Barclays confirms interest in Lehman

Barclays PLC confirmed Tuesday that it is interested in acquiring some assets of Lehman Brothers, the investment bank that collapsed after Barclays dropped out of merger talks.

Barclays, the UK's third largest bank, had been engaged in negotiations about a possible takeover of Lehman Brothers but pulled out over the weekend.

Yesterday's deal could throw a lifeline to more than 9,000 Lehman Brothers employees whose future was uncertain after the 158-year-old investment bank filed for bankruptcy protection on Monday.

Lehman Brothers filed for protection under the bankruptcy laws in the United States after suffering from massive exposure to risky real estate holdings. Administrators have taken over the company's European operations.

"Barclays confirms that it is discussing with Lehman Brothers the possible acquisition of certain Lehman Brothers assets on terms that would be attractive to Barclays shareholders," the company said in a brief announcement to the London Stock Exchange.

The comment followed a report in the Wall Street Journal that Barclays was looking to take over Lehman Brothers' core businesses in the United States - share and bond underwriting, merger advice and securities trading.

The Financial Times said it was believed that Barclays was not interested in buying Neuberger Berman, Lehman's asset management business.

Alex Potter, banking analyst at Collins Stewart, said he believed Barclays might be interested in some of Lehman's European operations based in London, because there are potentially greater synergies.

If Barclays is contemplating getting back into the cash equities business, Potter said, it would be a change in the bank's current strategy, "although one that may be well timed."

"I imagine the acquisition cost could be extremely low at the moment," Potter said.

Barclays shares were down 3.5 per cent at 305 pence ($5.48) in late morning trading in London.