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Lehman ponders a 'split' solution
Bill Condie, Evening Standard05.09.08
Embattled Wall Street bank Lehman Brothers is considering a radical solution to split itself into a "good" bank and a "bad" one.
It thinks that creating a separate company holding the bank's toxic property and mortgage assets would build the confidence of its counterparties in other businesses - other banks, hedge funds and pension funds.
The bad bank, dubbed for now Spinco, would hold $30 billion (£16.9billion).
If the plan goes ahead, Lehman would inject up to $8billion in equity into the new company.
It would also seek up to $24 billion from external investors, who would benefit from any recovery in the market for commercial and residential property.
Lehman has been brought near to collapse by the credit crisis.
