updated 9/2/2008 7:59:12 AM ET 2008-09-02T11:59:12

The head of Korea Development Bank said Tuesday that the state-owned lender is in talks to acquire troubled U.S. investment bank Lehman Brothers.

KDB Governor Min Euoo-sung said that discussions were under way “to form a consortium with private banks as (we) believe it is more desirable to acquire Lehman Brothers jointly rather than alone.”

“It is difficult to say how the talks will progress in the future as we have not been able to narrow differences with the Lehman side over prices,” he added in Korean-language comments to reporters, according to the bank’s public relations office.

It was unclear from Min’s remarks how much of a stake in Lehman the banks were seeking to obtain in the negotiations or if the private banks referred to South Korean banks.

Jun Kwang-woo, chairman of South Korea’s Financial Services Commission, in comments last month questioned whether a state-run institution should take the lead role in such an acquisition.

“Generally speaking, the private sector should be the leader in such a deal,” he told reporters on Aug. 25.

Jun’s comments had caused speculation that the government was trying to warn KDB away from pursuing a deal for Lehman Brothers.

Min said Tuesday that differences in viewpoint between his bank and the FSC, the government’s financial regulator, have narrowed.

Min was CEO of Lehman Brothers’ South Korean operations until taking the helm of KDB earlier this year.

A regional spokesperson for Lehman Brothers in Hong Kong could not immediately be reached for comment.

Spokesmen for major South Korean banks Kookmin Bank, Shinhan Bank and Hana Bank said they had no plans to invest in Lehman. A spokesman for Woori bank could not immediately be reached.

Min’s comments came after Britain’s Sunday Telegraph newspaper reported over the weekend on its Web site that Lehman hoped to conclude a deal this week with KDB, which would inject as much as $6 billion in capital in return for what the paper called a stake of up to 25 percent in the investment bank.

The report, which cited no sources for those details, also said that Lehman was working on alternatives to KDB, including China’s CITIC Securities or sovereign wealth funds from Abu Dhabi and Qatar.

Speculation has been rampant in recent weeks that Lehman Brothers Holdings Inc., the fourth-largest U.S. investment bank, could try and reach a deal for a capital injection.

Analysts project that Lehman, considered to be the most vulnerable to the credit crisis, could post losses of up to $4 billion when it reports third-quarter results in mid-September. It is expected that the investment bank will also announce a deal to raise fresh capital to help offset the losses.

Media reports in recent weeks have listed KDB, which the government plans to privatize, among the top overseas candidates to invest in Lehman.

At the end of 2007, KDB had total assets of 122.62 trillion won ($108 billion), according to its Web site. The bank had liabilities of 104.3 trillion won ($92 billion).

Korea Development Bank was founded in 1954 to help spur South Korea’s industrial development as the country was embarking on recovery from the 1950-53 Korean War.

In January, Merrill Lynch & Co. received a $6.6 billion cash injection to strengthen its balance sheet from three foreign institutions, including Korea Investment Corp., a South Korean government-owned investment management company launched in 2005.

© 2013 The Associated Press. All rights reserved. This material may not be published, broadcast, rewritten or redistributed.

Discuss:

Discussion comments

,

Most active discussions

  1. votes comments
  2. votes comments
  3. votes comments
  4. votes comments

Data: Latest rates in the US

Home equity rates View rates in your area
Home equity type Today +/- Chart
$30K HELOC FICO 4.71%
$30K home equity loan FICO 5.26%
$75K home equity loan FICO 4.70%
Credit card rates View more rates
Card type Today +/- Last Week
Low Interest Cards 13.42%
13.42%
Cash Back Cards 17.94%
17.94%
Rewards Cards 17.14%
17.14%
Source: Bankrate.com