Lehman lifeline plan in doubt as Korean banks cool

SEOUL (Reuters) - A lifeline from South Korea for troubled investment bank Lehman Brothers LEH.N appeared in doubt on Wednesday as the bank leading the plan said nothing had been decided, and other lenders denied interest in taking part.

State-controlled Korea Development Bank (KDB) is in talks with Lehman over a possible joint investment with other Korean banks, but said it was still unsure whether there would be a deal.

"Korea Development Bank has considered M&A deals in foreign investment banks including Lehman Brothers, and asset management companies, as part of its privatization and competitiveness efforts but nothing has been decided yet," it said in a statement.

A report in the Chosun Ilbo newspaper said KDB had proposed taking a 25 percent stake in Lehman in a deal worth up to 6 trillion won (2.9 billion pounds) and involving other Korean banks. It quoted an unnamed financial industry source.

Yet two banks cited in the report distanced themselves from the idea.

"We have not seriously considered the idea and have no plans to do so in the future," said a spokesman at Shinhan Financial Group (055550.KS), South Korea's second largest.

Third-ranked Woori Finance Holdings (053000.KS) said: "We have not received any offer about the Lehman deal nor have we considered it internally."

The smaller Hana Financial Group (086790.KS) reiterated a previous denial.

Europe's biggest bank, HSBC Holdings (HSBA.L) (0005.HK), is also interested in Lehman, according to the newspaper report.