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Lehman plunges on funding fears Lehman plunges on funding fears
(about 4 hours later)
Shares in US investment bank Lehman Brothers have plunged 30% on fears the the group will not be able to raise the funds it needs to cover losses. Shares in US investment bank Lehman Brothers have plunged 45% on fears over its finances, sending the main Wall Street stock indexes down sharply.
Lehman has been seeking ways to raise $6bn after sustaining credit crunch-related write-downs and losses. Amid fears that Lehman is struggling to raise $6bn (£3.4bn) to cover sustained credit crunch-related losses, its shares ended down $6.36 to $7.79.
There are fears that a potential investment from Korea Development Bank has fallen through. The fall sparked a wider sell-off on Wall Street, with the main Dow Jones index falling 280 points to 11,231.
Wall Street sent the firm's stock down to $8. The bank's share price is down more than 90% this year. This removed almost all of the gains it had enjoyed on Monday.
The Dow ended Monday up 290 points after the US government's bail-out of mortgage giants Freddie Mac and Fannie Mae pleased investors.
Meanwhile, the Nasdaq index closed down 60 points on Tuesday after having risen 14 points on Monday.
Korean funds
The main concern regarding Lehman is that a potential investment from Korea Development Bank has fallen through, something it has yet to comment on.
Lehman, the fourth-largest US investment bank, had hoped to secure a deal with the Korean fund before announcing third-quarter earnings on 18 September.Lehman, the fourth-largest US investment bank, had hoped to secure a deal with the Korean fund before announcing third-quarter earnings on 18 September.
There is now speculation that this trading announcement may be brought forward.
Lehman and KDB are thought to have been in talks for two months about the prospect of the state-run Korean bank taking a stake in Lehman.Lehman and KDB are thought to have been in talks for two months about the prospect of the state-run Korean bank taking a stake in Lehman.
Overseas interestOverseas interest
Lehman has been linked with a number of overseas financial firms as it tries to shore up its finances.Lehman has been linked with a number of overseas financial firms as it tries to shore up its finances.
Recent reports have suggested that Japanese brokers Nomura Holdings are considering buying a stake in Lehman.Recent reports have suggested that Japanese brokers Nomura Holdings are considering buying a stake in Lehman.
Other financial firms from China, Qatar and Abu Dhabi have also been linked to Lehman.Other financial firms from China, Qatar and Abu Dhabi have also been linked to Lehman.
The bank is also said to be meeting with potential buyers of its Neuberger Berman asset management unit to raise funds.The bank is also said to be meeting with potential buyers of its Neuberger Berman asset management unit to raise funds.