Lehman Brothers loss hits massive $4 billion as crisis plan spreads woe

My Account
Logout

Create an Evening Standard Account

Use your social network

Save time by using your existing account to sign in to Evening Standard

We'll never share your information or post anything to your account without your permission

Welcome! Sign in here

Use your social network

Save time by using your existing account to sign in to Evening Standard

We'll never share your information or post anything to your account without your permission

Forgot your password ?

Registration

* indicates fields that are mandatory

Email *

Password *

Confirm Password *

First name *

Surname *

Postcode *

Country *

Mobile phone number

Username *

Gender *

Year of birth *

When you sign up...

You will have access to all our online competitions, discounted offers and can post comments on our site.

You will also receive The Weekender newsletter sent every Thursday - it’s full of fantastic offers and ideas for the weekend. You can update your email preferences in your account page when you log in.

Other newsletters and emails

Homes & Property Newsletter - Yes I want to receive the weekly email with all the latest news on property in the capital

Occasionally we would also like to send you relevant emails detailing specific offers either from ourselves or carefully selected partners. If you would prefer not to receive these then please tick the appropriate boxes below. We will never pass on your details.

I do not want to receive additional offers and information from the Evening Standard

I do not want to receive additional offers and information sent by Evening Standard on behalf of carefully selected partners

Terms and Conditions

* I have read, understood and agree to be bound by the terms and conditions of Evening Standard

Registration

Mail Sent for Registration Confirmation.

A confirmation email has been sent. Please activate your account by clicking on the activation link sent in your mail box.

Many analysts fear this signals that the world banking crisis is far from over.

Europe's stock markets reacted badly to the plan with the FTSE leading the way down, falling by more than 1%.

Lehman shares, which crashed 46% yesterday as it became clear that the investment bank was not going to get a multi-billion bailout from a Korean bank, fell another 6.5% to $7.30 in early trading. Six months ago, they were trading above $66.

One analyst said: "The market had been hoping for more news regarding capital raising. This doesn't seem to be the case, so concerns about the banking system remain in place."

Dick Fuld: The Lehman executive chairman says it is one of the toughest periods in the firm's history

Lehman said that it will sell a majority stake in its asset management business and also flog off $4 billion of UK housing mortgages.

But rather than sell off the remainder of its $25 billion to $30 billion property portfolio, which has slumped in value, it said it will spin it off to its shareholders. That would strengthen the investment bank's balance sheet but leave its shareholders little better off.

In the past three months another 1500 Lehman staff lost their jobs with fears that many more could go. The bank employs 20,000 worldwide with the majority of its 4000European employees based in London.

Dick Fuld, chairman-and chief executive, said: "This is an extraordinary time for our industry and one of the toughest periods in the firm's history.

"The strategic initiatives we have announced today reflect our determination to fundamentally reposition Lehman Brothers by dramatically reducing balance-sheet risk, reinforcing our focus on our client-facing business and returning the firm to profitability." The bank said it lost $3.9 billion in its third quarter and had writedowns and losses from the credit crunch totalling $7.8 billion.

It also said it will slash its dividend in a bid to preserve cash, cutting it from 68 cents a year to just five cents.

Lehman did not reveal to whom it will sell a majority stake in its asset management business