³ÉÈËÂÛ̳

³ÉÈËÂÛ̳ BLOGS - Peston's Picks
« Previous | Main | Next »

Lehman: Barclays walks

Robert Peston | 18:11 UK time, Sunday, 14 September 2008

I have learned that Barclays has pulled out of negotiations to buy most of the troubled investment bank, Lehman Brothers.

It's decision, which was described by an executive close to the negotiations as "pretty definitive and unlikely to change", is a setback for attempts to rescue Lehman, which are being coordinated by the US Treasury and the New York Federal Reserve.

Barclays has walked away because it was unable to obtain guarantees - from either the Treasury/Fed or other commercial organisations involved in the rescue attempt - in relation to financial commitments faced by Lehman when markets open tomorow.

"It was impossible to find a solution to the problem of Lehman's immediate financial obligations in the time available," said the executive.

These obligations, on outstanding transactions by Lehman, run to billions of dollars and would be difficult to finance at the best of times, But in the light of the credit crunch and the parlous state of financial markets, Barclays feels it would be running a crazy risk if it took these on without any protect right now.


Comments

  • Comment number 1.

    It means that they weren't prepared (as in being ready) for selling Lehmans and were clearly relying on another approach to the problem. It was a reasonable question for a buyer to make.

    Of course, it could be a way to tell Barclays to go away whilst they concentrate on a homegrown solution to the problem.

  • Comment number 2.

    "I hae learned"?

  • Comment number 3.

    I have to wonder what exactly has Lehmans been up to. If they are up to their neck in CDSs so what?
    Presumably their customers knew what they were doing and also Lehmans would have done what any good bookie does and lay the bets off elsewhere.
    Or could it be that "The Industry" has decided there is one player too many?
    Dog eat dog.

  • Comment number 4.

    Not long to wait now until we find out what happens when a major investment bank goes 'belly up'.

    How many more dominoes will fall as a result of this and who will be the next one?

  • Comment number 5.

    This is real brinkmanship! Perhaps Lehman will still be rescued, but if it isn't then it's either going to create a blackhole that will suck other banks in and we'll be in a frightening situation come tomorrow evening or bank stocks will take a hammering and we'll lumber on for now.

    But any debate about who should pay and justice for taxpayers should be put on hold: the US has to bail out the banks. The governments across Europe have to bail out the banks! To do otherwise is to court an unacceptable risk in my view.

    There is a psychology out there now that didn't exist a year ago which is willing to accept how bad things are, and panic when things start to unravel. We don't know where that could lead and it is foolish to take any chances. It is my hope that the US changes its mind.

    I'm on the pessimistic side of what will happen, but nevertheless, I do go to bed worried tonight.

  • Comment number 6.

    It is back to the fair then.

  • Comment number 7.

    Good decision by Barclays - they have in the USA.

    Time to stick to your knitting

  • Comment number 8.

    A wise decision--why expose Barclay shareholders to the bad actors at Lehman Brothers?

    A famous US proverb: 'The opera ain't over 'til the Fat Lady sings!'

    I think I hear someone vocalizing off stage even now...

    Now is NOT the occasion for the Treasury to come riding to the rescue. Lehman must be allowed to fail, just like every other business in the marketplace.

  • Comment number 9.

    is the U.S. heading for another 'crash' again if jp morgan etc;wonthelp bail out Lehman bros;?

  • Comment number 10.

    Isn't this just all about the normal cycle for free rein economies? Fuelled by greed but who is immune from that. Let LEH go. Someone else will ascend.

  • Comment number 11.

    It's best that Barclays decided not to join the ranks of Wall Streets finest.

    Better to return to traditional banking methods of obtaining a return on capital than chasing the imagined returns of exotic financial instruments.

    Think Captain Mainwaring.

    Looking beyond the Lehman, Bear Sterns, Fannie Mae and Freddie Mac debacle. It is apparent that the years of free spending hedonism (on credit) are over and with it with over-liberal lifestyles.

    Society has passed from the age of the cavaliers to that of the puritans economically. The social changes have yet to follow.

    Lehmans is a relic of the age of profligacy, now passed.











  • Comment number 12.

    I have worried for years about the UK economy being based on so much easy credit. The bubble always bursts. Why the the surprise?

  • Comment number 13.

    Oh dear, tick tock.

  • Comment number 14.

    Barclays shouldn't have walked away...they should have ran. Have they learned nothing from the ABN Amro affair?

  • Comment number 15.

    I assume Lehmann Bros does not have depositors as in "Lloyds TSB or Nat West", so the losers will be mainly other banks who bought their "Paper",or Lehmanns own investment vehicles.No doubt the Market will be spooked tomorrow but it will pass and will ultimately recover.I don't know how long I will have to wait but I assume the Dividends will still roll in and maybe improve.

  • Comment number 16.

    Gold and Silver are now the two most precious financial portfolio items to have...watch the price of Gold go up this week.

  • Comment number 17.

    NEED TO KNOW- BASIS OF CRISIS

    At the end of the day all of the homes are still standing there, so who in fact owns them?
    Are all these billions of lost dollars just representing the overvalueing of the homes and thus increasing the costs of the mortgage to the extent that they could not be afforded?
    If so, it would seem that the lenders are victims of their own greed by not questioning the ability of people being able to afford their mortgages.
    Would this be a fair assessment of this crisis?

  • Comment number 18.

    17# A short answer: NO.

  • Comment number 19.

    HBOS/Lloyds merger agreed in the national interest?

    The whole point about the OFT and the Competition Commission is that they are there to safeguard the national interest. If they are
    to be sidelined, they may as well be closed down.

    These may be extraordinary times but once you by-pass the regulators once, you give carte blanche to the buccaneers.

    What is going to happen when someone else comes in tomorrow and offers a higher price than Lloyds? Will the OFT and CC still be bypassed?

    Or is this a sort of compensation for Lloyds over Northern Rock?


    Where is Richard Branson when you need him?


Ìý

³ÉÈËÂÛ̳ iD

³ÉÈËÂÛ̳ navigation

³ÉÈËÂÛ̳ © 2014 The ³ÉÈËÂÛ̳ is not responsible for the content of external sites. Read more.

This page is best viewed in an up-to-date web browser with style sheets (CSS) enabled. While you will be able to view the content of this page in your current browser, you will not be able to get the full visual experience. Please consider upgrading your browser software or enabling style sheets (CSS) if you are able to do so.