A Korean Takeover of Lehman Could Be a Disaster

Posted by: Moon Ihlwan on August 23

News reports speculate government-run Korea Development Bank (KDB) may still buy distressed Lehman Brothers after Financial Times’ said earlier this week secret talks to sell up to 50% of Lehman shares to KDB broke down. Yet a KDB takeover of Lehman won’t probably be a solution for either of the two.

The reason: The Koreans simply don’t have the expertise to run a global investment bank and lack patience to let expatriate experts run the show and deliver results. With the fourth largest foreign exchange reserves in the world, Korea certainly has enough money to rescue Lehman. And the country appears to have the political will, with President Lee Myung Bak’s government talking about the need to make Seoul a financial hub in Northeast Asia.

The problem is Korea’s management culture. The only way for Lehman to rebuild trust and business is letting able financiers take charge and work on his strategy. Unfortunately, the track record so far shows the Koreans can’t sit back and wait until foreign experts deliver results. One bad example: Hyundai Motor churned through four top executives in five years in its U.S. operation.

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