Barclays to Buy Some Lehman
Assets for $1.75 Billion

STEVE SLATER & LORRAINE TURNER / Reuters 16sep2008

LONDON — Barclays Plc agreed to buy bankrupt Lehman Brothers Holdings Inc's North American investment banking and capital markets businesses, its New York headquarters and two data centers for a total of about $1.75 billion.

The deal, announced late on Tuesday, would unite two big debt trading houses and could stanch the flow of customers fleeing Lehman in the wake of the largest bankruptcy in U.S. history.

It comes after days of intense upheaval on Wall Street, which also saw the U.S. government agreeing on Tuesday night to rescue American International Group with an $85 billion loan from the Federal Reserve.

The Lehman Brothers operations being acquired by Barclays include its North American fixed income and equities sales, trading and research, and investment banking businesses. Lehman will receive $250 million (140 million pounds) in cash for these businesses.

Barclays also agreed to buy the investment bank's New York head office in Manhattan and two data centers in New Jersey for close to their current market value, estimated at $1.5 billion (800 million pounds).

The operations to be acquired have about 10,000 employees, estimated trading assets of $72 billion, and $68 billion in liabilities. The businesses will be merged into Barclays Capital.

The deal needs to be approved by the U.S. bankruptcy court in New York and can be terminated if it is not completed by September 24.

Barclays said some of its shareholders had expressed interest in increasing their stakes in Barclays as part of their support for the deal, and its board expects those discussions to lead to a subscription of at least $1 billion of additional equity.

Barclays was involved in frantic talks over the weekend to rescue Lehman, but quit after U.S. authorities would not guarantee the U.S. investment bank's trading obligations.

That prompted Lehman's New York-based holding company to file for Chapter 11 bankruptcy protection, sending shockwaves throughout world financial markets as a year-long credit crunch claimed another, bigger victim.

The deal does not include Lehman's investment management division, which includes fund manager Neuberger Berman. On Monday, a person familiar with the situation said a sale of that unit was also close to being announced.

Private equity firms Bain Capital, Hellman & Friedman and Clayton, Dubilier and Rice have placed bids for the unit, the person said. Lehman had planned to sell a majority stake in the investment management unit before filing for bankruptcy, but is now selling the whole unit.

Barclays shares closed down 2.5 percent at 305.1 pence. The DJ Stoxx European bank index fell 4.3 percent.

(Additional reporting by Paritosh Bansal in New York, Raji Menon in London and Jessica Hall in Philadelphia)

Editing by David Cowell, Phil Berlowitz and Bernard Orr

source: 16sep2008

Barclays to Buy Lehman Banking Divisions for $250M

JOE BEL BRUNO & STEPHEN BERNARD / AP 16sep2008

Two days after walking away from a deal to purchase all of Lehman Brothers, Barclays PLC said Tuesday it had agreed to acquire Lehman's North American investment banking and capital markets businesses for $250 million in cash.

The British bank will also purchase Lehman's New York headquarters and its two data centers in New Jersey for $1.5 billion.

Lehman's parent company Lehman Brothers Holdings Inc.'s filed for bankruptcy protection on Monday after it was unable to find financing or fresh capital to shore up its balance sheet amid a continued downturn in the credit markets.

The deals require approval from the bankruptcy court.

Barclays said it will acquire Lehman's North American banking operations, which include fixed income and equities sales, trading and research and investment banking business. The deal throws a lifeline to about 10,000 employees working in the divisions.

Barclays and Lehman reached the agreement hours after Lehman's first bankruptcy hearing in a crowded courtroom at the U.S. bankruptcy court in Manhattan, just steps away from Wall Street's iconic bull statue.

JPMorgan advanced Lehman $87 billion when the market opened Monday, acting in part on a request by the Federal Reserve Bank of New York. The New York Fed later repaid JPMorgan that amount. On Tuesday, JPMorgan advanced another $51 billion.

Shai Waisman, a lawyer for Weil, Gotshal & Manges, LLP representing Lehman Brothers, in his opening statement argued that Lehman's Brothers' downfall was the result of a "chain reaction" of events that were largely out of the investment bank's control.

"Lehman operated in an extremely unfavorable business environment," Waisman said, referring to declining asset values and low levels of liquidity.

Judge James Peck approved a motion that JPMorgan Chase & Co. will remain Lehman's clearing house through the bankruptcy proceedings. The issue arose over the past two days, when JPMorgan made the advances to Lehman to allow it to keep trading and "avoid a disruption of the financial markets," according to court filings.

Also on Tuesday, the House Oversight and Government Reform committee said it would hold a hearing Sept. 25 to examine the "regulatory mistakes and financial excesses" that led to Lehman's bankruptcy filing. It asked Lehman Chief Executive Richard Fuld to testify before the committee.

AP Business Writers Vinnee Tong and Madlen Read contributed to this story.

source: 16sep2008

Barclays Announces Deal to Buy Lehman Parts

Agence France-Presse 16sep2008

LONDON — Barclays announced Wednesday that it had reached an agreement to acquire Lehman Brothers North American investment banking and capital markets businesses.

"The board of Barclays announces that Barclays has agreed, subject to US Court and relevant regulatory approvals, to acquire Lehman Brothers North American investment banking and capital markets operations and supporting infrastructure," said the bank, Britain's third largest.

Barclays said it would acquire trading assets with an estimated value of 40 billion pounds (50 billion euros, 72 billion dollars) and trading liabilities worth 38 billion pounds. It will also acquire Lehman's New York headquarters.

Barclays had at the weekend walked away from a merger deal with the beleaguered US investment giant, saying that such a tie-up would not have been in the best interests of Barclays' shareholders.

Lehman went bankrupt on Monday, plunging the global financial system into turmoil. The massive Lehman bankruptcy filing in US federal court in New York listed 639 billion dollars in assets and 613 billion in debt.

"This is a once in a lifetime opportunity for Barclays," said the British bank's president, Robert Diamond.

"We will now have the best team and most productive culture across the world's major financial markets, backed by the resources of an integrated universal bank.

"We welcome the opportunity to add Lehman's people and capabilities to the Barclays team."

In the same statement, Lehman Brothers' chief operating officer, Herbert McDade, said: "Lehman Brothers strength has always been our client franchise.

"With this transaction, 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."

source: 16sep2008