Sixteen Hong Kong banks offered on Wednesday to buy back a credit-linked financial product dubbed as minbonds issued by the Lehman Brothers.

Under the repurchase scheme, the vast majority of investors may be able to get back 70 percent or more of their original investments if they accept the repurchase package, according to Hong Kong's Monetary Authority.

Richard Fuld Jr., Chairman and CEO of Lehman Brothers Holdings, testifies before a House Oversight and Governmental Reform Committee hearing on the cause and effects of the Lehman Brothers bankruptcy in Washington on October 6, 2008. [CFP]

The banks also agreed to make extra payments to eligible investors who have already entered a settlement with the banks if the amount is less than they would be offered under the repurchase scheme.

The repurchase scheme, which will cost the banks more than 6 billion HK dollars (about US$800 million), will put an end to "more than 10 months of distress for investors" and "enable banks to resume normal operation," said John Tsang, financial secretary of the Hong Kong Special Administrative Region, who hailed the scheme as a "reasonable settlement that has taken account of the interests and rights of the investors."

Disgruntled minibond investors took to the street several times to pressure the banks to refund their investment since last September, when Lehman Brothers collapsed. They complained that both regulators and distributing banks failed to inform them of the risks involved.

KC Chan, secretary for Financial Services & the Treasury, said the repurchase offer covers more than 90 percent of the minibond investors. Those accepting the offer will be relieved of the delay and uncertainty in going though the liquidation process.

"The amount to be received under the repurchase offer scheme will be equal or higher than those obtained through liquidation of the minibonds," he said.

disgruntled investors who had lost money through complex financial products called "mini-bonds", whose value collapsed when the bank that backed them, US investment house Lehman Brothers, went bust last September.

(Xinhua News Agency July 23, 2009)