Korean regulator restrains KDB over Lehman deal

South Korea's top financial regulator Jun Kwang-woo, chairman, Financial Services Commission, has warned that that Korea Development Bank should take a ''cautious'' approach in its keenness in buying Lehman Brothers.

Korea Development Bank has been in talks with Lehman Brothers over a possible stake or acquisition (See: Korea Development Bank eyeing Lehman Bros), but failed to reach an agreement.

Lehman's shares, which had jumped to $15.52, in midday trading on Friday on the basis of interest shown by KDC, plumetted by more than 4 per cent from Friday's close to $13.77 a share after Jun Kwang-woo voiced concern about state-run Korea Development Bank's interest in the troubled US investment firm (Lehman Brothers may go for $4 billion write-down in Q3, feel JPMorgan analysts).

He told reporters in Seoul, while taking over a global investment bank can become an opportunity to raise the capability of the Korean investment banking business, but the risks were. "KDB should take a cautious approach.''

Jun Kwang-woo also said that while the government welcomed "any efforts" led by the private sector to go global, it may not be proper for state-owned financial institutions to lead the role and take on "excessive burdens,'' he said.

He further added that acquisitions of major global investment banks by South Korean companies should be led by the private sector and state-run institutions such as KDB should play a "cheerleader role.''