The fourth-largest investment bank in the US, Lehman Brothers, has filed for bankruptcy protection, amid a growing global financial crisis, reported BBC.
Lehman had incurred losses of billions of dollars in the US mortgage market.
The chance that the 158-year-old institution could collapse increased sharply after the strongest potential buyers pulled out at the weekend.
The move threatens to deal a further blow to the global financial system, as banks unwind their deals with Lehman.