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Lehman nightmare for Bank of America’s fixed income bankers (Update 2)

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.”

Comments (13)

  1. Why can’t everyone leave Lehman alone? Those guys in a bad state and all I see anywhere is mockery and humiliation at the hands of the braying crowd. See how you’d cope if 80% of your net worth had disappeared through what is fundamentally an act of God.

  2. Leave them alone? Like this isn’t big news, you numpty. And it’s not an act of god, an act of reckless stupidity maybe.

  3. Get down on your knees for the boys from Lehman.

  4. Working for Lehman myself (and I love this company) I can’t thinking that senior mgt will own us an apology. Won’t change much but would like to hear them said “look guys we screwed up big time”. Beginning 2007 CFO of Goldman brought the balance sheet to the board and said “I don’t like it we are overexposed” and they bought it. Went from long to short.
    Lehman one the senior manager (Mr Gelbrant) did the same with the Chief of Risk. Both got fired.
    Truman said once “the buck stops here”. Mr CEO I guess you should meditate it. You might be bleeding green but we are the one left on the pavement and that lost everything.
    Will you give your 2007 bonus back ?

  5. Angus, what are you talking about? Investment banking is a ultra-competitive, dog-eat-dog world, and nothing makes me happier than seeing rivals failing, particularly people my age from my university getting laid off – my comparative standing is furthered as my career carries on through a rapid uphill track whilst theirs stalls and given the current market they may now have to settle for 2nd-tier inferiority. I really hope Lehman collapses in the next 24hrs, and Merrill Lynch (which lost 40% of its value this week alone) is next to follow suit.

  6. Henry, people like you are bought and sold for dimes everyday on the pavement mate….and i’m sure u know that already

    Laughing at Henry Reply
  7. Henry, you need to take your medicine for those hemorrhoids of yours… it’s amazing to see someone’s head so far up their own a..

  8. I find these nasty cutting comments concerning Lehman, Merrills and any other major Financial institutions distateful. There for the Grace of God go all seasoned bankers who have dedicated their careeers to “blue chip” houses. In these difficult times we should be supportive, not sticking knives in backs of our industry colleagues.

  9. Henry, what goes around comes around…

  10. eFinancial does not sleep on the job, now does it? A whole new meaning for the “British weekend”…
    I just wonder where the uncatered investors will go after all these closures, and , if they still want to invest, who will serve them.

  11. Henry, go back to school….

  12. For once the market priced the risk right.

    that 100-150% bonus is the risk premium these bankers were paid to compensate for the lack of job seurity working for these US Investment Banks.

    I have no sympathy.

    Glad I got out of IB Reply
  13. Henry do you need to hotlines for metal hospital treatments?

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