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http://www.thisislondon.co.uk/standard/article-23555604-details/5%2C000+City+jobs+axed+as+US+banks+crash/article.do
Evening Standard, standard.co.uk
London, Monday 15.09.08
Evening Standard
Four thousand City workers and 1,000 more in High Wycombe lost their jobs today after the collapse of US investment bank Lehman Brothers.
At a crisis meeting at the bank's European HQ in Canary Wharf, staff were told they would all be made redundant. Lehman, the fourth biggest investment bank on Wall Street, filed for bankruptcy just before 6am London time.
As they gathered outside the Canary Wharf offices, staff were seen consoling one another. One banker said: "We've been told it's all over. We're finishing our existing business and that is it. It will be about a week. We are bankrupt."
The banker said it would not just be investment banking employees but other departments would also face the axe.
Within minutes of the Lehman bankruptcy, an even more illustrious Wall Street institution, Merrill Lynch, agreed to be taken over by the Bank of America for $50 billion to save it from becoming the next to fall. Both banks have lost billions on investments in the US mortgage market. Shares in London plunged.
American commentators are calling it the worst financial crisis on Wall Street since the 1929 crash which helped usher in the Great Depression. Another huge American financial institution, American International Group, the world's largest insurer, is planning a huge restructuring of its business. AIG is the main sponsor of Manchester United.
Bankers at Lehmans in Canary Wharf were called to a crisis meeting at 8.30 with director William Vereker. One said: "We have been told we are losing our jobs. It will be announced officially later I believe. There is a lot going on in my head at the moment."
Asian stock markets have already taken a pounding overnight and the FTSE-100 opened down 157.7 points at 5259. UK banks were worst hit by the opening losses, with Britain's biggest mortgage lender, HBOS, down more than 10 per cent. Royal Bank of Scotland fell more than 12 per cent, while Barclays - which had been one of the front-runners to rescue Lehman Brothers - was down six per cent.
Liberal Democrat Treasury spokesman Vince Cable warned today of further American intervention in the markets. Speaking on Radio 4's Today prog ramme, Mr Cable said Merrill and Lehman "hold the security to trillions of dollars worth of derivatives, swaps, futures, options".
He added: "If this pack of cards collapses, then the whole of the international financial system goes down with it so they are not going to be allowed to let it go bust. There will be an intervention."
Only a week ago America's two biggest mortgage companies, Fannie Mae and Freddie Mac, had to be rescued.
The Bank of England moved to reassure the markets in London today that it would intervene if necessary to help maintain stability.
In New York, Lehman Brothers staff have already been seen emerging from their offices, which have been cordoned off by police, clutching boxes filled with belongings from their desks.
The 158-year-old bank had been struggling to save itself for weeks and only five days ago launched a rescue package that it hoped would save it from collapse. By Friday, after a week of panic selling of Lehman shares it was clear that the package had failed.
The US Federal Reserve called in the heads of Wall Street's biggest banks to organise a rescue similar to the JP Morgan takeover of Bear Stearns in March. However, no bank was prepared to accept the risk of taking over Lehmans, which has total debts of $613 billion.
The last two potential buyers, Barclays and Bank of America, walked away last night leaving Lehman chairman Richard Fuld no option but to seek protection for the bank from its creditors under America's so called Chapter 11 bankruptcy laws.
Lehman said in a statement: "The board of directors of Lehman Brothers Holdings International authorised the filing of the Chapter 11 petition in order to protect its assets and maximise value." But while Wall Street was still reeling from that news, Merrill Lynch, which has already lost more than $40billion on writedown and losses in the US mortgage market, said it would be sold for $29 a share to Bank of America in a $50 billion deal.
Although it was no secret that Merrill had been badly mauled by the credit crunch, the speed of its demise came as a shock. The sale was seen as a desperate attempt to stop the financial crisis sparked by the credit crunch spiralling out of control and tipping the world economy into a deep recession.
Peter Goldman, portfolio manager at Front Barnett Associates in Chicago, said: "What they are doing is shoring up the next domino. They're putting Merrill in as safe hands as possible to halt the downward spiral."
Analysts said the deal was probably the best that Merrill could hope for. Michael Karp, chief executive at executive search and consulting firm Options Group in New York, said: "Merrill is very strong internationally and Bank of America is not, so when you add it all up it's a pretty good marriage." Merrill Lynch, founded in 1914, has long been known for its independent spirit on Wall Street, with its 16,000 brokers nicknamed the "Thundering Herd". It has also been nicknamed "Mother Merrill" because young traders are often nurtured and promoted through the ranks rather than going outside the company. Headhunters and consultants said the US financial services sector, already suffering from a glut of unemployed talent after shedding more than 100,000 jobs this year, must now brace for up to 50,000 more. There were warnings that the era of huge bonuses in the City is over. Mr Karp said:. "This is seriously going to impact all over the world."
Evening Standard, standard.co.uk
London, Monday 15.09.08
Evening Standard
Four thousand City workers and 1,000 more in High Wycombe lost their jobs today after the collapse of US investment bank Lehman Brothers.
At a crisis meeting at the bank's European HQ in Canary Wharf, staff were told they would all be made redundant. Lehman, the fourth biggest investment bank on Wall Street, filed for bankruptcy just before 6am London time.
As they gathered outside the Canary Wharf offices, staff were seen consoling one another. One banker said: "We've been told it's all over. We're finishing our existing business and that is it. It will be about a week. We are bankrupt."
The banker said it would not just be investment banking employees but other departments would also face the axe.
Within minutes of the Lehman bankruptcy, an even more illustrious Wall Street institution, Merrill Lynch, agreed to be taken over by the Bank of America for $50 billion to save it from becoming the next to fall. Both banks have lost billions on investments in the US mortgage market. Shares in London plunged.
American commentators are calling it the worst financial crisis on Wall Street since the 1929 crash which helped usher in the Great Depression. Another huge American financial institution, American International Group, the world's largest insurer, is planning a huge restructuring of its business. AIG is the main sponsor of Manchester United.
Bankers at Lehmans in Canary Wharf were called to a crisis meeting at 8.30 with director William Vereker. One said: "We have been told we are losing our jobs. It will be announced officially later I believe. There is a lot going on in my head at the moment."
Asian stock markets have already taken a pounding overnight and the FTSE-100 opened down 157.7 points at 5259. UK banks were worst hit by the opening losses, with Britain's biggest mortgage lender, HBOS, down more than 10 per cent. Royal Bank of Scotland fell more than 12 per cent, while Barclays - which had been one of the front-runners to rescue Lehman Brothers - was down six per cent.
Liberal Democrat Treasury spokesman Vince Cable warned today of further American intervention in the markets. Speaking on Radio 4's Today prog ramme, Mr Cable said Merrill and Lehman "hold the security to trillions of dollars worth of derivatives, swaps, futures, options".
He added: "If this pack of cards collapses, then the whole of the international financial system goes down with it so they are not going to be allowed to let it go bust. There will be an intervention."
Only a week ago America's two biggest mortgage companies, Fannie Mae and Freddie Mac, had to be rescued.
The Bank of England moved to reassure the markets in London today that it would intervene if necessary to help maintain stability.
In New York, Lehman Brothers staff have already been seen emerging from their offices, which have been cordoned off by police, clutching boxes filled with belongings from their desks.
The 158-year-old bank had been struggling to save itself for weeks and only five days ago launched a rescue package that it hoped would save it from collapse. By Friday, after a week of panic selling of Lehman shares it was clear that the package had failed.
The US Federal Reserve called in the heads of Wall Street's biggest banks to organise a rescue similar to the JP Morgan takeover of Bear Stearns in March. However, no bank was prepared to accept the risk of taking over Lehmans, which has total debts of $613 billion.
The last two potential buyers, Barclays and Bank of America, walked away last night leaving Lehman chairman Richard Fuld no option but to seek protection for the bank from its creditors under America's so called Chapter 11 bankruptcy laws.
Lehman said in a statement: "The board of directors of Lehman Brothers Holdings International authorised the filing of the Chapter 11 petition in order to protect its assets and maximise value." But while Wall Street was still reeling from that news, Merrill Lynch, which has already lost more than $40billion on writedown and losses in the US mortgage market, said it would be sold for $29 a share to Bank of America in a $50 billion deal.
Although it was no secret that Merrill had been badly mauled by the credit crunch, the speed of its demise came as a shock. The sale was seen as a desperate attempt to stop the financial crisis sparked by the credit crunch spiralling out of control and tipping the world economy into a deep recession.
Peter Goldman, portfolio manager at Front Barnett Associates in Chicago, said: "What they are doing is shoring up the next domino. They're putting Merrill in as safe hands as possible to halt the downward spiral."
Analysts said the deal was probably the best that Merrill could hope for. Michael Karp, chief executive at executive search and consulting firm Options Group in New York, said: "Merrill is very strong internationally and Bank of America is not, so when you add it all up it's a pretty good marriage." Merrill Lynch, founded in 1914, has long been known for its independent spirit on Wall Street, with its 16,000 brokers nicknamed the "Thundering Herd". It has also been nicknamed "Mother Merrill" because young traders are often nurtured and promoted through the ranks rather than going outside the company. Headhunters and consultants said the US financial services sector, already suffering from a glut of unemployed talent after shedding more than 100,000 jobs this year, must now brace for up to 50,000 more. There were warnings that the era of huge bonuses in the City is over. Mr Karp said:. "This is seriously going to impact all over the world."
