Limited impact of Lehman Brothers bankruptcy on Finnish investors and bank customers

Hundreds of Finns have investments with Lehman Brothers

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The bankruptcy of the American investment bank Lehman Brothers is having a direct impact on a number of Finnish investors. For instance, the Finnish investment company Front Capital has sold index loans launched by a Lehman Brothers subsidiary, with the mother company guaranteeing them.
     Front Capital has sold 4-5 Lehman investment products, mostly last year. The most recent such investments were made early this year.
      Hannu Kananen, Chairman of the Board of Front Capital, says that “several hundred Finnish investors” have put money into index loans tied with Lehman. The total value of the investments is just over EUR 30 million.
     “Not even on the international level are there experiences of a banking concern of this size going into liquidation. We do not have information on how long it will take before we get answers”, Kananen says.
     
The best and the worst scenarios are difficult to predict, Kananen says, but in the worst of situations investors could lose their money, he admits.
     Currently the holdings are not being traded, and when the situation becomes clearer, the investors can decide whether or not to wait for their money through debt assessment, or to sell the investment on the secondary market.
     Kananen says that Front Capital has thousands of investors as customers. He adds that the collapse of Lehman Brothers can cause harm to the investment company itself, if the confidence of the investors cannot be restored.
     
One investment company in addition to Front Capital that has offered products tied to Lehman is the investment company Taaleritehdas. In October and November last year it offered investors a
Europe Obligation, which was launched and guaranteed by Lehman Brothers.
     Taaleritehdas CEO Esko Immonen says that Lehman’s problems are certainly having an impact on his company’s activities, but that the number of customers investing in the products is “rather small”. He cannot yet say what will happen to the money invested in the obligations.
     According to him, holders of the obligations are nevertheless in a better position than many others in the processing of Lehman’s debts, because the obligations were directly launched by Lehman Brothers.
     “There is nothing more to do than to wait for the situation to be cleared up, and the debt assessment to be completed”, Immonen says.

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