Lehman Brothers Holdings Inc. (fka LEHMQ)

[likwit]

KDB Still Interested in Lehman Takeover

09-15-2008 17:36
By Oh Young-jin, Kim Jae-kyung
Staff Reporters

The Korea Development Bank (KDB) is still interested in Lehman Brothers, depending on how the U.S. government deals with the Chapter 11 bankruptcy filed by Wall Street's fourth largest investment bank. Korean firms invested $720 million in Lehman, according to the Financial Services Commission.

``The bank is still interested in Lehman's franchises,' a source who was involved in aborted negotiations between the two banks told The Korea Times, Monday.

The source said the franchises KDB are interested in include its global network as well as investment banking at its headquarters.

``It all depends on how the U.S. government deals with this,' the source said, referring to the Korean government's treatment of KDB's handling of LG Card.

As with Chapter 11 cases, the court goes for liquidation by freezing liabilities and selling assets, removing talent off the payroll of the company in question.

``In LG Card's case, the KDB took it over and nurtured it back to health before selling it to Shinhan Bank,' the source said. ``At issue is whether the U.S. government is willing to do the same thing.'

The source, however, cast doubt about Washington's willingness to do so, citing separate authorities between the executive and legislative branches.

KDB had talked with Lehman's top executives but the possible deal fell apart when they failed to respond positively to the Korean bank's offer that amounted to one third of the worth of its ``good company,' according to the source. He didn't name the exact amount of the KDB offer.

However, the source explained that Lehman's ``good' assets, if its distressed ones were taken out, would amount to $30 billion.

The source said that buying Lehman could be a leg up in the growth of Korea's investment banking abilities, and that KDB CEO, Min Euoo-sung was not disappointed with the way his offer to other Korean banks was rejected. `` Min took it as something that was inevitable for banks that were not sure of the uncertainty shrouding the bank,' he said.

Lehman was heading for the court for bankruptcy after negotiations with KDB as well as Barclays fell apart ahead of the weekend.

Reports said the U.S. government was not willing to step in to backstop Lehman's bailout, in the same style as it did with Bears Sterns, the No. 5 investment bank on Wall Street earlier this year. The U.S. government is also saddled with its recent rescue of Fannie Mae and Freddie Mac, two mortgage firms that are backed by the federal government


http://www.koreatimes.co.kr/www/news/nation/2008/09/123_31052.html