Barclays PLC, the U.K.'s third-biggest bank, may buy parts of Lehman Brothers Holdings Inc.'s European investment bank after agreeing to acquire the bankrupt securities firm's North American business for $1.75 billion.
Barclays plans to purchase Lehman's investment banking, fixed-income and equities sales, trading and research divisions in North America, which employ about 10,000 people, plus the company's headquarters in New York and two data centers.
The London-based bank also is in talks to take over parts of Lehman's equities business in Europe and may hire some of its employees in Asia, Barclays President Robert Diamond said Wednesday.
Lehman, which survived railroad bankruptcies of the 1800s, the Great Depression in the 1930s and the collapse of hedge fund Long-Term Capital Management a decade ago, filed for bankruptcy protection Sept. 15 after record losses in the mortgage market.
Diamond, who abandoned talks to buy all of Lehman less than 24 hours before it collapsed, said less than 5 percent of the assets Barclays is buying are mortgage-related.
“Diamond has struck an interesting deal, but to make this work he will have to be flexible with Barclays's balance sheet,” said Julian Chillingworth, chief investment officer at Rathbone Brothers Plc, which owns Barclays shares.
Barclays rose 3.2 percent in London trading, valuing the company at $47 billion. The shares outperformed the 69-member Bloomberg Banks and Financial Services Index, which fell 6.9 percent.
Nomura Holdings Inc., Japan's biggest securities firm, is also interested in parts of the European unit, a person familiar with the situation said. Nomura officials declined to comment.
Lehman is selling off pieces that weren't included in the holding company's bankruptcy filing.
Barclays will pay $250 million in cash for Lehman's North American operations and $1.5 billion for the real estate, the company said in Wednesday's statement. The bank plans to raise at least 600 million pounds in a stock sale to help fund the deal and has opportunities to buy other Lehman pieces, Varley said.
Lehman Chief Executive Officer Richard Fuld said in a statement that the deal with Barclays “is a wonderful outcome for a great number of our employees.” Lehman employed about 25,000 people before it unraveled.
Diamond, 57, said last month that he wants Barclays to take market share from Wall Street firms weakened by the credit crunch and break into the “top tier” of U.S. securities firms. The North American unit will add to Barclays profit as early as next year, CEO John Varley, 52, told analysts.
Diamond was in New York last weekend as Lehman met with Wall Street executives to discuss a rescue plan.
Lehman needed a bailout after Korea Development Bank pulled out of a plan to provide new capital and Lehman shares lost most of their value.