Business | Markets
Lehman-hit UAE investors blame banks
Financial institutions 'failed to give sufficient risk warning on capital protected notes'.
- By Babu Das Augustine, Banking Editor
- Published: 00:07 October 2, 2008
Dubai: A large number of UAE investors, who lost the money they invested in Lehman Brothers capital protected notes and face huge financial burden on the leverage they made use of, allege that they were misled by banks that sold this product to them in the UAE.
"I was not adequately briefed about the risk factors by the local bank that sold me the notes and the leverage. My bank was too keen to sell me the leverage; they took advantage of my trust in them. I think the central bank and the UAE authorities should act against these banks," said an investor who lost $300,000 (Dh1.1 million) in Lehman notes.
Bankers said yesterday that although they never anticipated a risk of the magnitude of the collapse of Lehman Brothers at the time of selling these notes, investors were made aware of the implications of leveraged investments at the time of offering such facilities.
"At the time of the offer, the Lehman capital protected notes had a face value of $100. It was clearly understood that any time the value of the notes fell below $80 it could trigger a margin call. Now as it stands the value has fallen by more than 80 per cent and we have made a margin call of 50 per cent of the leverage, which is within our agreement with our customers," said an official with National Bank of Fuj-airah.
A Citibank source said yesterday that a few of their clients have invested in Lehman and the bank is in discussion with its clients on how best it could resolve the issues related to these investments.
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