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Lehman Brothers reports big losses


Lehman Brothers reports big losses


One of the largest US securities companies, Lehman Brothers has reported a second-quarter loss of some two billion euros.It also said today it would raise around four and a half billion euros in a public offering to shore up its balance sheet.

The loss announced by Lehman reverses the profit of some 800 million euros it posted a year ago. The capital raising comes as banks have written off an estimated 250 billion euros of mortgages and other assets in the credit crunch.

The news of Lehman comes just hours after the UK Royal Bank of Scotland, RBS, announced that 95 percent of its shareholders subscribed for its record 15 billion euro rights issue. It is Europe’s biggest and the first by a British-based bank since the credit crunch rocked the banking sector.

RBS is Britain’s second biggest bank. It launched the rights issue to rebuild one of the most stretched balance sheets among European banks. The strong takeup is seen as an indication investors will back calls for cash even after dramatic falls across the beleaguered bank sector.

RBS said difficult trading conditions have left banks needing to hold more capital.
The prospect of slow economic growth is proving a tough backdrop for those raising cash.
In addition, pressure from regulators to maintain bigger cash cushions has prompted a number of other European banks to follow the RBS move.

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