US investment bank Lehman Brothers’ fundraising efforts could take a new twist this week, as talks with Korea Development Bank (KDB) over a $6bn investment look to have slowed.
Chief executive officer Dick Fuld has drafted a blueprint for dividing the group into a “good bank” and a “bad bank”, by hiving off the bank’s $32bn in toxic commercial mortgages into a new company, backed by $24bn in debt and $8bn in new equity.
Any deal with KDB could see the state-run institution acquire equity in the “good bank” with the cash raised from the deal propping up the “bad bank”.
Chief executive Dick Fuld has been considering the bank’s options in recent months, with a sale of the group’s asset management arm to a private equity company such as KKR, Blackstone or Bain Capital one of the plans on the table.
But the bank would be reluctant to lose a unit that includes its showpiece performer Neuberger Berman and could look at splitting into two separately listed companies as an alternative.
Such a move would leave the remainder of Lehman free to trade without the burden of uncertainty surrounding its asset portfolio.
The news comes as Lehman also named Eric Felder and Hyung Soon Lee as global co-heads of fixed income and Riccardo Banchetti and Christian Meissner co-chief executive officers of Europe and the Middle East.
Felder, Lee, Banchetti and Meissner will join the executive committee of Lehman, the fourth-largest US securities firm.
The current chief executive for Europe, Middle East and Asia Pacific Jeremy M. Isaacs will retire at yearend, after eight years in the position, while Andrew Morton, global head of fixed income, and Benoit Savoret, chief operating officer of Europe and the Middle East, have decided to leave “to pursue other interests,” Lehman said in the statement.