"This is an extraordinary time for our industry, and one of the toughest periods in the firm's history," Richard Fuld, Lehman's chief executive, said.

The investment bank has already taken $7 billion in credit-related write-downs and losses since the start of the global credit crisis.

World stocks, meanwhile, fell toward two-year lows on Wednesday as the problems faced by Lehman stoked concern that banks are struggling to rebuild capital and financial markets remain brittle.

Anticipating continued market upheaval, Christian Jimenez, president of Imene Investment partners in Paris, said: "Lehman's meltdown won't probably be the last negative episode of this credit crisis."

"The consequences of the troubles in the banking system will continue to drag the economy, and stocks will stay in the doldrums for a while before we see any durable rebound."