Lehman and Korean Development Bank In Joint Investment Talks
Today state-owned Korea Development Bank (KDB) confirmed that it's in talks with Lehman Brothers over a possible joint investment in the U.S. bank with other Korean banks, sending local banking shares lower.
"Our CEO said talks are ongoing and cannot disclose the content of them," said KDB spokesman Sung Joo-young.
An investment from Korea Development would help Lehman Chief Executive Officer Richard Fuld bolster the company's finances after $8.2 billion of write-downs on mortgage-related assets and a 75 percent share-price plunge this year. Government-backed firms in Korea, China and Singapore have bought into stricken Wall Street banks during the past year, betting their investments will yield windfalls when financial markets stabilize.
Buying a top bank could catapult South Korea's financial services firms into the top ranks of global investment houses, which have been battered by heavy mortgage write-downs, and which have seen their share prices tumble.
But investors are jittery about a potential Lehman tie-up, which may involve top South Korean banks such as Shinhan Financial Group Woori Finance Holdings and Hana Financial Group on concerns about the extent of problems at the U.S. bank.
Shares at Woori, the country's No.3 financial services firm, tumbled 6.3 percent to their lowest in almost three years. Second-ranked Shinhan trimmed falls to close down 1 percent and No.4 Hana shares shed 2.6 percent, underperforming a 0.5 percent fall on the wider market.
KDB CEO Min Euoo-sung, who headed Lehman's local operations until earlier this year, also said his bank was in discussions to form a consortium with private banks to jointly buy Lehman, but pricing remained an issue, according to his spokesman.
Published on September 2, 2008
Are you retail Agent Looking for a Quote?