The administrators of Lehman Brothers’ European division have cut 750 jobs at the firm with immediate effect.

PricewaterhouseCoopers LLP, said the move came “despite exhausting all avenues” to save the posts.

The vast majority of the cuts will be made in London, where the firm employed about 5,000 people.

Lehman Brothers, the fourth-largest investment bank in the US, filed for bankruptcy as it was hit by the credit crunch and could not be rescued.

The jobs will go from the firm’s European fixed income and personal investment management units, after a buyer could not be found.

‘Maximising value’

“It is extremely disappointing that despite exhausting all avenues these jobs could not be saved,” said PwC partner Tony Lomas.

“We continue to be focussed on maximising the value of recoveries for creditors, whilst minimising the impact on other stakeholders as much as possible.”

Shortly after the collapse, Barclays bought Lehman’s US investment banking unit for £250m.

And last week Japanese bank Nomura said it was buying some of Lehman’s European and Middle Eastern operations for an undisclosed sum.

Under the deal announced last week, Nomura will acquire the equities and investment banking businesses from the US bank which filed for bankruptcy protection in mid September.

The Japanese bank said it expected to save the jobs of a “significant proportion” of the 2,500 Lehman staff in those businesses.

The Nomura deal does not include any of Lehman’s trading assets or liabilities, Nomura said.

It is also going to acquire Lehman’s assets in Asia.

News reported by The BBC

Nomura signalled its intention to become a major force in European investment banking yesterday after acquiring Lehman Brothers’ London equities and investment banking business in a deal that will save 2,500 jobs.

Japan’s biggest investment bank said the mistakes made by international rivals had allowed it to fulfil its long-held ambition of becoming a major player in Europe. The bank will hire just over 2,500 Lehman employees, with the vast majority to be based at the bankrupt US bank’s office at Canary Wharf in London’s Docklands. The deal leaves the future unresolved of about 2,000 staff in London, working in businesses such as fixed- income and asset management.

PricewaterhouseCoopers (PwC), the administrator, said it had received “tentative” interest in these.

Nomura said it had taken on neither assets nor liabilities from Lehman’s balance sheet and that the undisclosed price it had paid was “nominal”.

Asked how big Nomura intended to become, Sadeq Sayeed, senior adviser to Nomura’s board, said: “Big,” adding that the mistakes of rivals had allowed Nomura to capitalise on its prudent balance-sheet management.

“Over the last 20 years, Nomura has not punched its weight in international markets. It has tried to buildbusinesses in international markets with varying degrees of success,” Sayeed said. “We have been looking for opportunities outside Japan for some time… We have shown that speed is a characteristic we relish and change is something we are not afraid of.” The acquisition of the business follows Nomura’s $225m (£121m) takeover of Lehman’s Asian operation the day before. The company beat Barclays to acquire the European equities unit because Nomura wanted to take on the investment banking business too.

The bigger the sale, the better for creditors because employee liabilities will be transferred to Nomura, PwC said. Nomura and Barclays have bought the lion’s share of Lehman’s assets since its bankruptcy last week.

By Sean Farrell, Financial Editor

News reported by The Independent

Japanese bank Nomura has confirmed that it will buy some of Lehman Brothers’ European and Middle Eastern operations for an undisclosed sum.

It will acquire the equities and investment banking businesses from the US bank which filed for bankruptcy protection last week.

Nomura said it expects to save the jobs of a “significant proportion” of the 2,500 Lehman staff in those businesses.

It said its priority was to get them up and running under the Nomura name.

Lehman Brothers had an estimated 5,000 workers in the UK.

However, it is not yet clear where the 2,500 jobs that have been saved across the two regions will be located.

PricewaterhouseCoopers, the administrators of the Lehman’s business in Europe, said it was “delighted” by the deal.

“Clearly we are very pleased with this outcome which secures the future of so many staff, but there is still a great deal of work to be done on this very complex administration,” said Mike Jarvis.

The deal, which Nomura said would significantly extend its geographic reach, is subject to regulatory approval.

It does not include any of Lehman’s trading assets or liabilities, Nomura said.

The Japanese bank is also going to acquire Lehman’s assets in Asia.

News reported by The BBC

The last two major investment banks in the US have changed their status to become bank holding companies, allowing them to take deposits from investors.

The changes should enable Goldman Sachs and Morgan Stanley to raise more funds by opening commercial banks.

The move – part of a huge restructuring effort on Wall Street – will also give them access to Federal Reserve support.

The US government has announced a $700bn (£382bn) package to tackle the worst financial crisis for decades.

CHANGING WALL STREET
– May 2008: JP Morgan Chase buys Bear Stearns for $2.2bn, ending its 85 years as an independent firm
– September 2008: Lehman Brothers files for bankruptcy, the largest in US history, ending its 158-year history
– September 2008: Bank of America acquires Merrill Lynch, founded in 1918, in a $50bn deal
– September 2008: Goldman Sachs and Morgan Stanley request to change their status
Congress is considering the plan, drawn up by Treasury Secretary Henry Paulson, which would set up a fund to buy up much of the bad debt held by financial institutions, which had triggered the credit crisis.

The BBC’s business editor Robert Peston said transforming these investment giants into licensed, deposit-taking banks marked the end of an era for Wall Street.

“Now that the US taxpayer is in a formal sense underwriting Goldman and Morgan Stanley, their days of buckling the swash on the worldwide high seas of finance are over, possibly for good.”

‘Greater safety’

There had been fears, given the recent turbulence in the financial markets, that Morgan Stanley and Goldman Sachs would not be able to survive as independent players, and both their share prices have come under pressure.

HAVE YOUR SAY They speak about ‘economic forces’ as if they are natural disasters – they are man made
James, Southend
Send us your commentsBoth banks had filed requests with the Federal Reserve to change their status, and late on Sunday, the Fed announced it had granted the requests.
The last few weeks have seen dramatic and unexpected changes among banks, with Merrill Lynch being bought by Bank of America and Lehman Brothers filing for bankruptcy protection.

Earlier this year, Bear Stearns was acquired by JP Morgan Chase.

Flexibility and stability

Goldman Sachs said it already had two existing deposit businesses, Goldman Sachs Bank USA and Goldman Sachs Bank Europe, into which it is transferring assets from other parts of the business.

“With over $150bn in assets, GS Bank USA will be one of the 10 largest banks in the US,” the bank said.

GOLDMAN SACHS
Founded 1869
It became a listed company in 1999 having been a private partnership
Provides investment banking, securities and investment management services
Recently reported a 70% fall in third-quarter earnings to $845m (£473m)

“We intend to grow our deposit base through acquisitions and organically,” it added.

Commenting on the change for Morgan Stanley and Goldman Sachs, Chip MacDonald, mergers partner at law firm Jones Day, said: “It creates a perception of greater safety and supervision. It really rationalises the regulatory system”.

“It should be good for both Goldman Sachs and Morgan Stanley.”

Goldman Sachs said it decided to be regulated by the Federal because it “provides its members with full prudential supervision and access to permanent liquidity and funding”.

John Mack, chairman and chief executive officer of Morgan Stanley, said: “This new bank holding structure will ensure that Morgan Stanley is in the strongest possible position – with the stability and flexibility to seize opportunities in the rapidly changing financial marketplace.”

“It also offers the marketplace certainty about the strength of our financial position and our access to funding.”

Solution sought

Mr Paulson has urged other countries to follow the American example in dealing with the international financial crisis.

MORGAN STANLEY

Founded 1935

Areas include institutional securities, wealth management and asset management

Merged with Dean Witter, Discover & Co in 1997

Recently saw third quarter earnings fall 3% to $1.43bn

Both presidential candidates have been having their say about the financial crisis.

Republican John McCain said President George W Bush should take the blame for the crisis along with both parties in Congress.

Mr McCain said he was enraged by the greed of Wall Street speculators and said the rescue plan should be funded by cutting government waste, rather than through taxation.

Meanwhile Democrat presidential candidate Barack Obama suggested Mr Paulson could be asked to play a role in his administration should he win the presidency.

But Mr Obama criticised the bail-out proposal, calling for independent supervision of its implementation.

News reported by The BBC

The European administrators of failed US investment bank Lehman Brothers have filed a court order in New York demanding $8bn (£4.4bn) be returned from the US to London.

A PricewaterhouseCoopers (PwC) spokesman said the money was needed to pay creditors, salaries, property bills and other day-to-day expenses.

Lehman’s European headquarters, where 4,500 staff worked, is based in London.

PwC is currently trying to find buyers for various parts of Lehman Europe.

‘No redundancies’

Before it went into administration last Monday, Lehman Europe frequently transferred money from its London HQ to its parent company in New York, said the BBC’s Joe Lynam.

“The money was usually kept overnight – earning interest – before being sent back to London.”

But, as the bank neared its end last Sunday, that did not happen and Lehman Europe found itself down by $8bn, having formally requested the money earlier in the week, our reporter said.

PwC also said it was hopeful of finding a single buyer of Lehman’s (European) equities group and investment banking businesses, which employ 1000 specialist staff.

“Who ever buys these groups will have to take on staff liabilities,” said Dan Schwarzmann, a PwC administator.

He added that PwC was hopeful that there would be no redundancies in these businesses, but could not rule it out.

Lehman’s demise sent shock waves through global markets, undermining confidence in the financial system.

Tighter regulation

The UK prime minister said that international regulation of the financial system must be brought up to date in the wake of the recent turmoil.

Gordon Brown told the BBC: “We’re in a new economy, a global financial economy, the world is changing very fast, but the governance of the global financial system has not caught up with it and that’s what’s got to change.”

The global financial impact of the demise of Lehman Brothers is still emerging as firms worldwide state their degree of exposure to the bankrupt firm.

In Hong Kong, angry investors marched to government offices on Sunday calling for action after losing money on investments linked to the failed investment giant.

Last week, UK bank Barclays snapped up some of the core assets of the Wall Street giant, including its New York headquarters, for $1.75bn.

News reported by The BBC

Japanese investment bank Nomura has confirmed that it will buy the Asia-Pacific business of Lehman Brothers for an undisclosed sum.

The lucrative Asian assets of the failed US bank include equity trading and investment banking operations.

The acquisition would allow Nomura, which has Japan’s top mergers and acquisitions advisory service, to expand quickly outside the country.

It is also thought that Nomura wants to buy parts of Lehman’s European assets.

Reports that a deal had been agreed sent Nomura shares up 9.6% in Tokyo to 1,430 yen earlier.

‘Transformational’ deal

In a statement, Nomura said all 3,000 employees of the business throughout the Asia-Pacific region will be kept on.

Kenichi Watanabe, Nomura’s president and chief executive called the deal “transformational” and a “once in a generation opportunity”.

“Our ability to capitalise on this opportunity in spite of such volatile markets reflects our financial strength and demonstrates how well we have managed the credit crisis,” he added.

Once Wall Street’s fourth largest investment bank, Lehman filed for bankruptcy protection last week after it was brought to its knees by its huge exposure to risky residential and commercial loans, which have tumbled in value amid the credit crisis.

Its administrators are keen to move swiftly to find buyers for parts of its business which are still trading before the firm starts to lose staff and customers.

Lehman’s investment banking operation ranks ninth in Asia and accounted for about a fifth of its overall revenue in the first six months of 2008.

Keen to snap it up at a knock-down price, Nomura had reportedly battled against rivals Barclays and Standard Chartered for the business.

Meanwhile, Nomura is also reportedly interested in parts of Lehman’s European business, which is headquartered in London.

Barclays has also been named as a contender after the UK bank agreed to pay $1.75bn for Lehman’s North American investment banking and trading unit last week.

News reported by The BBC

This week has seen the biggest movements ever on the FTSE 100 – when at the end of the week the index jumped 8.8% on news of the US government has pledged to bail out the troubled US banking system!

The FTSE has been on a roller coaster starting the week at 5,417 and dropping to 4,880 during the week to jump 431 on friday to end slightly lower thatn the beginning of the week at 5311! Earlier in the week the Glbal Central banks pumped $180bn into the markets to lift the amount of funds available to the world banks. On Friday the US Treasury is proposing to buy back up to $800bn of the bad debt in the US mortgage market, as the US debt plan takes shape.

It will be interesting to see what happens in the mortgage markets over the coming months where we have seen a 36% slump in mortgage lending in August this year over August of 2007, once the above measures start to kick in. The lending market has stalled because banks are reluctant to lend to each other and the inter-bank lending rates are at a high – I was speaking to my friend in Australia and he commented that “getting a mortgage in Australia at the moment is like winning the lottery!”

The core assets and business of Lehman Brothers is to be purchased by Barclays Bank for $1.3bn, which incredibly includes Leham’s Manhatten Skyscraper worth on its own around $1bn! So in a market of turmoil the vultures circle and there are bargains to be had. Judge approves Lehman deal.

As with last week the travel industry has seen trouble with Italian airline Alitalia being on the edge of going into liquidation. What seems crazy is that there have been two rescue packages open to the company, which have been turned down by the unions to block redundancies. So the unions would rather sit there and block a rescue where a few jobs are lost in preference to the whole company going under where everyone losses their job! CAI consortium was only approved by 3 out of the 9 unions to block 3000 job losses!

On the bright side is that the petrol retailers have are reducing fuel at the pumps in the UK on the bakc of dropping oil prices. BP and supermarkets Asda and Morrison were leaders in cutting prices.

End of the week saw:
Stock exchanges:
FTSE 100: 5,311
DOW: 11,388
S&P: 1,255
Nikkei: 11,921

Currencies
UK Sterling £ to US Dollar $ 1.83070
UK Sterling £ to Euro € 1.26995
US Dollar $ to Euro € 0.69370

A New York bankruptcy judge has backed a $1.3bn (£700m) plan for Barclays to buy the core business of collapsed US investment bank Lehman Brothers.

The deal gives the UK bank ownership of Lehman’s Manhattan skyscraper – worth nearly $1bn – as well as responsibility for some 9,000 former staff.

Lawyers for what was the fourth biggest US bank said they were confident the deal would safeguard thousands of jobs.

Lehman collapsed on Monday sparking a week of turmoil on financial markets.

A US bankruptcy judge approved the sale after a seven-hour hearing that ended past midnight, saying he had found no better alternative for the assets Lehman sought to sell.

‘Tsunami victim’

“I have to approve this transaction because it is the only available transaction,” the judge, James Peck, told a packed Manhattan court.

He said he was saddened by the case, which he called the “most momentous bankruptcy hearing I have ever sat though”.

“Lehman Brothers became a victim, in effect the only true icon to fall in a tsunami that has befallen the credit markets,” the judge added.

The demise of Lehman – which collapsed having incurred huge bad debts related mainly to the US mortgage market – prompted the largest US bankruptcy case in history.

Earlier this week, Barclays had agreed to buy the bank’s North American investment banking and trading unit for $250m, as well as its New York headquarters and two data centres for $1.5bn.

But the final figure was reduced after Lehman’s lawyers said new property valuations were less than expected and that the company’s trading accounts had shrunk.

The deal will free up cash to fund operations while the rest of the company unwinds. A lawyer for Lehman’s said accounts worth around $138bn were dependent on the sale.

News reported by The BBC

Details are emerging of an emergency plan by the US government to tackle one of the worst crises to hit the world’s financial markets in decades.

The US Treasury is proposing a fund worth up to $800bn (£440bn) to buy back a large proportion of the bad debt in the US mortgage market, reports say.

President George W Bush hailed the move as “unprecedented action” in the face of “unprecedented challenges”.

Congressional and Treasury officials will meet later to work on the plan.

Talks will continue throughout the weekend and the package is expected to be signed into law within days.

It is believed the intention is to find a way of bringing all the bad debts into one organisation whose task will be to hold them on behalf of the taxpayer until they can be sold off at some point in the distant future, says the BBC’s Justin Webb in Washington.

There are some members of Congress who are queasy at the thought of the taxpayer taking on hundreds of billions of dollars of currently worthless debt, he says.

But the leader of the Democrats in the House of Representatives, Steney Hoyer, said he expected quick action.

After a week of turmoil, stock markets around the world rallied on news of the rescue plan, with the UK’s FTSE 100 closing on Friday with its biggest one-day gain.

‘Maximum impact’

President Bush said swift, politically bipartisan action was needed to keep the US economy from grinding to a halt as problems sparked by the credit crisis had begun to spread through the entire financial system – leaving jobs, pensions and companies under threat.

President Bush on ”a pivotal moment” in the US economy

“These are risks the US cannot afford to take. We must act now to protect economic health from serious risk,” he added.

Treasury Secretary Henry Paulson said a “bold” move was needed to restore the financial system’s health.

Giving few details, Mr Paulson said the Bush administration was stepping in with a plan to remove so-called “toxic debts” from US banks’ balance sheets.

The programme, he said, must be “large enough to have maximum impact”.

“For us here in the UK the big question is whether what Paulson’s proposing makes it more or less likely that our government will have to launch a similar rescue scheme for our banks” President Bush

In the meantime, he said that the government would be stepping up action to increase the availability of capital for new home loans.

Once this difficult period was over, Mr Paulson said, the government’s next task would be to overhaul bank regulations.

The chairman of the Senate Banking Committee, Christopher Dodd, said he and his colleagues would need to see the details of the plan first, but he accepted that quick action would be needed.

“We understand the gravity of the moment,” said the Democratic senator.

Rescue moves

Earlier on Friday, the government announced plans to guarantee US money market funds – mutual funds that typically invest in low-risk credit such as government bonds and are often used by pension funds – up to a value of $50bn, in a move to further restore confidence.

“The Treasury and the Fed have finally realised the depth and systemic nature of the crisis” John Ryding, economist

Will the plan work?
McCain attacks bank assistance

Meanwhile, the Securities and Exchange Commission temporarily banned “short-selling” in the stocks of 799 companies. Short-selling is a form of trading which effectively bets that the value of a company’s shares will fall.

“The Treasury and the Fed have finally realised the depth and systemic nature of the crisis,” said John Ryding, an economist at RDQ Economics

“We believe that these actions will constitute the wider firebreak that will contain the crisis.”

Mounting fears that the credit crisis is beginning to spread out through the financial system have rocked shares and companies recently.

Investment giant Lehman Brothers collapsed this week, rival Merrill Lynch was bought out by Bank of America, and the US government has bailed out insurer AIG with an $85bn rescue package and state-backed mortgage lenders Fannie Mae and Freddie Mac.

News reported by The BBC

The financial impact of the demise of Lehman Brothers is emerging as firms worldwide state their degree of exposure to the bankrupt firm.

Three Chinese banks have some $297.4m (£166.1m) in Lehman Brothers bonds, state media and local reports said.

Swiss Life said it had exposure of $20m Swiss francs (£9.9m) and Swiss Re had exposure of 50m Swiss francs.

German bank KfW transferred 300m euros (£237m) to Lehman after it collapsed on Monday, local media reported.

However, a spokesperson for KfW said the transfer had been done in error.

“There was an erroneous swap payment on Monday… for reasons for which are being investigated internally”, the company told the Frankfurter Allgemeine Zeitung newspaper.

Lehman Brothers collapsed after seeing billions of dollars of losses in the US mortgage market.

UK deal

Of China’s exposure, Industrial & Commercial Bank said it owns Lehman bonds worth $151.8m, according to the Xinhua agency, while Bank of China has $75.6m in bonds and China Merchants Bank had $70m in Lehman bonds.

Meanwhile, UBS said on Tuesday that its exposure to Lehman Brothers was less than $300m.

But Japanese firms’ total Lehman exposure was far greater at 440bn yen (£2.3bn), according to an earlier Kyodo news report.

Bank of Japan governor Masaaki Shirakawa that while Lehman’s collapse would harm Japanese firms, those hit had enough funds to cover losses.

“I am not concerned that the recent events will destabilise the financial system in Japan,” he said.

The news comes as UK bank Barclays has acquired certain core assets of Lehman Brothers for $1.75bn.

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.

The administrators, PricewaterhouseCoopers, said it had a keen interest in developments with Lehman Brothers in the US.

The administrator said that all UK employees at Lehman still attending work will be paid by the end of the month.

News reported by The BBC