New York: With Lehman Brothers’ shares signaling another steep drop on Friday, top executives are racing to put a sale of the beleaguered investment bank in place before it loses further market value and confidence.
Confidence has waned that Lehman Brothers Holdings Inc. will emerge from the financial crisis as an independent franchise, and the No 4 US investment bank is scouring Wall Street for a financial lifeline. Executives worked feverishly in the past 24 hours to find someone willing to buy all or part of the company, bankers and industry executives close to the situation said.
And the scrutiny is expected to grow more intense on Friday, with investors placing bets that Lehman’s stock will again nosedive. Shares fell 41 cents, or 9.7%, to $3.81 in after-hours trading; the stock skidded 41.8% to $4.22 during the regular session in New York, and is down more than 94% for the year.
Bank of America Corp., Japan’s Nomura Securities, France’s BNP Paribas, Deutsche Bank AG and Britain’s Barclay’s Plc have been mentioned this week as potential buyers. Goldman Sachs Group Inc., which also was being talked about as a potential buyer, is not interested, according to an industry official who ask not to be named.
Lehman is also in close contact with both the Treasury Department and Federal Reserve about how to proceed.
Any resolution of the Lehman troubles is not expected to involve the use of government money which would set it apart from the billions of dollars that the government put at risk to facilitate the sale of Bear Stearns in March and to rescue mortgage giants Fannie Mae and Freddie Mac this week.
Lehman’s losses soared to almost $7 billion in the last two quarters alone, primarily because of wrong-way bets on mortgage securities and other risky investments.
It’s not alone. Global banks have lost more than $300 billion since the subprime mortgage crisis spread to the credit markets one year ago. And the International Monetary Fund has suggested total losses globally could hit $1 trillion.