Lehman Brothers admitted yesterday that it had lost more than $700m (£350m) in its third quarter, as it reported its first quarterly loss in five years. The Times. The Daily Telegraph. The Guardian. The Independent. Financial Times

Despite making ‘large valuation gains’ from hedging against the credit crunch, the declines in the bank’s mortgage and leveraged loan assets, as the sub-prime homeloan crisis spread, left it about $700m out of pocket for the three months to September.

Lehman reported a 47% decline in third-quarter revenues, to $1.06bn, at its fixed-income business, which it blamed on ‘very substantial valuation reductions’ on mortgage-related securities and loans backing leveraged buyouts.

However, chief financial officer Chris O’Meara said that the ‘worst of this credit correction is behind us’, adding that the present market presented ‘trading opportunities’.