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| Version 6 | Version 7 |
|---|---|
| Lehman shake-up as losses mount | Lehman shake-up as losses mount |
| (about 4 hours later) | |
| Troubled US bank Lehman Brothers has reported a massive third quarter net loss and outlined radical plans to strengthen its finances. | Troubled US bank Lehman Brothers has reported a massive third quarter net loss and outlined radical plans to strengthen its finances. |
| Lehman said it made a loss of of $3.9bn (£2.2bn) between June and August, taking its losses this year to $6.6bn. | Lehman said it made a loss of of $3.9bn (£2.2bn) between June and August, taking its losses this year to $6.6bn. |
| To shore up its weak financial position, it has slashed its dividend and will sell a stake in its lucrative fund management arm. | To shore up its weak financial position, it has slashed its dividend and will sell a stake in its lucrative fund management arm. |
| However, no "white knight" investor has stepped forward to bolster the firm. | However, no "white knight" investor has stepped forward to bolster the firm. |
| The fourth largest US investment bank will also reduce its exposure to residential mortgages and spin off its commercial real estate business as part of the shake-up. | The fourth largest US investment bank will also reduce its exposure to residential mortgages and spin off its commercial real estate business as part of the shake-up. |
| Shares rebound | Shares rebound |
| Lehman shares, which had plummeted 45% on Tuesday, fell further after the trading statement, but by nowhere near as much. | |
| They ended Wednesday trading down 6.9%. | |
| The markets may have responded better if they (Lehman) had struck a deal at any cost Steve Goldstein, Marketwatch Bank 'too big to fail' | The markets may have responded better if they (Lehman) had struck a deal at any cost Steve Goldstein, Marketwatch Bank 'too big to fail' |
| "This is an extraordinary time for our industry, and one of the toughest periods in the firm's history," said chairman and chief executive Richard Fuld. | "This is an extraordinary time for our industry, and one of the toughest periods in the firm's history," said chairman and chief executive Richard Fuld. |
| Lehman gave no indication that it had found a backer to offer it a fresh capital injection. | Lehman gave no indication that it had found a backer to offer it a fresh capital injection. |
| Earlier, Korea Development Bank (KDB) said it had pulled out of talks with Lehman Brothers with regard to possible investment in the US bank. | Earlier, Korea Development Bank (KDB) said it had pulled out of talks with Lehman Brothers with regard to possible investment in the US bank. |
| "We are announcing that we ended talks at this point in time because of a disagreement over conditions of a transaction and considering domestic and foreign financial market conditions," KDB said in a statement. | "We are announcing that we ended talks at this point in time because of a disagreement over conditions of a transaction and considering domestic and foreign financial market conditions," KDB said in a statement. |
| PESTON'S PICKS Nothing less than a reconstruction of the firm is required Read Robert's thoughts in full | |
| State-run KDB said the decision came because of disagreement over terms and current financial market conditions. | State-run KDB said the decision came because of disagreement over terms and current financial market conditions. |
| Lehman, the fourth-largest US investment bank, had hoped to secure a deal with the Korean fund before announcing its third-quarter earnings. | Lehman, the fourth-largest US investment bank, had hoped to secure a deal with the Korean fund before announcing its third-quarter earnings. |
| "The markets may have responded better if they had struck a deal at any cost, " Steve Goldstein at Marketwatch told the BBC. | "The markets may have responded better if they had struck a deal at any cost, " Steve Goldstein at Marketwatch told the BBC. |
| "They needed that lifeline," he added. | "They needed that lifeline," he added. |
| No Bear Stearns | No Bear Stearns |
| The Wall Street bank has lost billions of dollars through its badly judged bets on the growth of US sub-prime mortgages - a market that crumbled at the back end of last summer. | The Wall Street bank has lost billions of dollars through its badly judged bets on the growth of US sub-prime mortgages - a market that crumbled at the back end of last summer. |
| But BBC Business Editor Robert Peston insists that Lehman is not in immediate danger of collapse in the style of Bear Stearns earlier this year. | But BBC Business Editor Robert Peston insists that Lehman is not in immediate danger of collapse in the style of Bear Stearns earlier this year. |
| For one thing, it says it has immediate access to $42bn in cash reserves, which he said "looks ample to meet any unexpected calls on its cash". | For one thing, it says it has immediate access to $42bn in cash reserves, which he said "looks ample to meet any unexpected calls on its cash". |
| However, he did add: "But that doesn't mean its in good shape. It still has $54bn of exposure to illiquid and hard-to-monetize commercial real estate, residential mortgages and high-yield acquisition finance." | However, he did add: "But that doesn't mean its in good shape. It still has $54bn of exposure to illiquid and hard-to-monetize commercial real estate, residential mortgages and high-yield acquisition finance." |