Lehman finds itself down then out

NEW YORK & LONDON - Wall Street workers departed with their belongings from bankrupt Lehman Brothers as a significant percentage of the 26,200 staff globally faced redundancy. The 158-year-old US investment bank filed for bankruptcy in early on Monday, September 15, after failing to find a buyer to rescue it from mounting debt and illiquidity problems.

At the London offices, administrator PricewaterhouseCoopers (PwC) took charge, initially saying the main UK business Lehman International (Europe) and others had gone into administration. However, several days later chunks of the UK business were purchased by Japanese bank Nomura. PwC also revealed no funds from the New York treasury had reached the firm's overseas subsidiaries, even for staff payrolls.

UK bank Barclays bought some of Lehman's core US assets for $1.75 billion. Barclays has bought Lehman's US investment banking and trading unit for $250 million, and paid a further $1.5 billion for the failed bank's New York headquarters and two data centres. Barclays rejected a wider rescue deal for Lehman before the bank's collapse, pulling out over the weekend of September 13-14 when US regulators failed to guarantee Lehman's trading obligations.

Lehman shares tumbled to under a quarter on the New York Stock Exchange and were suspended in London on the morning of bankruptcy. Its share prices had already been decimated by a third-quarter $3.9 billion loss. That fall was exacerbated by estimated outstanding mortgage debt exposures and the failure of the bank's earlier plans to sell off large parts of its business, including the earlier withdrawal of sovereign wealth fund Korea Development Bank from investment talks.