Lehman Brothers said cash holdings increased 18% in the past three months and analysts said the bank may need to raise capital to avoid a ratings downgrade and to post $5.4bn (€3.5bn) in additional collateral for derivatives transactions.

Paolo Tonucci, treasurer at Lehman said in a statement: “We ended the first quarter with liquidity of $34bn (€22bn) and finished the second quarter well above $40bn.”