Lehman on trail of £3bn after diving into the red

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The bank disclosed that it made its first-ever quarterly loss in the three months to end-May. It swung from a net profit of $481 million in the first quarter to a loss of $2.8 billion, a far worse result than analysts had expected.

The bank said the loss came as a result of massive writedowns on subprime-related assets and losses from its principal trading business.

Chairman and chief executive Richard Fuld said: "I am very disappointed in this quarter's results. Notwithstanding the solid underlying performance of our client franchise, we had our firstever quarterly loss as a public company."

Lehman wants to raise $6 billion of new capital through public offers of its ordinary shares and of convertible preference shares that will convert into ordinary shares in three years.

The bank gave no details of which, if any, new investors might be involved in the share issues although there has been speculation that New Jersey pension funds may be involved, along with Maurice Greenberg, the former chief executive of American Insurance Group.

Lehman shares fell 11% to $28.70.