Lehman plans to layoff 1,500

Lehman Brothers, which has been subject to takeover speculations is planning to cut another 1,500 jobs before the third quarter earnings in mid September. The online edition of the New York Times, which first reported the news of the fresh layoffs, constitute 6 per cent of Lehman's employee strength.

The collapse of the sub prime mortgage market has caused more than $500 billion of losses and writedowns, with Lehman expected to take a hit of as much as $4 billion and an estimated loss for the quarter of $3.30 a share. In the last 12 months, the Lehman stock has fallen 76 per cent.

Since the credit crisis began to hit Wall Street firms, Lehman has already laid-off nearly 6,000 workers since June 2007 and it is not known which part of its operations the present round of layoffs will affect.

In a bid to shore up its balance sheet before closing its books for the third quarter on 31 August, Lehman had been scourcing the globe for investors including sovereign wealth funds, but none of the deals have materialised over difference in valuations.

Korea Development Bank, which had shown an interest in acquiring Lehman has been restrained by th South Korean regulator, the Financial Services Commission, which  warned that that the bank should take a ''cautious'' approach in its keenness to buy the US investment bank.

Analysts opine that the ideal way out for Lehman would be to put the bad mortgage debt into a separate unit and then recapitalize the investment back with the proceeds of a sale of part or all of Neuberger and perhaps a capital infusion from abroad.

According to reports, Lehman will probably open a new company with internal and external investors to buy all the company's bad mortgage debt in order to clear its balance sheet.