Entries Tagged 'Lehman Brothers' ↓

Administrators of Lehman Brothers’ European business have asked for the return of more than $8 billion that was transferred to the failed investment bank’s U.S. company before its bankruptcy.

The request, made in a letter sent by PricewaterhouseCoopers on Wednesday, is likely to be well received by Lehman’s 4,500 staff in London, many of whom have been angry that the bank’s U.K. operations had no cash when their parent company failed last Sunday night.

The fact that $8 billion had been transferred to New York in the days leading to Lehman’s collapse is not considered suspicious at this poing, although the auditors claim that they are not ruling anything out.

The written request may be followed up with legal action to reclaim the funds.  It is too early to establish whether the money that was transferred from London to New York could even be claimed back at this point.

The funds were not necessarily sent to New York as a single sum, but more likely as an accumulation of funds over the bank’s last several days of solvency.

Shares of Wall Street firms Morgan Stanley and Goldman Sachs took a severe beating on Wednesday despite both companies releasing better-than-expected quarterly results just a day earlier.

The last-minute $85 billion rescue of AIG by the Federal Reserve did little to calm investors’ fears, and U.S. stocks have dropped as much as 3.5%.

Goldman Sachs [[GS]] shares plunged 22% Tuesday afternoon, and Morgan Stanley [[MS]] shares dropped to their lowest level in ten years, crashing 37%.

The selloff in the two investment banks continued Wednesday as fears about the U.S. financial services sector engulfed financial markets worldwide.

In a bid to offer clarity about the firm’s health, Morgan Stanley delivered its quarterly results late Wednesday - a day earlier than expected - that move did little to put investors at ease.

UK lender Barclays has released a statement that said it is considering whether to hire employees from Lehman Brothers’ European operations, in the wake of its agreement to acquire the failed investment bank’s U.S. broker/dealer business.

Barclays Capital, the lender’s investment banking arm, has cited the equities and equity capital markets businesses as probable target areas.  Bank management is looking to capitalize on an opportunity to bring new talent on board from the U.K. and Europe.

The statements from Barclays will give hope to many of the 4,000+ who were employed by Lehman’s London offices.