KDB: Maybe We'll Buy Lehman

SEOUL (Reuters) – State-run Korea Development Bank said on Friday Lehman Brothers (LEH) was one of its options for acquisitions, reviving expectations that the U.S. investment bank might still bring in a large investor.

“We are studying a number of options and are open to all possibilities, which could include (buying) Lehman,” a KDB spokesman said.

KDB said it was open to mergers or acquisitions of both domestic and foreign companies to beef up its weak areas as the government was aiming to privatize it by 2012.

Officials at Lehman were not immediately available for comment.

The news comes after a newspaper reported on Thursday that Lehman sought to sell up to a 50 percent stake to China's biggest brokerage, CITIC Securities, or Korea Development Bank but the two Asian companies walked away after deciding the asking price was too high.

In July, KDB Chairman and Chief Executive Officer Min Euoo-sung told a news conference that now would be a good time to buy coveted foreign targets on the cheap as the global credit crunch pushed down their valuations.

The Chosun Ilbo daily cited government and industry sources as saying that Lehman had first contacted Korea Investment Corp (KIC), a sovereign wealth fund, among South Korean investors as part of a fund-raising drive.

But after the KIC decided not to invest in Lehman, the Wall Street bank contacted KDB, whose CEO had led local operations of Lehman for three years until early this year.

Shares in Lehman have plunged more than 80 percent since early 2007, leaving the bank worth some $9 billion at this week's valuations.


Lehman, the fourth-largest U.S. investment bank, has taken a $7 billion hit from credit-related write-downs and losses since the start of the global crisis.

Analysts say lowered valuations at western banks would enable South Korean banks to buy them to support their global expansion, but that such attempts could be challenged by foreign regulators.

“Financially, KDB will not have a problem buying a majority stake in Lehman, as the U.S. bank's market cap has fallen sharply over the months,” said Park Jung-hyun, an analyst at Hanwha Securities in Seoul.

“The problems, however, are legal and regulatory issues. I am not so sure if the U.S. government will easily allow a foreign bank to purchase a significant stake in one of its key financial institutions.”

($1=1051.1 Won)

By Kim Yeon-hee

(Additional reporting by Park Jung-youn; Editing by Keiron Henderson and Jean Yoon)