Lehman Brothers’ hard-charging CEO Dick Fuld might have to resort to some drastic measures – and soon – if he’s going to bolster confidence in the fractured investment bank, analysts said.
UBS bank analyst Glen Schorr said in a note to clients yesterday that Lehman should shop its asset-management subsidiary Neuberger Berman and pursue a sale of some of the hundreds of billions of mortgage assets jamming up its balance sheet.
“We feel the most likely scenario is the sale of a large block of risky assets, possibly in concert with the sale of Neuberger, as a way to partially plug any hit to book value realized on the asset sale to possibly avoid another capital raise,” Schorr wrote.
He also suggested Lehman kick off a sales plan ASAP to quash liquidity concerns.
Known primarily for its savvy in fixed-income, Lehman has been battered by traders betting that the 185-year old investment bank might suffer a similar fate as Bear Stearns, which collapsed into the arms of JPMorgan Chase in June.
Rumblings about the firm going private or getting bought out have juiced Lehman’s share price in recent days, and Schorr’s comments appeared to have the same effect.
Lehman’s stock jumped 90 cents, or 4.5 percent, to close at $21.16.
Even those atop the ivory tower are wagering that the investment bank’s days as an independent firm may be numbered. New York University Professor Nouriel Roubini, in an interview on financial Web site Tech Ticker, speculated that Lehman’s days could be measured in months, and described their franchise as no longer “viable.”