Lehman buys bad-loan assets

Lehman Brothers said it agreed to buy two non-performing loan (NPL portfolios with a combined book value of about US$240 million from China Huarong Asset Management, which had scheduled selling off bad loans with a face value of US$3 billion last December. But with few bids scaling up to Huarong's reserve price, only three of 22 scheduled tranches were actually sold last year. At that point Huarong withdrew some assets from the block, but left open the possibility of negotiating with bidders over other assets. Lehman did not disclose what it paid for the assets, but the speculation is the price was very low relative to the US$240 million face value.