Lehman Brothers

Lehman Brothers began the week reshuffling its senior management in global fixed income and across the European investment bank as it attempted to put in place a team that could guide it through an independent future.

Korea Development Bank pulled out of negotiations to buy a stake in embattled Lehman Brothers on Tuesday, sparking a week of intense activity amid concern over Lehman’s future.

Korea Development Bank has re-emerged as a potential bidder for a stake in Lehman Brothers, despite comments from Korea’s top financial regulator last week that such an investment was too risky for a state-owned institution.

The chairman of Korea’s Financial Services Commission poured cold water on any plans the Korea Development Bank may have had to acquire a stake in Lehman Brothers this week, arguing that a state-owned bank, albeit one which is due to be privatised, should not take such risks.

A noose of market speculation and rumour tightened around Lehman Brothers this week pushing five year default protection on the venerable New York investment bank wider by 70bp to 375bp — equivalent to a lowly double B rated credit.

"The general question is: have you taken sufficient write-downs? The reason I ask is there are cases of other top management officials at other companies saying they were finished and then other quarters, they had big writedowns again." Michael Mayo, an analyst at Deutsche Bank, presses Dick Fuld, chief executive of Lehman Brothers, about the bank’s calculations of its subprime and illiquid assets during a conference call on Monday.