US investment bank Lehman Brothers announced an estimated third quarter loss of $US3.9 billion ($A4.88 billion) overnight and drastic restructuring plans to bring the bank back into profit.
The loss, which followed a second quarter loss of $US2.8 billion, was primarily driven by gross mark-to-market adjustments stemming from write downs on commercial and residential mortgages as well as real estate assets.
As part of its restructuring, the bank plans to sell a majority interest in its Investment Management Division which will raise more than $US3 billion. ($A3.8 billion)
It also intends to sell approximately $US4 billion ($A5 billion) of UK residential mortgages to reduce its residential mortgage exposure by 31 per cent.
Chairman and CEO of Lehman Brothers Richard S. Fuld Jr. said it was one of the toughest periods in the firm’s history but he was determined to return the bank to profitability.
“The strategic initiatives we have announced today reflect our determination to fundamentally reposition Lehman Brothers,” he said.
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