Korea Development Bank wants 25% stake in Lehman: Report

SEOUL: State-run Korea Development Bank (KDB) has offered to buy a 25 per cent stake in troubled US investment bank Lehman Brothers for more than four billion dollars, a news report said Wednesday.

Chosun Ilbo newspaper, citing financial industry sources, said KDB proposed to buy the stake for five to six trillion won ($4.3-5.2 billion).

KDB also wanted the right to raise its stake to up to 49 percent, Chosun added, and proposed separating Lehman's risky assets by creating a "bad bank" structure for them.

KDB said nothing specific had yet been decided.

"As part of efforts to enhance competitiveness as a global investment bank, KDB has been looking into a merger and acquisition deal with overseas investment banks, including Lehman Brothers, or asset management companies," it said.
"However, nothing specific has been decided yet," it said, adding it remains unclear whether such attempts would bear fruit.

KDB chief Min Euoo-Sung told local media Tuesday that his bank was in talks with Korean commercial banks on a consortium to bid for Lehman.

Woori Finance Holdings and Shinhan Financial Group both denied interest in any such plan.

Min said it was hard to predict how negotiations will end due to differences over pricing and over the US firm's potential liabilities.

Financial Services Commission chief Jun Kwang-Woo last week expressed caution about KDB's bid.

"I welcome efforts by private institutions to globalise our banking industry but it is not good for a state-controlled institution to become the leader," he said at the time.

"Such a deal requires a careful approach due to high risks." Lehman Brothers suffered billions of dollars in writedowns and credit losses in the crisis triggered by the meltdown in the US subprime mortgage sector.

KDB, set up in 1954 to finance the nation's industrial and economic development, is South Korea's fifth largest bank with assets of about $120 billion.

The government hopes to privatise it by 2012 and turn it into a global player by allowing it to acquire other financial companies.