Southeast Asia’s biggest bank cuts off Lehman, stock down 25% in pre-market
Posted by: in Stocks Money NewsFiled under: Lehman Br Holdings (LEH)
The Wall Street Journal reports that Singapore’s DBS Group Holdings, the biggest bank in Southeast Asia, will no longer do business with Lehman Brothers Holdings Inc. (NYSE: LEH). The Journal notes: “DBS has sent an internal e-mail saying it would not deal with Lehman Brothers from now on. It said DBS shouldn’t enter into new dealings with Lehman or Bear Stearns.” Quoth Lehman: “Our liquidity position is and continues to be strong.”
I have posted about whether Lehman could meet a Bear-like fate here and here. ING thinks that the Fed won’t participate in a Lehman bailout since it’s not too big to fail. The Journal reports: “We think the Fed was moved to provide lender of last resort facilities because it judged Bear’s large prime brokerage business made it “too big to fail” in the wholesale payments, clearing and settlement system. On the face of it, Lehman is not too big to fail.”
Wall Street, like poker, is a game of bluffs and bets. Successful bluffing depends on keeping a straight face. Unfortunately for Lehman customers and investors, DBS is calling Lehman’s bluff. It’s a race to the exits as the market watches who will follow DBS out the door. And with Reuters reporting that Moody’s (NYSE: MCO) has cut Lehman’s ratings outlook to ’stable’, the pressure is on even more.
Last one out is a rotten egg.
Peter Cohan is President of Peter S. Cohan & Associates. He also teaches management at Babson College and edits The Cohan Letter. He has no financial interest in the securities mentioned.
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