Singapore’s DBS, Maybank and Hong Leong have said they will compensate certain investors who were sold Lehman Brothers Minibonds. The bank said it agreed with the Monetary Authority of Singapore (MAS) on the need to give priority to vulnerable customers, such as the elderly and poorly educated.

The move follows a series of protests and rallies by disappointed investors and the launch of investigations into claims of mis-selling by the regulator.

Maybank said it has contacted over half of the segment it deems to be ‘vulnerable’, and has conducted or scheduled interviews with 70% of those who have written or contacted it.

Management has reached a decision on deserving cases that warrant full compensation, and is working out the details before communicating the decision to the affected investors, it said.

Hong Leong is offering to buy back Lehman Brothers investments at par from any investors over the age of 62 with no secondary education.

DBS estimates it will pay out SG$70-80m (US$45-55m) in Hong Kong and Singapore cases in which it failed to meet certain standards.

"I am deeply concerned about the anguish our customers are experiencing. DBS is committed to doing the right thing and my colleagues and I are working as hard as possible to resolve the situation. Every customer is important to us and in cases where our standards are not met, DBS will not hesitate to make cash compensation," said DBS’s CEO Richard Stanley in a statement last night.

Nobody could have imagined the extent of the fallout from the US sub-prime crisis, or the collapse of a venerable 158-year-old financial institution like Lehman and the toll this would take on investors, said Stanley.

The bank said Lehman-related structured products were sold to 4,700 customers in Singapore and Hong Kong who invested a total of SG$360m (US$239.3m). In Singapore, 1,400 DBS customers invested a total of SG$103m (US$68.4m) in High Notes 5. Of these customers, two thirds are from DBS Treasures, which caters to customers with a minimum of SG$200,000 (US$133,000) cash and/or investments; 80% are below the age of 60.

DBS will make a final announcement next week when the final credit redemption amount, based on prevailing market conditions, is determined. It expects the investments will be worthless.