Lehman plans asset sales after record $4 bln loss

By Dan Wilchins and Jonathan Stempel

NEW YORK (Reuters) - Lehman Brothers sought to restore investor confidence with plans to sell a majority stake in its asset management unit and spin off commercial real estate, but investors questioned its future after a record $3.93 billion quarterly loss.

Shares of Wall Street's fourth-largest investment bank failed to rebound on Wednesday, a day after tumbling 45 percent, reflecting disappointment that Lehman Brothers Holdings Inc did not announce concrete asset sales. Lehman will slash its annual dividend, and said it would consider offers to buy the entire company.

Lehman's report came three days after the federal government took control of mortgage companies Fannie Mae and Freddie Mac, and six months after the government-brokered rescue of Bear Stearns.

"What you are dealing with is a confidence issue," said Doug Roberts, chief investment strategist at Channel Capital Research in Shrewsbury, New Jersey, "What people are saying is that there has been no resolution of the problem."

Lehman said it intends to sell 55 percent of a portion of its investment management division, including asset management unit Neuberger Berman and the private equity and wealth management businesses. It said it was in "advanced discussions with a number of potential partners" on a sale.

Final bids are due Friday, and a sale might be announced in October, a person familiar with the matter said.

Lehman plans to spin off $25 billion to $30 billion in troubled commercial real estate assets into a new publicly traded company, Real Estate Investments Global, in the first quarter of 2009.

It also said it is in talks to sell $4 billion of its U.K. residential mortgage portfolio to BlackRock Inc, and expects a sale in the next few weeks. The deal would cut residential mortgage exposure by 47 percent to $13.2 billion.