Hong Kong banks have agreed to buy back controversial financial products backed by failed US investment bank Lehman Brothers at market value, a spokesman for the banking industry said yesterday.
"(We have) agreed to accept the government's plan to buy back Lehman Brothers mini-bonds at market value," a spokesman for the Hong Kong Association of Banks told reporters.
He said the banks made the move due to the "extraordinary market situation".
The decision, which the government had pushed for, comes after weeks of protests by disgruntled investors, many of whom claim the mini-bonds were mis-sold by the banks.
The mini-bond, complex financial products that include elements of derivatives linked to risky mortgages, were presented as solid investments, protestors say.
But they lost most of their value after Lehman's collapsed last month.
The spokesman said accountancy firm Ernst and Young had been appointed to work out the value of the bonds, but no timetable had been set.
Some investors had previously rejected the government's proposal, saying they should receive a full refund of their investment rather than a reduced market-value sum.

Central gov’t discusses milk scandal company's fate with dairies

The Chinese government summoned five dairy producers to discuss yesterday the future of Sanlu Group, the company at the centre of the contaminated milk scandal, state media reported.
China's industry ministry was soliciting proposals from the five companies on how to restructure Sanlu at a meeting in Beijing, the China Securities Journal reported.
Sanlu, which is 43 percent-owned by New Zealand dairy giant Fonterra, faces bankruptcy with more than 102.5 million dollars of debt plus potential lawsuits looming, state media reported.
The five companies were Inner Mongolia Yili Industrial Group, Beijing Sanyuan Foods Co, American-owned Heilongjiang Feihe Dairy Group, Heilongjiang Wondersun Dairy Co and Wahaha Group, the report said, citing unnamed officials.
Representatives from an industry association and government agencies were also expected at the meeting, the report said.
China's dairy industry has been hit hard after four children died of kidney failure and more than 50,000 were sickened when they consumed milk products contaminated with melamine, an industrial chemical added to make the protein content seem higher.
The scandal continues to escalate, as a growing number of multinationals have pulled their made-in-China products from shelves in overseas markets.