Korean Development Bank prepares bid for Lehman Brothers

by Gill Montia

Story link: Korean Development Bank prepares bid for Lehman Brothers

Korean Development Bank (KDB) has confirmed it is in the process of bringing together a consortium of investors that could provide an injection of cash for Lehman Brothers.

The troubled investment bank is currently seen as the most vulnerable on Wall Street because write-downs on its commercial and residential mortgage assets could substantially reduce its value.

According to a report in The Telegraph, Lehman Brothers is also in talks with a number of sovereign funds from the Middle East and with Citic Securities, a Chinese firm.

Interest in a KDB-led bid has been heightened by the fact that the bank’s governor, Min Euoo Sung, held the post of chief executive of Lehman Brothers’ operations in Seoul, until earlier this year.

Last weekend, Lehman said it was planning to reduce its headcount by 1,200, adding to the 4,000 job cuts already made in 2008.

The bank is widely seen as undercapitalised and reported a loss of $2.8 billion in the second quarter of 2008.

A further loss is expected in the three months to the end of August, with analysts predicting writedowns of up to $4 billion during the quarter.