SFC and HKMA welcome Minibond Receivers' announcement

Hong Kong (HKSAR) - The following is issued on behalf of the Hong Kong Monetary Authority:

The Securities and Futures Commission (SFC) and the Hong Kong Monetary Authority (HKMA) are pleased to note the announcements by PricewaterhouseCoopers (PwC), the Receivers of the Minibond collateral, concerning the distribution of the underlying collateral for the Minibond series 10 to 12, 15 to 23 and 25 to 36 (the Relevant Series) to the nominal holders of the Relevant Series via the Clearing Systems in accordance with the terms of the settlement agreement with Lehman Brothers Special Financing Inc. (Lehman Brothers) (Note 1).

The SFC and the HKMA are also pleased to note that the recovery percentages on a weighted basis are on average 1.6% higher than the indicative recovery percentage stated in the announcement by the Receiver dated March 28, 2011. The recovery of collateral at a higher level, together with the additional ex-gratia payment by the 16 Lehman Brothers' Minibond distributing banks (the Banks), will increase the level of recovery of eligible customers to between 85.7% to 97.5% of their initial investment (Note 2).

The SFC's acting Chief Executive Officer, Mrs Alexa Lam said, "Today's announcements signal the final step to be taken by each of the 16 banks under the agreement reached in July 2009.Since then, each of these banks has implemented a repurchase scheme at its expense, instituted internal re-engineering programmes for systems and controls governing the sale of structured products, implemented the enhanced complaints process (which has paid out in aggregate over $600 million to investors) and all 16 banks have created a fund out of their Minibond commission income to pay for the return of the collateral to the maximum possible extent.

Now the collateral has returned to Hong Kong. The distribution will provide very substantial recovery, certainly much better than would have been achieved by any other means, at no cost to investor.This is a good result for Hong Kong."

"We are pleased to note that the collateral recovery arrangement has been executed and the investors of the relevant Minibond series will benefit from the high level of recovery.This is an important milestone which not only allows investors to avoid lengthy litigation and potentially costly fees and legal uncertainty, but also represents the concerted efforts among regulators, the participating banks and the relevant investors to recover the invested amount as far as practicable," the Deputy Chief Executive of HKMA, Mr Arthur Yuen said.

Notes:

1.The Receivers' announcement is available on PwC's website at (www.pwchk.com/minibonds).The recovery and proposed distribution does not cover customers who bought Minibond series 5 to 7 and 9 because the collateral for these series were securities issued by Lehman Brothers and all collateral claims are unsecured debts in the bankruptcy of Lehman Brothers. PwC has also been appointed as receivers for the collateral for Minibond series 5 to 7 and 9 and will continue to pursue claims on behalf of the Trustee in the interests of holders of these Minibonds (for further information on Minibond series 5 to 7 and 9, please refer to the FAQs dated January 3, 2011 posted on PwC's website).

2.The 16 Minibond distributing banks are: (1) The Royal Bank of Scotland N.V.

(formerly known as ABN AMRO Bank N.V.); (2) Bank of China (Hong Kong) Ltd; (3) Bank of Communications Co Ltd; (4) The Bank of East Asia, Ltd; (5) Chiyu Banking Corporation Ltd; (6) Chong Hing Bank Ltd; (7) CITIC Bank International (formerly known as CITIC Ka Wah Bank Ltd); (8) Dah Sing Bank Ltd; (9) Fubon Bank (Hong Kong) Ltd; (10) Industrial and Commercial Bank of China (Asia) Ltd; (11) Mevas Bank Ltd; (12) Nanyang Commercial Bank, Ltd; (13) Public Bank (Hong Kong) Ltd; (14) Shanghai Commercial Bank Ltd; (15) Wing Hang Bank Ltd; and (16) Wing Lung Bank Ltd