MercoPress. South Atlantic News Agency

Troubled icon US investment bank ready for takeover

Lehman needs to raise money to cover losses inflicted by the credit crunch

Troubled US investment bank Lehman Brothers has several parties interested in buying into the cash strapped institution according to Wall Street analysts. These include the state controlled Korea Development Bank and Europe's biggest bank HSBC Holdings together with a Chinese bank.

KDB has been in talks with Lehman over a possible joint investment with other Korean banks for some time now but said it was still unsure whether there would be a deal. "Korea Development Bank has considered M&A deals in foreign investment banks including Lehman Brothers, and asset management companies, as part of its privatization and competitiveness efforts but nothing has been decided yet" it said in an official statement. A media report from Seoul said KDB had proposed taking a 25% stake in Lehman in a deal worth up to 5.3 billion US dollars and involving other Korean banks. The Koreans also wanted assurances their share could eventually rise to 40%. Europe's biggest bank, HSBC Holdings, is also interested in Lehman according to the South Korean media report. Allegedly HSBC has joined with a Chinese bank for the operation. Speculation about HSBC interest has circulated for several weeks although the bank's policy target has moved from investment banks to emerging markets. KDB needs other banks to come aboard after Korea's Financial Services Commission this week expressed concern at the idea of a state-led bank leading any investment in Lehman. Lehman is under pressure to raise capital as Wall Street firms reel from the fallout of the subprime mortgage crisis and is looking for buyers for some 40 billion US dollars in commercial mortgages and property on its balance sheet. The investment bank received another blow earlier this week when hedge fund Ospraie Management LLC, said it would close its flagship fund after it plunged 27% in August on losses on commodities. Lehman owns 20% of the fund.