Lehman Brothers raises $4bn and reviews UK sub-prime business

by Gill Montia

Story link: Lehman Brothers raises $4bn and reviews UK sub-prime business

Lehman Brothers has completed a successful fundraising.

The investment bank raised $4 billion in a sale of convertible preferred shares that saw strong demand from institutional investors.

The move helped to dispel rumours (which have been denied by the bank) that it could follow Bear Stearns and be forced into a sale

Lehman has also reported results for the first-quarter of 2008 that are above market expectations.

However, it is rumoured that the bank has plans to suspend lending at it UK sub-prime mortgage subsidiaries, Pacific Mortgage Limited and Preferred Mortgage, because of concerns about a slowdown in the UK property market.

It is not yet clear whether it will close the sub-prime lending divisions or apply stricter scrutiny and criteria to their lending.

Last year, the credit squeeze forced the bank to close two of its businesses in the UK, the London Mortgage Company and Southern Pacific Personal Loans.

Around 177 jobs were lost as a result and further job losses are anticipated when Lehman reviews its Pacific and Preferred lending businesses.