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

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.”

News reported by The BBC

Share prices in Europe and Asia have fallen sharply in the midst of the financial turmoil over the fate of the US investment bank Lehman Brothers.

The UK’s FTSE 100 index fell 2.7% in early trade, France’s Cac 40 index shed 3.4% and Germany’s Dax dropped 2.8%.

In Asia, the key Australian share index ended down 1.8%, and in Singapore the STI dropped 2.3% in morning trade.

In Taiwan, the benchmark share index closed down 4%, and in India share prices fell by more than 5% on opening.

Several of Asia’s major stock exchanges – in Tokyo, Hong Kong, Shanghai and Seoul – were closed for holidays.

In markets that were trading, banking, insurance and financial sectors suffered most after Lehman Brothers, the fourth-largest investment bank in the US, said it would file for bankruptcy protection.

‘Dollar rally unsustainable’

Meanwhile the US dollar fell in Asian trade on Monday, on concerns about the US financial system’s stability.

The dollar fell 2.3% to 105.45 yen – the biggest one-day percentage fall since early 2002. The euro also gained against the dollar, at $1.4479, up 1.7%.

The pound rose to $1.8040, from $1.7946 on Friday.

The Bank of England said it was monitoring conditions in sterling money markets and would act to stabilise them if needed.

The European Central Bank said it would intervene in eurozone money markets if necessary.

Anantha Nageswaran, head of investment research at Bank Julius Baer, said: “The dollar rally over the last two months was unsustainable and it was brought about by short-term liquidation pressures by many hedge funds and because of a mistaken feeling that the US economic numbers had turned the corner.”

Loan fund

Lehman Brothers has suffered losses of billions of dollars in the sub-prime crisis, and has seen its share price plummet during recent months.

A consortium of international private sector banks and securities firms announced a new $70bn loan fund, intended for use by financial companies to help ease the credit shortage.

The US Central Bank, the Federal Reserve also made new moves to ease access to emergency credit for struggling financial companies, broadening the types of securities financial institutions can use to obtain emergency loans.

News reported by The BBC

Shares in US investment bank Lehman Brothers have plunged 30% on fears the the group will not be able to raise the funds it needs to cover losses.

Lehman has been seeking ways to raise $6bn after sustaining credit crunch-related write-downs and losses.

There are fears that a potential investment from Korea Development Bank has fallen through.

Wall Street sent the firm’s stock down to $8. The bank’s share price is down more than 90% this year.

Lehman, the fourth-largest US investment bank, had hoped to secure a deal with the Korean fund before announcing third-quarter earnings on 18 September.

Lehman and KDB are thought to have been in talks for two months about the prospect of the state-run Korean bank taking a stake in Lehman.

Overseas interest

Lehman has been linked with a number of overseas financial firms as it tries to shore up its finances.

Recent reports have suggested that Japanese brokers Nomura Holdings are considering buying a stake in Lehman.

Other financial firms from China, Qatar and Abu Dhabi have also been linked to Lehman.

The bank is also said to be meeting with potential buyers of its Neuberger Berman asset management unit to raise funds.

News reported by The BBC