A year after the fall of Lehman Brothers brought the entire house of cards crashing, the Central Bank of UAE has notified all banks and financial institutions prohibiting the sale of structured products to their retail customers without the approval of the Central Bank.

Sources indicate that the prohibition is the first of its kind, as never before have high net-worth individuals been classified as retail investors. Further, the notice mandates that all banks identify whether they are selling structured products to retail customers, and either put in place measures to comply with the restriction, or explore possible safe harbours.

A group of Indian investors in the UAE are at loggerheads with the National Bank of Fujairah for selling structured products linked to Lehman Brothers. In August this year, these investors established a Follow-up Committee based in Mumbai to collect all necessary documents in order to take joint steps and promote their cause, both in India and globally, with regard to these ‘guaranteed’ structured products. “The bank is making the investors pay for its mistakes, which is extremely alarming as it will not only hurt the affected retail investors but on a larger scale, damage the integrity of UAE’s investment and financial sector,” says Rahul Kumar, the Secretary-General of the newly established Indian Investors Follow-up Committee.

Last month, sixteen Hong Kong banks agreed to buy back a credit-linked financial product dubbed as mini bonds issued by Lehman Brothers.  The repurchase scheme cost the banks more than $800 million (Rs. 3,840 crore).