The administrator to the European business of bankrupt US investment bank Lehman Brothers, PriceWaterhouseCoopers, was last night locked in negotiations with two rival bidders over the sale of parts of the business.
The first bidder is understood to be Barclays Bank, which has already agreed to buy many of Lehman's US operations and now has its eye on the bank's European equities and investment banking businesses. Barclays is not interested in acquiring other parts of Lehman's European operation, but the two units employ some 3,000 of the 5,000 staff based at the US bank's Canary Wharf headquarters. The sale of a large part of Lehman's European business to Barclays would be convenient given the British bank has already picked up so much of its US operation, a deal that was formally cleared by the US courts on Saturday.
However, Barclays faces stiff opposition from Nomura, the Japanese securities business, which also has its eye on Lehman's London business.
Both Barclays and Nomura refused to comment last night on their involvement in the talks with PWC. However, it is understood that Nomura believes one factor in its favour is that it is interested in buying more of the Lehman Europe business than Barclays.
Dan Schwarzmann, one of four PWC partners heading up the administration of Lehman Europe, said he could not comment on the identities of the bidders close to a deal. "We have been working flat-out this weekend examining a number of offers, trying to assess the certainty they will bring," he said. "We are focusing on two particular buyers, drilling down into the financial detail and we hope to announce a deal... soon."
Some 300 PWC staff are involved in the process, which was expected to continue all night. Mr Schwarzmann said while he was confident of being able to unveil a buyer of much of the European business of Lehman within the next day or so, he could not give guidance on how many staff in London would keep their jobs. The shock revelation that Lehman had filed for Chapter 11 bankruptcy protection in the US last Monday prompted dramatic scenes at the investment bank's London office, with many staff clearing their desks amid fears they would not be paid in September.
Since then, however, many Lehman workers have returned to the office and PWC secured a £100m loan to ensure they were paid on Friday. Many of the staff are working with PWC administrators to unwind Lehman trading positions suspended immediately following the bankruptcy.
Mr Schwarzmann said his immediate priority was to consider those offers that concerned the largest parts of the European business. However, the administrators may at a later stage return to talks with bidders that have expressed interest in other units.
He also warned that the longer a deal took to conclude, the less likely it would become, because Lehman's best staff would find jobs elsewhere.