Korea Development Bank has re-emerged as a potential bidder for a stake in Lehman Brothers, despite comments from Korea’s top financial regulator last week that such an investment was too risky for a state-owned institution.
KDB’s governor, Min Euoo-Sung, said on Tuesday that the bank was considering an investment in partnership with other Korean banks, in a move that would help restore confidence in Lehman following heavy losses.
"We are discussing ways to form a consortium with domestic banks in a bid to take over Lehman Brothers," said Min, who previously worked for the firm.
After starting his career at Citibank in New York, he moved to Seoul where he worked for Jardine Fleming, Morgan Stanley, Salomon Smith Barney, and Woori Financial Group, where he was vice chairman and CFO. After Woori, he became chief executive of the Seoul branch of Lehman.
Min’s comments come after Korean regulators last week played down speculation that KDB would take a leading stake in Lehman, saying it would be too risky for the state-owned policy bank.
Kwang Woo Jun, the head of Korea’s Financial Services Commission, said: "KDB might have considered forming and leading a consortium. But it appears burdensome for a state-run institution to play a leading role and take risks which may be more than financial."
After Jun warned against KDB taking a stake in Lehman on August 25, shares of the US bank fell from $14.41 to $13.45 on the New York Stock Exchange. It has since rebounded.
KDB and Lehman refused to comment.