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Commods seen important to Lehman despite troubles
NEW YORK (Reuters) - Commodities staff at Lehman Brothers may not see the heavy job losses coming to other units at the financially troubled No. 4 U.S. investment bank, industry sources said on Wednesday.
"We've been in touch with the people at Lehman over the last few months and what we find is that the commodities section remains important to the bank," said a headhunter in New York, speaking on conditions of anonymity.
"I think what we're seeing now are wider bank-related issues, which have little to do with the viability of Lehman's commodity operations. So, I'll be surprised if they slash-and-burn there," he said.
He added that as recently as September 1, Lehman had advertised online for a "Commodities Product Controller" for its oil trading desk, to be based in London.
A Lehman executive declined comment on the future of the bank's commodity operations after the company on Wednesday reported a record loss of about $4 billion in the third quarter. Its shares fell to a 52-week low.
Lehman said it planned to sell part of its asset management unit and divest its commercial real estate holdings.
Worried employees told Reuters they were looking for jobs. Lehman has slashed its head count by 1,500 since the end of May, ending August with 25,935 employees.
"I don't think anyone in Lehman is too confident about his job right now. But certainly no one on the commodities side there has been worried about a specific downsizing, other than probably the hold-on in hiring that may come," said one recruiter who has been in touch with the bank.
Strong staff loyalty has helped Lehman in the past.
"Lehman has been a nemesis for people like us in the recruiting world. Every time we have pulled somebody out of Lehman, that guy has got countered to stay," said Vickram Tandon, director of commodities hiring at Options Group in New York.
But any further financial turmoil could cut into the bank's commodities headcount.
"From what we have heard on the market, there's going to be an even bigger wave (of lay-offs) coming toward the end of the year or early next year" at Lehman, Tandon said.
Lehman does not release separate results for commodity trading, but a study of its latest quarterly statement showed the bank assuming a higher Value-at-Risk for commodities from the previous quarter.
Lehman's VaR averaged $15 million for the three months ended August, versus $12 million for the quarter to May. Analysts said this reflected confidence in the business.
Human Capital, a U.K.-based consultancy with clients across Europe, North America, Asia and the Middle East, said most investment banks hunted aggressively for commodity specialists as raw materials rallied in the second quarter.
But there were exceptions, such as UBS, which lost some senior talent in commodities to rivals after a $37 billion write-down due to the U.S. mortgage crisis.
