Barclays looks to improve scope with Lehman transaction, might acquire other Lehman assets

By Jennifer Lanning Drey

Portland, Ore., Sept. 17 - Barclays' proposal to acquire Lehman Brothers Holdings Inc.'s North American investment banking and capital markets operations was driven by the British bank's desire to expand its product and geographic scope, Robert D. Diamond Jr., Barclay's president, said during a conference call held Wednesday to discuss the transaction.

By product, Lehman would bring excellence in M&A, equity sales and trading and equity capital markets and capital trading, he said.

The combination would provide a unique opportunity to leverage fee-related businesses at time in the market when it is appropriate, Diamond said.

If combined, the firms would become top three players in leveraged finance and prime services, areas in which neither are currently considered to be in the top three, he said.

Geographically, Diamond said Lehman's depth and scale in the United States is exactly what the bank is looking to add to its positions in Europe, the Middle East, Africa and parts of Asia.

"The businesses are strikingly complimentary, and we are in a position where we can step up and do something substantial here, which I hope the [bankruptcy] court will conclude is very much in the interest of creditors because of the scale of what we are undertaking and offering," John Varley, Barclays Group chief executive, said during the call.

As previously reported, Barclays' $250 million offer for the assets is subject to approval from the U.S. Bankruptcy Court for the Southern District of New York.

"We have put up a proposal, which we hope the court will think of as attractive to the positions of interests of creditors," Varley said.

Other assets eyed

Also during the call, Varley said Barclays is considering picking up other Lehman assets in Europe and Asia but stressed that the possibility was merely an option.

"We now have the opportunity, and it's an opportunity that we're looking at quickly and seriously, to see what else might fit with the businesses that we're developing elsewhere around the world, but think of it as an option, not an obligation," he said.

The North American assets covered under the current sale agreement include trading assets with a current estimated value of $72 billion and trading liabilities with a current estimated value of $68 billion. It also includes supporting infrastructure and about 10,000 employees.

"The acquisition of the businesses that we've announced today is in line with our strategy of seeking higher growth through time by geographical diversification, and it meets our financial tests, including delivering a strengthening of our capital ratios," Varley said.

New York-based Lehman Brothers Holdings Inc. filed for bankruptcy on Sept. 15. Its Chapter 11 case number is 08-13555.

© 2015 Prospect News.
All content on this website is protected by copyright law in the U.S. and elsewhere. For the use of the person downloading only.
Redistribution and copying are prohibited by law without written permission in advance from Prospect News.
Redistribution or copying includes e-mailing, printing multiple copies or any other form of reproduction.