Monday, Government-owned Korea Development Bank refused to rule out bidding for the beleaguered Lehman Brothers, (LEH) but has hinted that any approach would not be imminent, reports said.
Wall Street investment brokerage firm Lehman Brothers, which has been hit hard by the subprime meltdown and credit crisis, needs capital to shore up its balance sheet. It remains the most exposed of the big banks to troubled fixed-income assets and to American commercial and residential property. The troubled bank is expected to reveal a $2 billion net loss when it reports its third-quarter figures in the middle of September. It is also expected to write off another $3 billion of assets in an attempt to sort out its balance sheet.
All the Wall Street banks are suffering from a decline in M&A activity, lackluster equity markets and dull fixed-income markets. Lehman Brothers, with more than $75 billion of leveraged loans, commercial property investments and other suspect assets, is regarded as one of the weakest.
It is understood that Lehman has already drawn plans to sell a stake in the bank's lucrative fund management unit, and had preliminary talks with the South Korean bank last week. Reportedly, the Koreans backed away because the price was too high.
Lehman Brothers hopes to wrap up a deal this week that would give the firm billions of dollars in new capital, according to a published media report. The troubled investment bank hopes to receive as much as $6 billion from the Korea Development Bank, in exchange for a significant stake in Lehman.
The Korean Development Bank (KDB) was found in 1954 as the Korea Reconstruction Bank, by the Government of South Korea to fund the economic development in the wake of the Korean War. While the Korean Government fully owns the bank, KDB is expected to become private by 2011. As of 2007, the bank is said to have assets of $115 billion and total equity of $17.5 billion.
In an interview over the weekend, Korea Development Bank (KDB) said, "We are just at an early stage of privatization, and we are weak at investment banking by international standards. In the long term, we should strengthen that weakness."
LEH rose $0.22 or 1.39% and closed Friday's regular trading session $16.09. After hours, LEH declined $0.03 or 0.19% and traded at $16.06.
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June 05, 2026 16:18 ET A busy week for economic news flow saw a slew of reports being released that reflected the trends in the U.S. labor market. In Europe, economic growth and inflation data gained attention as the European Central Bank and Bank of England head for policy session later in the month. In Asia, the monetary policy session of the Indian central bank was in focus as the country, a major oil importer, reels under the pressures of a weaker rupee and rising inflation.