Shares in Lehman Brothers plunged on Monday as the bank disclosed a worse-than-expected $2.8bn second-quarter loss and said it would raise $6bn in common and preferred shares to bolster its financial position.

The embarrassing second-quarter loss, Lehman’s first since going public in 1994, followed a decline in the value of its mortgage assets and losses on proprietary trading positions. Lehman also suffered as previously successful hedging strategies designed to cushion its mortgage exposure went awry.