Lehman takes $4 billion quarterly loss
Lehman Brothers the massive Wall Street investment bank reported a quarterly loss of $4 billion on the back of mortgage-related write downs and losses. The company also announced it’s spinning off or selling its commercial real estate and its coveted investment management division.
Lehman has been on death watch. As one of the biggest players in the subprime mortgage arena they have been one of the slowest banks to restructure and sell off debt. Now as their stock price has plummeted the company looks more and more like Bear Stearns. Unfortunately for Lehman there haven’t been the strong intonations from the government to save it.
The body count in this crisis is epic now. We’ve lost our two government-sponsored mortgage giants Fannie and Freddie to what amounts to a bankruptcy restructuring, we’ve lost one major Wall Street bank and are on the verge of another, we’ve lost at least ten banks to FDIC conservatorship and have a huge S&L on the ropes in Washington Mutual. Wow - just saying that feels scary.
From CNN.com
Lehman Brothers suffered one of its worst quarterly losses in the company’s history, reporting a loss of nearly $4 billion Wednesday, and announced a series of drastic steps aimed at reviving the beleaguered firm.
The firm said it would spin-off part of its commercial real estate assets, sell a majority stake of its investment management division and slash its annual dividend.
The company’s stock has plunged nearly 88% so far this year due to concerns about its ability to raise much needed capital.
A keystone of Lehman’s restructuring plan included a drastic reduction in both its commercial and residential real estate holdings. Lehman said it would spin off the majority of the company’s commercial real estate assets into a new separate public company dubbed Real Estate Investments Global.
The company trimmed its residential real estate holdings by nearly a half. Part of that included the planned sale of about $4 billion worth of U.K. residential real estate. Lehman said it was working with asset manager BlackRock (BLK, Fortune 500) on the sale and expected it to be completed in the coming weeks.