Sorry!! The article you are trying to read is not available now.
Thank you very much;
you're only a step away from
downloading your reports.

At Barclays, It's All About Lehman


Barclays loves the name that so many still hate on Wall Street: Lehman.

The banking crisis is over, at least across the pond.

That's the sentiment after Barclays (BCS) and HSBC (HBC) posted strong earnings for the first half of the year this morning. Shares of both banks are surging and analysts practically tripping over themselves with glee, telling Bloomberg that "the market thinks the worst is over."

Just how strong were the reports? HSBC's net profit fell by more than half during the first six months of the year, to $3.3 billion from $7.7 billion last year. At Barclays, profit jumped by 9 percent but its impairments on bad debts surged by 63 percent during the period, more than what analysts had predicted.

But don't let that ruin the fun.

The excitement over Barclays' results stems mainly from its surge in investment banking and trading. Like JP Morgan (JPM) and Goldman Sachs (GS) did in recent in recent months, Barclays benefited from the thawing of the credit markets.

But the real gem in Barclays message is the very same name that continues to incite anger and resentment more than a year after its downfall: Lehman Brothers.

Barclays quickly snapped up some of the U.S. assets of the failed bank for a song last September in a move that looks better and better for the British bank with each passing quarter.

Barclays president Bob Diamond again called the Lehman acquisition a strong and strategic move. "It's an outstanding franchise," he said today. "It gives us incredible scale and depth in the U.S. with clients."

After Lehman filed for Chapter 11 bankruptcy last September, Barclays bought the bank's North American banking and brokerage operations for just $250 million, plus liabilities. At the time, some analysts questioned the deal for Barclays, which had been focused on broadening its retail business.

But now banking is on top at Barclays while the retail business falters. According to Bloomberg, the Lehman acquisition catapulted Barclay to become the sixth-largest global mergers and acquisitions advisor in 2008, up from number 67 in 2007. Earnings at Barclays Capital, which absorbed most of the Lehman assets, nearly doubled during the first half of this year. Diamond said today the firm expects to hire 1,000 new people in banking by the end of this year.

All that success is not lost on Lehman creditors, who are still battling it out over who gets what of the little bit that's left from the biggest bankruptcy in history. Lawyers for Lehman are seeking information into how Barclays valued Lehman's liabilities at the time of the deal, which was approved swiftly by the bankruptcy judge at the time.
< Previous
  • 1
Next >
No positions in stocks mentioned.
The information on this website solely reflects the analysis of or opinion about the performance of securities and financial markets by the writers whose articles appear on the site. The views expressed by the writers are not necessarily the views of Minyanville Media, Inc. or members of its management. Nothing contained on the website is intended to constitute a recommendation or advice addressed to an individual investor or category of investors to purchase, sell or hold any security, or to take any action with respect to the prospective movement of the securities markets or to solicit the purchase or sale of any security. Any investment decisions must be made by the reader either individually or in consultation with his or her investment professional. Minyanville writers and staff may trade or hold positions in securities that are discussed in articles appearing on the website. Writers of articles are required to disclose whether they have a position in any stock or fund discussed in an article, but are not permitted to disclose the size or direction of the position. Nothing on this website is intended to solicit business of any kind for a writer's business or fund. Minyanville management and staff as well as contributing writers will not respond to emails or other communications requesting investment advice.

Copyright 2011 Minyanville Media, Inc. All Rights Reserved.
Featured Videos