Hong Kong banks will not start compensating Lehman Brothers' minibond holders at the moment, said He Guangbei, chairman of the Hong Kong Association of Banks (HKAB) on Friday.

"Till now, we just know that the bonds' issuer went bankrupt. However, we do not know much about the situation and values of its collateral products, which ultimately determine the bonds' values," said He, who is also the chief executive of Bank of China (Hong Kong).

He, however, stressed that HKAB will encourage its members to collect related information through any channel available and as soon as possible.

"We do not have adequate information at the moment, so it is difficult to make decisions on the repayment," He said, adding that once the banks receive enough information, they will communicate with investors as early as they can.

"Since products of Lehman Brothers sold in Hong Kong are quite different in nature, regulations and arrangements, we need further understanding on its development and impact," said He after the association's regular meeting on Friday.

He said the HKAB has already issued an announcement to its member banks advising them to try their best to communicate with their customers and answer their queries. The association also asked the banks to contact customers once they have an update on the issue.

"The incident has left investors facing uncertainties and we understand their feelings," said He, acknowledging that the bankruptcy of Lehman Brothers has taken a toll on the global finance and Lehman's related products in Hong Kong are also having problem.

He said the financial market in Hong Kong has been shaken recently by the US financial turmoil, but in terms of liquidity and asset, Hong Kong performs much better than other international banks.

(HK Edition 09/27/2008 page2)