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Text size [+][-]  Saturday March 20 2010GLOBAL EDITION

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09 Jun 2008 18:25

Flak jacket or straitjacket?

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Lehman Brothers estimates that it lost $2.8bn in the second quarter. The firm is to announce complete results next Monday, June 16.

Lehman took hits totaling $4.9bn on marking assets to market, on hedges failing to work as expect and on principal investments.

The investment bank also announced that it was raising $4bn of common equity, priced at $28 a share, and $2bn of non-cumulative mandatory convertible preferred stock. The latter will pay a dividend of 8.75% a year.





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Losing $2.8bn is pretty embarrassing for a firm that has long touted its risk management prowess. At least Lehman does now have an even better capital and liquidity position than before. But such strength won't be much use unless the investment bank can also turn a decent profit.

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