% dent to their equity and 10% dent on net profit (quite big though)
Of course, they won't...
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2 comments:
I think u had underestimated singapore investors' investment by 100%.
Hi Brendan,
Do you have the figures to share with us? I couldn't find it anywhere.
In any case, even if I underestimated by 100%, which I take it to mean it should be SGD 2bn instead of SGD 1bn, I think DBS have the capacity to pay back using their own capital.
It is better to pay back at least some money, with zero interest, over many many years (to limit the impact to DBS) than to do nothing.
If I were an investor, I would appreciate that. And it is morally right to do it.
Alas, DBS doesn't seem very morally inclined though...
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