Lehman Brothers is moving closer to selling its asset management division—including the crown jewel, Neuberger Berman—a sign that other efforts to raise capital have not been that successful, CNBC has learned.

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[LEH  Loading...      ()   ] head of the investment management division, George Walker, told Neuberger partners late last week that the sale of the entire investment management division is a growing possibility. The partners may even meet with potential buyers in the coming days.

Lehman has been hoping to avoid selling all or part of Neuberger, one of its prized assets. But the firm is facing billions of dollars in additional losses from soured real-estate debt and needs to sell off parts of its operations to raise cash.

As reported, Lehman has been in negotiations to sell pieces of itself to foreign banks, sovereign wealth funds, and private equity firms. The investment management business has been shopped to private equity firms, including Kohlberg Kravis Roberts. The firm values the unit at $10 billion, but possible investors have been balking over price.

Meanwhile, the company has been cobbling together a bold plan to remove tens of billions of dollars in bad debt, composed of subprime loans and commercial real-estate investments, by spinning off the soured investments currently on its books into a separate company.

The separate company has many benefits for Lehman because, under the proposed structure, the bad debt would be off the firm's balance sheet removing an uncertainty that has crushed shares of Lehman from most of the year.

In addition, under the plan Lehman shareholders and other investors could own a piece of the new company composed of the real-estate investments. So if the value of these securities and holdings eventually recover, Lehman investors would benefit.

Watch CNBC's Charlie Gasparino report on Lehman on video at left.

But just moving the assets off Lehman's balance sheet isn't cost free; Lehman must raise capital, possibly as much as $10 billion or more depending on how much the real-estate assets will be marked down from their original values.

Moreover, people close to the deliberations between Lehman and possible new investors say many of the foreign banks have been squeezing the firm and its two top executives, CEO Dick Fuld and President Bart McDade, on price of buying a chunk on the company.

The capital raising plan -- maybe the most ambitious in recent Lehman turbulent history -- comes amid growing doubts that Lehman can eventually compete with big Wall Street players without being sold to a bank with additional capital.

Fuld has helped Lehman escape near-death before, including after the Long Term Capital Management debacle that caused huge losses and almost led to a run on the bank. No one expect Lehman to implode the way Bear Stearns did in March given the strength of its management and its access to the Federal Reserve discount window which now allows emergency borrowing by Wall Street firms.

But people inside Lehman say if the firm can survive the current crisis, it will change dramatically from the risk-taking bond house that turned huge profits up until this year -- and now massive losses.

People with knowledge of both Fuld's and McDade's thinking say the two executives are currently envisioning Lehman taking far less trading risk in the future and that it will resemble Lazard Freres, which specializes in investment banking and other low-risk assignments.

There are already signs that Lehman is putting a new team in place to deal with this new future. As first reported by CNBC, Fuld is handing more of the day-to-day responsibility to his No. 2, McDade, and people inside the firm expect him to step down as CEO, handing that job to McDade, and remain as chairman in the coming months.

Earlier Sunday, Lehman announced changes to its executive management. Jeremy Isaacs, its long-time CEO of its international operations will "retire" by the end of the year, and Andrew Morton, its global head of fixed income will leave to "pursue other interests."

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