Barclays has apparently decided that spending lots of money on the House of Fuld is not a very good idea after all. Bank of America has yet to reach the same conclusion.
The prospect of Ken Lewis lapping up the empire of Fuld should have Bank of America's London fixed income professionals breaking out in a little light perspiration at the very least. Lehman's European fixed income operation is both bigger and better than theirs, and Lewis may well favour at least some of its staff in any tie-up.
For this reason, Bank of America would be a relatively good bet for Lehman jobs in Europe. Its London operation is comparatively small, and overlaps outside fixed income would be limited. B of A, for example, doesn't have a cash equities operation in London, and its European M&A/corporate finance franchise is tiny.
Acquisition by Barclays would not have been pretty. "Both banks are in pretty much every product area to a certain degree. The overlaps would have been brutal," says one headhunter.
If avoiding layoffs were the priority (which it obviously isn't at this stage - avoiding bankruptcy would be nice) and assuming they had a choice, an approach by Barclays would probably have been favoured by Lehman bankers in the US.
"There's a whole series of reasons why it would make sense for Barclays to buy Lehman," says Ladenburg Thalmann analyst Dick Bove. "Barclays doesn't have a major position in the US capital markets. It doesn't have a huge investment banking department, and it doesn't have the same scope in its fixed income trading operations."