- The Washington Times - Wednesday, September 3, 2008

SEOUL (AP) | Korea Development Bank said Tuesday that it is in talks on troubled U.S. investment bank Lehman Brothers, confirming weeks of speculation over its intentions amid expectations that the Wall Street institution is in dire need of a capital injection.

Min Euoo-sung, the governor of state-owned KDB, said that discussions were under way “to form a consortium with private banks as [we] believe it is more desirable to acquire Lehman Brothers jointly rather than alone.”

“It is difficult to say how the talks will progress in the future as we have not been able to narrow differences with the Lehman side over prices,” he added in Korean-language comments to reporters, according to the bank’s public-relations office.

It was not clear from Mr. Min’s remarks how much of a stake in Lehman the banks were seeking to obtain in the negotiations or whether the private banks referred to South Korean banks.

A Lehman Brothers Holdings Inc. spokesman declined to comment.

Jun Kwang-woo, chairman of South Korea’s Financial Services Commission, in comments last month questioned whether a state-run institution should take the lead role in such an acquisition.

“Generally speaking, the private sector should be the leader in such a deal,” he told reporters on Aug. 25.

Mr. Jun’s comments had caused speculation that the government was trying to warn KDB away from pursuing a deal for Lehman Brothers.

Mr. Min said Tuesday that differences in viewpoint between his bank and the FSC, the government’s financial regulator, have narrowed.

Any deal would require South Korean regulatory approval.

Mr. Min was chief executive officer of Lehman Brothers’ South Korean operations until taking the helm of KDB earlier this year.

Spokesmen for major South Korean banks Kookmin Bank, Shinhan Bank, Hana Bank and Woori Bank, part of government-owned Woori Financial Group, said they had no plans to invest in Lehman.

Mr. Min’s comments came after Britain’s Sunday Telegraph newspaper reported over the weekend on its Web site that Lehman hoped to conclude a deal this week with KDB, which would inject as much as $6 billion in capital in return for what the paper called a stake of up to 25 percent in the investment bank.

The report, which cited no sources for those details, also said that Lehman was working on alternatives to KDB, including China’s Citic Securities or sovereign wealth funds from Abu Dhabi and Qatar.

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