Barclays Relieves Lehman’s Banking Division

A year ago Lehman Brothers had a market capitalization of more than $33 billion but today it is now releasing its once-prized businesses at very low values.
 
Taking advantage of Lehman Brothers Holdings Inc.'s bankruptcy reorganization the North American banking and capital markets units of Lehman were acquired by Barclays PLC, the third- largest British bank for only $250 million.

In addition to the North American investment banking and trading operations, Barclays also opted for Lehman's New York headquarters and two data centers in New Jersey for only $1.5 billion.  

On the Brink of Bankruptcy

Being unable to look for fresh capital to prop up its financial statement along with the continued slump of the credit markets the Lehman Brothers Holdings Inc., a U.S. investment bank file filed for bankruptcy protection. The bankruptcy court still has to sanction the deals between Lehman and Barclays.

The investment management division was formerly valued by as much as $10 billion by Wall Street analysts however taking into account the bankruptcy proceedings the division now is valued less. The Lehman executives still carries on looking for a potential sale of the esteemed division including the money manager Neuberger Berman.

According to an anonymous source that is familiar with the negotiations Lehman was concentrating on selling the business to private- equity firms and the deal might be made soon.

The two top private-equity firms bidding on the investment management division are Bain Capital and Hellman & Friedman followed by Kohlberg Kravis Roberts & Co.

Lehman's North American banking operations has about 10,000 working employees in the trading and research and investment banking business. Barclays’ acquisition of Lehman's North American banking operations including the fixed income and equities sales is a salvation for the employees in the divisions.

Just hours after Lehman’s first bankruptcy hearing in a crowded U.S. bankruptcy court in Manhattan, Lehman and Barclays had come to an agreement on the sale of the banking divisions.

Assessment of Lehman Brothers’ Decline

Shai Waisman, a lawyer for Weil, Gotshal & Manges, LLP said that Lehamn operated in a highly unfavorable business environment, declining asset values and low levels of liquidity, which led to Lehman's Brothers' downfall. Waisman is representing Lehman Brothers.

JPMorgan Chase & Co. will continue to be Lehman's clearing house through the bankruptcy proceedings as approved by Judge James Peck. According to court filings JPMorgan has already made the advances to Lehman in order for the company to continue trading and to prevent commotion in the financial markets.

Lehman Chief Executive Richard Fuld was asked to demonstrate to the House Oversight and Government Reform committee hearing on the matters of regulatory mistakes and financial excesses which is alleged as the reason to Lehman's bankruptcy.