Koreans to the Rescue of American banks!
Published in Libération
(France) on 09-03-2008
by Nicholas Cori (link to original)
Koreans to the rescue of American banks!
A few years ago, the Americans wouldnt hesitate to launch campaigns against foreigners who wanted to buy national companies, without fear of compromising their liberal convictions. In 2006, the Chinese oil company Cnooc lost out, prevented by the Republican administration from buying out their American rival Unocal. Today, with the current financial crisis in full force, foreign capital has lost its bad smell.
A few months ago, Merrill Lynch and Citigroup went looking for funding from the royal coffers of Singapore and Kuwait. But foreign investors only bought minority shares of capital in these financial institutions. This time, Lehman Brothers, the last remaining independent investment bank on Wall Street, is ready to sell to the Korea Development Bank (KDB), controlled by South Korea. Negotiations, which have been going on for a month, are about to bear fruit. KDB has just this morning confirmed that they are making good progress.
According to the Financial Times, KDB are willing to buy 50% of Lehman, half immediately and the rest over the medium term. For the moment, Lehmans directors are asking too high a price although they may have to lower their expectations. The American investment bank has seen its share price fall by 70 % since the beginning of the year and, according to analysts, will be needing fresh investment to cover more losses to come. The next interim accounts could show losses of a further 4 billion dollars for the bank. As for KDB, whose director is the former manager of Lehman in South Korea, Min Euoo-Sung, the bank is hoping to take advantage of the opportunity to grow and develop in the United States.
If the deal goes ahead, it will be the first time, to my knowledge, that an American financial institution finds itself being run by a public foreign bank.
A few years ago, the Americans wouldnt hesitate to launch campaigns against foreigners who wanted to buy national companies, without fear of compromising their liberal convictions. In 2006, the Chinese oil company Cnooc lost out, prevented by the Republican administration from buying out their American rival Unocal. Today, with the current financial crisis in full force, foreign capital has lost its bad smell.
A few months ago, Merrill Lynch and Citigroup went looking for funding from the royal coffers of Singapore and Kuwait. But foreign investors only bought minority shares of capital in these financial institutions. This time, Lehman Brothers, the last remaining independent investment bank on Wall Street, is ready to sell to the Korea Development Bank (KDB), controlled by South Korea. Negotiations, which have been going on for a month, are about to bear fruit. KDB has just this morning confirmed that they are making good progress.
According to the Financial Times, KDB are willing to buy 50% of Lehman, half immediately and the rest over the medium term. For the moment, Lehmans directors are asking too high a price although they may have to lower their expectations. The American investment bank has seen its share price fall by 70 % since the beginning of the year and, according to analysts, will be needing fresh investment to cover more losses to come. The next interim accounts could show losses of a further 4 billion dollars for the bank. As for KDB, whose director is the former manager of Lehman in South Korea, Min Euoo-Sung, the bank is hoping to take advantage of the opportunity to grow and develop in the United States.
If the deal goes ahead, it will be the first time, to my knowledge, that an American financial institution finds itself being run by a public foreign bank.