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Reply #31: Merrill says Lehman faces Q3 loss, $2.5 bln writeoff [View All]

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UpInArms Donating Member (1000+ posts) Send PM | Profile | Ignore Mon Jul-28-08 08:47 AM
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31. Merrill says Lehman faces Q3 loss, $2.5 bln writeoff

July 28 (Reuters) - Lehman Brothers Holdings Inc (LEH.N: Quote, Profile, Research, Stock Buzz), the fourth-largest U.S. investment bank, may write down an additional $2.5 billion in the third quarter on its residential portfolio and post a loss for the period, Merrill Lynch analyst Guy Moszkowski said.

"It appears disposition of mortgage assets is accelerating, which we conclude means third-quarter results will include another round of significant negative marks, particularly in residential, where price discovery is increasing," Moszkowski wrote in a note to clients.

Lehman, the smallest of the major Wall Street investment banks, is looking at selling 20 percent of about $65 billion of its exposure to real-estate-related assets in the third quarter, he said.

This suggests Lehman may take additional writedowns amid lower prices in the residential market, Moszkowski said.

"The firm appears willing to accept some discount or market impact from the wholesale disposition of assets in order to reduce risk and pressure on its balance sheet," he added.


Despite repeated assurances by Lehman management about the investment bank's capital and liquidity position, its stock has fallen 74 percent this year.

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