Lehman Brothers shares were hammered again yesterday on doubts that the embattled investment bank would be able to raise fresh capital.
The bank's stock fell by 45 per cent after reports that Korea Development Bank had been instructed by the Korean authorit-ies not to supply a capital injection that the banks had been negotiating for weeks.
Lehman is trying to shore up its capital position and unload stricken assets after suffering more than $8bn (£4.5bn) of credit losses and writedowns in the past year. The bank has more than $65bn of mortgage-related assets whose values are falling with the collapse of the US property market.
Richard Bove, an analyst at Ladenburg Thalmann, said: "People simply made the decision that theydidn't want to be anywhere near this company because management was no longer in control of what was in the best interest of shareholders."
Analysts are predicting further writedowns when the fourth-biggest US investment bank posts third-quarter earnings next week. Meredith Whitney, an analyst at Oppenheimer & Co, forecast a $4bn writedown on mortgages and leveraged loans.
The bank had planned to announce the results of its talks to sell assets and attract capital with the results. Investors were also concerned yesterday that Lehman would be forced to sell its asset management business, Neuberger Berman, for a knockdown price.
The shares closed down 45 per cent in New York and have lost 85 per cent of their value this year.
"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," Mr Bove told Reuters.
Dick Fuld, the bank's chief executive, shuffled his management team for the third time in four months over the weekend. He ousted Jeremy Isaacs, the head of international operations, and Andrew Morton, head of fixed income.
