Shares in troubled US bank Lehman Brothers have plunged again on concerns over the future of the bank.

Lehman announced the biggest loss in its history on Wednesday and investors remain unconvinced by the bank's plans to strengthen its finances.

One analyst said the firm was "limping along" and "may or may not make it".

Lehman's shares fell 40% to $4.30 and have lost 76% since Monday. The value of other financial firms has also been affected by the KDB ends Lehman investment talks ...
Lehman plunges on funding fears ...
South Korea in talks with Lehman ...
Lehman Brothers posts $2.8bn loss ... nervousness.

Shares in mortgage lender Washington Mutual, for example, fell more than 20%.

"We thought that getting news out of Lehman was going to clear the dark cloud but it really doesn't," said Arthur Hogan, chief market analyst at Jeffries.

"It just leaves us with a company that's limping along, that may or may not make it," he added.

Lehman has lost billions of dollars through its badly judged bets on the growth of US sub-prime mortgages - a market that began to crumble last year.

The Wall Street bank said on Wednesday it made a loss of $3.9bn (£2.2bn) between June and August, taking its losses this year to $6.6bn.

To shore up its weak financial position, it has slashed its dividend and will sell a stake in its lucrative fund management arm.

It will also reduce its exposure to residential mortgages and spin off its commercial real estate business as part of the shake-up.

But investors were not convinced that Lehman would be able to pull off the deals and raise the money it needs to plug its losses.

"Finance is a confidence game," said Andrew Busch, analyst at BMO Capital Markets.

"Once it's gone, the critical function of being able to trade with other financial entities becomes difficult and expensive," he added.

(BBC)

<< Back