Which one is the good bank? This sounds like Dr. Frankenstein and Mr. Hyde.
This is a classic 'off-balance sheet' play, as in 'we have to get this toxic debt off our balance sheet fast because no one will touch us otherwise, and even the Fed won't take it.'
Calling all Sovereign Wealth Funds...
Reuters
Lehman weighs real estate spinoff
NEW YORK (Reuters) - Lehman Brothers Holdings Inc. is considering a plan to put some $32 billion of its commercial real estate and mortgage assets in a new company and spin it off, Bloomberg reported on its website on Thursday.
Under the plan, similar to a good-bank-bad-bank model, Lehman will put in about $8 billion of equity in the new company, the news agency said, citing unnamed sources.
The remaining $24 billion will be lent to the new company by Lehman or outside investors, it said. Shares of the company would be owned by Lehman's current shareholders, it said.
The plan is one of several being considered, it said. Under another plan, Lehman would set up a company funded and run by outside investors to buy some of these assets, it said.
Lehman declined to comment.
Lehman, the smallest of the major U.S. investment banks, has not detailed its plans, but according to sources, the bank is looking at various options, including seeking buyers for commercial mortgages and property on its balance sheet.
At the same time, it is weighing the sale of part or all of its asset management business, including Neuberger Berman, sources have said previously. It is also in talks with state-controlled Korea Development Bank over a possible investment in the overall business.
Earlier on Thursday, Fox-Pitt Kelton analyst David Trone wrote in a research note that Lehman Brothers should consider spinning off its commercial mortgage securities and loans portfolio to shareholders instead of selling it.
A simple spinoff of the commercial mortgage securities and loans portfolio would ensure that shareholders have the option of owning two entities or keeping only the core Lehman stock, Trone said. (What is the choice for none of the above? - Jesse)
