Barclays buys core Lehman assets
Posted by admin on 17 September, 2008 under Business news | 
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UK bank Barclays has bought some of the core assets of US investment bank Lehman Brothers for $1.75bn (£1bn).
Barclays bought Lehman’s North American investment banking and trading unit for $250m, and paid $1.5bn for its New York headquarters and two data centres.
Lehman – the fourth-largest investment bank in the US – filed for bankruptcy protection on Monday.
The deal, which comes after a weekend when Barclays refused to buy all of Lehman, needs bankruptcy court backing.
BBC Business Editor Robert Peston had said earlier that Barclays would not be interested in acquiring Lehman’s “toxic investments in the residential and commercial property markets”.
‘Growth opportunity’
As well as the investment banking and trading operations, Barclays is also acquiring Lehman’s fixed income, equities sales, and research departments in North America.
The deal could safeguard the jobs of about 10,000 employees working in the divisions.
The agreement was made not long after Lehman’s first bankruptcy hearing in a US bankruptcy court in Manhattan.
John Varley, chief executive of Barclays, said the proposed acquisition was part of a policy of “profitable growth on behalf of our shareholders”.
Lehman Brothers chief operating Herbert McDade said: “We have the opportunity to continue the growth and development of our US investment banking and capital market franchises with one of the leading financial institutions in the world.”
bowraven said,
Barclays seals Lehman deal – Banking giant Barclays (BARC) has agreed to buy up some of the assets from the latest credit crisis casualty Lehman Brothers.
The UK’s third largest bank reached agreement on a deal focusing on Lehman’s core US broker-dealer operations – an area that undertakes securities underwriting tasks, conducts trading and provides merger advice to clients, many of whom are lucrative to the business.
Barclays walked away from a rescue deal for the collapsed Wall Street firm over the weekend, saying a merger was not in the best interest of shareholders after the US Government refused to guarantee protection against future losses on Lehman’s trading positions.
The Asian and European investment banking divisions have featured in talks between the two banks, but it remains unclear if these – and other – areas of Lehman Brothers are to be included in the deal.
The completion of the deal will see Barclays’ US presence increase significantly, boosting its recent flurry of activity in hiring key figures for its investment banking arm and enabling any start-up in America to begin much quicker.
Despite the news, Barclays’ share price was down almost 2% at the end of market acitivity on Tuesday. This however was a fraction of the loss suffered by fellow bank Royal Bank of Scotland (RBS).
On Monday, Lehman Brothers filed for bankruptcy protection after a series of badly judged bets on mortgage securities saw it rack up successive multibillion-dollar losses over the last five quarters.
News reported by Interactive Investor
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