The move would be part of a plan to spend more than 200 billion yen (S$2.7 billion) on investment in US and European financial institutions Kenichi Watanabe said in an interview in the Yomiuri Shimbun.

Lehman 'is one of the candidates in which we plan to invest,' Mr Watanabe said without elaborating.

A number of overseas banks and securities firms are said to be considering bidding for a stake in Lehman, which suffered billions of dollars in writedowns and credit losses amid the meltdown in US subprime mortgages sector.

A news report from Seoul said the state-run Korea Development Bank (KDB) had offered to buy a 25 per cent stake in Lehman for more than four billion US dollars.

Japan's largest banking group, Mitsubishi UFJ Financial Group, has denied a news report that it was considering bidding for a stake in Lehman, which will report third quarter results next week. -- AFP