Lehman Brothers gets 4 billion dollars of much needed capital
Lehman Brothers raised 4 billion dollars in a stock offering Tuesday, quelling fears of a cash shortage at the fourth-largest US investment bank due to the ongoing credit crisis. ( dpa )
The capital infusion follows similar moves by other banks hit with billions of dollars in writedowns of mortgage-related assets since mid-2007.
US lender Thornburg Mortgage said it raised 1.35 billion dollars in an emergency offering Tuesday to stave off bankruptcy. It was the bank's second attempt after an initial offering failed to create enough interest.
A report by Morgan Stanley on Tuesday said the turmoil in financial markets was a product of the most serious banking crisis in 30 years. The report forecast a drop in revenue at investment banks of 20 per cent in 2008, on the back of a 60-per-cent decline in revenue from credit businesses.
Speculation that Lehman could suffer more writedowns has sent its share price down 40 per cent since February. Its shares rose 11 per cent Tuesday morning.
Lehman's stock offering was increased from an initial 3 billion dollars due to high demand, which "demonstrates the confidence that investors have" in the bank, Chief Financial Officer Erin Callan said in a statement.
Lehman Brothers has so far reported about 4 billion dollars in writedowns since last August, and last month said profits sank 57 per cent in the first quarter to 489 million dollars.