Fresh blow for Lehman after Korean investor warned off
Lehman Brothers, the investment bank beset by worries over asset sales and the future of boss Richard Fuld Jr, was dealt another blow yesterday after potential investor Korea Development Bank (KDB) was warned off an approach.
South Korea’s top financial regulator Jun Kwang-woo, warned KDB that it should take a “cautious approach”, after the state-run group revealed it was interested in acquiring a 50 per cent stake in Lehman Brothers. Jun, who chairs the Korean Financial Services Commission, said that an attempt to take over a global investment bank should be headed by private lenders rather than a state institution. He said a takeover was “an opportunity to raise the capability of the (Korean) investment banking business” but warned that “as the risks are also big, KDB should take a cautious approach.”
It emerged last week that KDB was in talks with Lehman, although discussions were said to have stalled soon after. Lehman’s shares jumped on Friday but fell yesterday after the regulator’s warning.
The investment bank is casting around for ways to raise capital ahead of its September earnings report, when it is expected to post write downs of up to $4bn (£2bn).
It could consider selling a stake in itself, or other assets including its assetmanagement arm and commercial real estate portfolio.