Korea Development Bank said Tuesday it is in the hunt for troubled U.S. investment bank Lehman Brothers, confirming weeks of speculation over its intentions amid expectations the Wall Street institution is in dire need of a capital injection.

Min Euoo-sung, the governor of state-owned KDB, said that discussions were under way "to form a consortium with private banks as (we) believe it is more desirable to acquire Lehman Brothers jointly rather than alone."

"It is difficult to say how the talks will progress in the future as we have not been able to narrow differences with the Lehman side over prices," he added in Korean-language comments to reporters, according to the bank's public relations office.

It was unclear from Min's remarks how much of a stake in Lehman the banks were seeking to obtain in the negotiations or if the private banks referred to South Korean banks.

Jun Kwang-woo, chairman of South Korea's Financial Services Commission, in comments last month questioned whether a state-run institution should take the lead role in such an acquisition.

"Generally speaking, the private sector should be the leader in such a deal," he told reporters on Aug. 25.

Jun's comments had caused speculation that the government was trying to warn KDB away from pursuing a deal for Lehman Brothers.

Min said Tuesday that differences in viewpoint between his bank and the FSC, the government's financial regulator, have narrowed.

Any deal would require South Korean regulatory approval.

Min was CEO of Lehman Brothers' South Korean operations until taking the helm of KDB earlier this year.

A regional spokesperson for Lehman Brothers in Hong Kong could not immediately be reached for comment.

Spokesmen for major South Korean banks Kookmin Bank, Shinhan Bank, Hana Bank and Woori Bank, part of government-owned Woori Financial Group, said they had no plans to invest in Lehman.

Min's comments came after Britain's Sunday Telegraph newspaper reported over the weekend on its Web site that Lehman hoped to conclude a deal this week with KDB, which would inject as much as $6 billion in capital in return for what the paper called a stake of up to 25 percent in the investment bank.

The report, which cited no sources for those details, also said that Lehman was working on alternatives to KDB, including China's Citic Securities or sovereign wealth funds from Abu Dhabi and Qatar.

Speculation has been rampant in recent weeks that Lehman Brothers Holdings Inc., the fourth-largest U.S. investment bank, could seek a capital injection.

Analysts project that Lehman, considered to be the most vulnerable to the credit crisis, could post losses of up to $4 billion when it reports third-quarter results in mid-September. It is expected that the investment bank will also announce a deal to raise fresh capital to help offset the losses.

Media reports in recent weeks have listed KDB, which the government plans to privatize, among the top overseas candidates to invest in Lehman.

At the end of 2007, KDB had total assets of 122.62 trillion won ($108 billion), according to its Web site. The bank had liabilities of 104.3 trillion won ($92 billion).

Shaun Cochran, head of research for CLSA Korea, said the most likely partner for KDB would be Woori Financial Group, which is more than 70 percent owned by the government.

"This is an extremely complex deal to pull off should they decide to do it," Cochran said, citing challenges in melding the corporate cultures of two state-owned South Korean banks with a private and non-Korean entity such as Lehman Brothers.

In January, Merrill Lynch & Co. received a $6.6 billion cash injection to strengthen its balance sheet from three foreign institutions, including Korea Investment Corp., a South Korean government-owned investment management company launched in 2005.

Associated Press writers Jae-soon Chang, Hyung-jin Kim and Jae-hyun Jeong contributed to this report.