Page last updated at 06:51 GMT, Tuesday, 2 September 2008 07:51 UK

South Korea in talks with Lehman

Lehman Brothers office
Lehman needs to raise money to cover losses inflicted by the credit crunch

After weeks of speculation and rumour, South Korea has confirmed that it is interested in beleaguered US investment bank Lehman Brothers.

A spokesman for state-run Korea Development Bank (KDB) said it was in talks about a possible investment.

A report by Korea's Yonhap news agency said the bank was seeking to buy Lehman outright as part of a consortium.

Lehman has sustained billions of dollars in writedowns because of investments hit by the credit crisis.

The Sunday Telegraph reported at the weekend that Lehman hopes to raise $6bn from KDB although it is also working on alternative plans with financial institutions from China, Abu Dhabi and Qatar.

KDB chief Min Euoo-Sung told South Korea's Yonhap news agency there were differences over pricing and the US firm's potential liabilities.

"I think it is desirable to make a joint bid for Lehman Brothers. So (KDB) is in talks with other commercial banks on forming a consortium," he was quoted as saying.

However, he added that "it is difficult to predict the outcome of negotiations with Lehman due to differences over price".

A spokesman for KDB confirmed that the bank was in talks over a potential investment but could not disclose the details.

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