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Nomura, others vie for Lehman Asia operations

Deals

Nomura Holdings, Japan's largest brokerage, has put in bids to buy both the Asian and European operations of failed US investment bank Lehman Brothers, sources told Reuters.

Nomura executives visited Hong Kong over the weekend to propose buying Lehman's flagship stockbroking and investment banking divisions in Asia, according to the sources, who asked not to be identified as the information is not public.

“Nomura's proposals are the most competitive and put it in the leading position,” one financial industry source said.

Separately, officials from South Korean brokerage Samsung Securities were also in Hong Kong over the weekend to discuss investing in Lehman's Asian operations, a source close to the matter said.

Lehman, once the fourth-biggest US investment bank, last week filed the largest ever US bankruptcy case after collapsing from exposure to risky securities backed by subprime mortgages.

Barclays agreed last week to buy Lehman's core business in North American investment banking and capital markets businesses for $1.75 billion, and weekend media reports said the British bank might also bid for parts of Lehman's European equities and equity capital markets businesses.

The Financial Times reported on Monday that Standard Chartered and China's CITIC Securities Co Ltd were also interested in Lehman's Asian assets.

Lehman has around 3,000 employees in Asia in 10 offices, with roughly 1,300 in Tokyo and 800 in Hong Kong.

The Tokyo office has a large fixed income group, while Hong Kong mainly houses M&A, equity capital and debt capital bankers. In Singapore, Lehman employs 250, mostly focused on commodities and trading.

Lehman's net revenue from Asia-Pacific in January-June was $1.4 billion, nearly matching the whole of 2006 and accounting for roughly 20% of the bank's overall revenues.

Lehman ranks 2nd behind JPMorgan in year to date M&A rankings in Asia ex Japan, with 15 deals worth a total $32 billion, according to Thomson Reuters.

Japan's Mainichi newspaper said on Sunday that Nomura particularly wants Lehman's European M&A and stock trading divisions.

Shares in Nomura, regarded as a domestic powerhouse, rose 8.5% in Tokyo on Monday, and CITIC Securities jumped 10% in Shanghai. In Seoul, Samsung Securities was flat, underperforming a 0.4% gain on the broader index

PricewaterhouseCoopers is acting as administrator for Lehman's European business, and is expected to move quickly as delays would cause Lehman to lose customers and staff.

Lehman has hired investment bank Rothschild to advise it on the sale of its Asia operations, a person with direct knowledge of the sale process told Reuters on Friday.

The Financial Times said KPMG was also involved in the talks after being appointed as provisional liquidator to Lehman's Hong Kong operations.

On Sunday, more than 100 angry Hong Kong investors, many of them elderly retirees, marched on government offices, calling for action after losing money on structured products linked to Lehman.

The protesters accused the government of failing to provide proper oversight and said local banks did not do enough to warn them of the risks involved. Many had bought so-called “minibond” products, notes secured by swap obligations guaranteed by Lehman. (Reuters)

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