Lehman Brothers announced plans yesterday to raise $6 billion (£3 billion) by issuing new shares as the Wall Street brokerage unveiled a larger-than-expected $2.8 billion loss for its second quarter.

The results, which were dragged down by about $4 billion of writedowns on Lehman's mortgage and private equity-related investments, were well below the loss of $300 million to $1 billion that most analysts had predicted. They represent the first loss since Lehman went public in 1994 and compare with a $1.26 billion profit the year before.

Although Lehman did not quantify Britain's contribution to the group's loss in the three months to June, it said that many of the British mortgage-related assets on its books had become virtually impossible to value. This is in marked contrast with its first quarter, when the assets had been fairly easy to value, according to Erin Callan, Lehman's chief financial officer.

Richard Fuld, the chairman and chief executive, said: “I am very disappointed in this quarter's results. However, with our strengthened balance sheet and the improvement in the financial markets since March, we are well positioned to serve our clients and execute our strategy.”

Ms Callan added that the capital-raising was “designed to end the chatter about Lehman Brothers and get back to business” after persistent rumours that the group could run out of cash, despite Lehman's assurance that it has about $45 billion of cash and other liquid assets at its disposal.

Lehman's shares, which had already dropped by 51 per cent this year, declined by $2.81 to close at $29.48 yesterday.

The group's second-quarter results included $3 billion of negative net revenues in Lehman's fixed income division and $601million of net revenues in its equities division, giving its overall capital markets division $2.4 billion of negative revenues. Investment banking net revenues were down by 25 per cent on the year before at $858 million, but investment management net revenues were 10 per cent higher than the year before, at $848 million.

Lehman said that its second-quarter results were “more preliminary” than usual because their publication was brought forward by a week to calm fears that the group was running out of cash. It said that it would release more detailed results on Monday.

Last week, Lehman Brothers denied that it had accessed emergency funds from the US Federal Reserve's so-called discount window after its plans to raise further capital emerged, sparking a resurgence in rumours that the group would follow Bear Stearns into a fire sale. JPMorgan acquired Bear Stearns this year after a run on the firm amid rumours of a liquidity crisis.

“We did not access the primary dealer facility today,” a Lehman spokesman said. “The last time we accessed it was on April 16 for testing purposes. We ended the first quarter with liquidity of $34 billion and finished the second quarter with well over $40 billion.”

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