The shares fell as much as forty per cent on Tuesday as traders questioned the investment bank’s future in the wake of reports that Korea Development Bank has broken off talks about taking a substantial stake.
Five-year credit default swaps written against Lehman’s debt ballooned out to a six month high, widening 125 basis points to 450bp in active trade.
The rot stopped momentarily before lunch in New York as Citigroup analysts suggested Lehman might “pre-announce” third quarter earnings as early as Tuesday.
Richard Bove, the Ladenburg Thalmann analyst, who has been issuing increasingly shrill calls for the bank to be taken over, issued another one on Tuesday.
Reuters:
I think what has to happen is a hostile takeover, the top management has to be kicked out and, if the stock is falling the way it is, I think that will happen.
Related links:
Fears about the future of Lehman grow – FT.com
Is Lehman Brothers actually falling apart? – FT Alphaville
Lehman’s CMBS trouble – FT Alphaville