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Lehman loss looms for L&G clients

Around 1,300 investors in a Legal & General structured product backed by Lehman Brothers may not recover the 20 per cent of their investment lost when the bank collapsed.

L&G has written to clients invested in the £12m accelerated growth investment plan two, saying they should get back at least 80 per cent of their investment at maturity, assuming the remaining underlying counterparties repay their money.

L&G says it is “unlikely” the FTSE will rise enough to make up the 20 per cent of the original investment lost when Lehmans filed for bankruptcy. No changes have been made to the remaining four counterparties – Barclays Bank, Yorkshire BS, Citigroup Funding, Commerzbank (formerly Dresdner Bank).

The restructured plan offers 104 per cent of capital growth in the FTSE 100 (previously 130 per cent) and index participation has fallen to 80 per cent of the original level. L&G restored 100 per cent capital protection on the protected capital and growth plan four, which was exposed to Lehmans, but investors had to forego potential growth.


For better or worse

It was with sadness and incredulity that I sat down on a summer’s morning to begin reading the latest FSA update, annual report 2008/09. My heart sank as 124 pages downloaded before my eyes.

Easing the exit

One of the key differences between the UK and the US’s quantitative easing programmes is that virtually all of the Bank of England’s purchases have been gilts whereas the US Federal Reserve has used a lot of its ammunition to buy residential mortgage-backed securities.

The high street of shame

This week, I had intended to pen a quick review of Peter Hargreaves’ new book, In for a Penny.

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