Lehman Brothers

Lehman Brothers was once one of the largest investment banks in America. Its collapse in 2008 was seen by many as the apex of the financial crisis that remade the banking system in America. Its constituent parts in the United State have been sold off to the British bank Barclays and its European and Asian operations have been sold off to the Japanese bank Nomura. The successor parts of Lehman form substantial parts of both bank’s investment banking offerings.

Lehman Brothers Holdings Inc was a global financial services firm which was involved in investment banking, broking in debt and equity, trading on its own account, research, private equity, investment management and private banking. Companies it controlled included Neuberger Bergman Inc, SIB Mortgage Corporation, Aurora Loan Services, Crossroads Group and Eagle Energy Partners.

Lehman Brothers was always focused on investment banking, although for a time it did have a split focus when it was owned by American Express who wished to convert their affluent users into customers of a retail brokerage. In 1994 Lehman Brothers once again became an independent investment bank as American Express sold its shares in an Initial Public Offering.

The successors of Lehman Brothers are Barclays Capital and Nomura. Barclays Capital is the London based investment banking arm of Barclays Bank. Barclays Bank has been a large British bank operating since the seventeenth century. Despite having an international presence it had never had much success in establishing itself in the United States, apart from some limited success with its Barclaycard brand. In the 1990s it sold Barclays Bank of California to Wells Fargo due to the losses it was making. Barclays had in fact been on the verge of buying all of Lehman’s Brothers operations before Lehman announced that they were going to file for bankruptcy. However they backed out at the last minute and they later picked up the North American operations of Lehman, an area where Barclays was considered weak. Barclays Capital took over the operations and the building of Lehman Brothers and is now a major investment banking presence in New York, matching its position in London and pushing it up from the second tier that it was in before the crisis.

Nomura Securities, which have bought Lehman Brother’s operations outside North America, are Japan’s oldest and largest securities brokerage. They have long had an overseas presence, although nothing that matches their enormous presence in the Japanese retail brokerage market. It also owns Nomura Bank, a Japanese retail bank through which it makes most of its profits. Although their roots are in Japan they have recently moved their international headquarters from Tokyo to London to expand their focus from Japanese to global markets. Part of this expansion has been to buy the Lehman Brothers operations outside North America, including their important London headquarters.

The Lehman crisis was the time when Lehman Brothers filed for bankruptcy in September 2008. Although the crisis had started before that with the virtual closure of the credit markets in June 2007 and the subsequent collapse of Bear Stearns, the crisis had not really hit the public consciousness until the collapse of Lehman Brothers. The collapse of Lehman Brothers was brought on by the refusal of the US Treasury to subsidize a buyout of Lehman’s by Barclays. Lehman’s had been very exposed to the subprime mortgage problems and was unable to continue trading.