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SINGAPORE - Singapore's central bank has banned some of the island's biggest financial institutions from selling structured notes after they improperly marketed $367 million of the bonds that were linked to Lehman Brothers Holdings Inc.
The 10 banks and brokerages can't sell structured notes for between six months and two years, the central bank, known as the Monetary Authority of Singapore, said in a statement late Tuesday.
The banned institutions include the city-state's biggest bank DBS Group, the securities units of its two main rivals OCBC and United Overseas Bank, and regional brokerages such as CIMB and Kim Eng.
The central bank said some of the financial institutions assigned risk ratings that were inconsistent with warnings stated in the prospectus for the notes, and salespeople were ill-trained to sell the notes.
The Lehman collapse last fall led to a default on the dividend payment of some of the bonds, most of which had a maturity of 5 to 7 years and a yield of about 5 percent.
About 10,000 investors bought 520 million Singapore dollars ($367 million) of the notes, and financial institutions have compensated about 4,000 of them, the central bank said.
Similar structured notes were sold in Hong Kong, Taiwan and Indonesia.
The 10 financial institutions banned by the central bank are DBS Group, UOB Kay Hian, OCBC Securities, ABN AMRO's Singapore branch, Maybank Singapore, CIMB-GK Securities, Hong Leong Finance, DMG & Partners, Phillip Securities and Kim Eng Securities.
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