The possible collapse or failure of Lehman Brothers would not shock investors, as it has already been priced into worldwide stock markets, Lincoln chief executive and analyst Elio D’Amato said.
The real worry is if short-sellers targeted even bigger investment banks such as Morgan Stanley and Merrill Lynch, who have absorbed losses of US$14.4 billion and US$51.8 billion respectively.
“If there was a new company coming under trouble, then obviously this would result in continued lack of confidence in the financial sector and, given its importance in equities markets globally, its effects would be significant,” D’Amato said.
Lehman Brothers shares reached US$86.18 in 2007 and the stock was worth US$4.22 on September 11 trading. On the same day, Merrill Lynch’s shares tumbled over 16 per cent, while Morgan Stanley was flat.
Lehman Brothers posted a US$3.9 billion loss last week and ended a potential capital infusion deal with Korea Development Bank.
Media reports on Friday suggested that Lehman Brothers may be engineering a deal with the US Federal Reserve and Government, to sell itself in the same way as Bear Stearns did, as early as this morning.
According to the reports, likely suitors included Bank of America, and British-based giants HSBC and Barclays.
Macquarie Group declined to comment if it was interested in Lehman Brothers.
Lehman Brothers Australia refused to comment on a possible sale of the division, or on staff concerns.
