Lehman Brothers yesterday pinned its hopes of surviving the financial crisis on selling most of its prized asset management unit and spinning-off $30bn-worth of troubled property assets after failing to secure capital from outside investors.
The beleaguered Wall Street bank sought to end months of speculation over its future and halt a share-price collapse by rushing out third-quarter results, which showed a $3.9bn loss, and outlining plans to shrink its business to a smaller, less risky, core.
Lehman confirmed it would spin off most of its commercial real estate portfolio of about $30bn, dispose of a 55 per cent stake in its asset management unit, sell $4bn in UK property assets to Blackrock, and slash its dividend, in an effort to return to profitability and regain investor confidence. The “bad-bank” plan would see Lehman injecting up to $7.5bn in the new entity, which would hold the assets to maturity, thereby sparing the rest of the institution the pain of quarterly writedowns.