Barclays may acquire more of Lehman

LONDON - September 17, 2008 "Options, not obligations," Group Chief Executive John Varley said of the possibility of salvaging more of Lehman Brothers businesses.

Barclays PLC, the third-largest British bank, took advantage of Lehman Brothers Holdings Inc.'s bankruptcy reorganization to reach a deal on Tuesday for Lehman's North American investment banking and trading operations for just $250 million.

Barclays also picked up Lehman's New York headquarters and two data centers in New Jersey for $1.5 billion, all subject to court and regulatory approval.

Barclays President Robert D. Diamond Jr. said in a conference call with analysts that Barclays' interest was primarily in the U.S. cash equities business, as part of the company's goal to boost its earnings from North America.

"It's an absolute machine, it's extremely profitable," Diamond said.

"We wouldn't want to miss the opportunity to add some of the talent from the U.K. and Europe to the team," Diamond added.

"It would most typically be where Lehman has a strong position and BarCap (Barclays Capital) a weak position."

The two executives also indicated a possible interest in some assets in Asia.

In a statement earlier Wednesday to the London Stock Exchange, Barclays confirmed the deal and said that some of its shareholders had expressed interest in subscribing to at least $1 billion of additional equity to support the acquisition and beef up Barclays capital base.

"The proposed acquisition of Lehman Brothers North American investment banking and capital market operations accelerates the execution of our strategy of diversification by geography and business in pursuit of profitable growth on behalf of our shareholders, in particular increasing the percentage of Barclays earnings sourced in North America," Varley was quoted in the statement as saying.

"This transaction delivers the strategic benefits of a combination with Lehman Brothers core franchise, whilst meeting Barclays strict financial criteria, and strengthening our capital ratios," he said.

Barclays shares rose 13.6 percent in midday trading on the London Stock Exchange to 349.75 pence ($6.26).

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