September 23, 2008 / 2:00 PM / 12 years ago

Nomura buys Lehman's Europe investment bank arm

LONDON (Reuters) - Japan’s Nomura Holdings Inc (8604.T) agreed to buy Lehman Brothers’ equities and investment banking business in Europe and the Middle East, in its second swoop on the bankrupt U.S. bank’s overseas assets in 24 hours.

Japan’s biggest investment bank said it expects to retain “a significant proportion” of the 2,500 staff employed in the businesses.

It did not say how much it would pay but Sadeq Sayeed, senior advisor to the bank and involved in the deal, said it was a “nominal” amount and that Nomura will not take on any trading assets or trading liabilities.

Lehman LEHMQ.PK filed for bankruptcy protection last week. Britain’s Barclays Plc (BARC.L) bought its core U.S. broker-dealer business and Nomura bought its Asia-Pacific arm on Monday. The deals are expected to save most jobs in each region.

Nomura was the frontrunner to buy the European arm after entering exclusive talks with Lehman’s administrators in Europe, PricewaterhouseCoopers (PwC), on Monday.

It adds to a run of big deals by major Japanese banks, who have been less hit by financial turmoil and asset writedowns in the past year than rivals, and are snapping up assets from or injecting capital at banks hit by the credit crunch. [nT150406]

Japan’s biggest bank, Mitsubishi UFJ Financial (8306.T), is planning to buy up to a fifth of Morgan Stanley for up to $8.5 billion. [nT150406]

PUNCHED BELOW WEIGHT

Nomura, the first Japanese securities company to establish an overseas office 81 years ago, said it had struck “two transformational deals” in less than 24 hours after failing with its organic expansion plan in the last two decades.

“In the last 20 years Nomura has not punched its weight in the international market,” Sayeed told reporters on a conference call. He said the bank had been looking at overseas acquisition opportunities “for quite some time” and moved quickly to snap up Lehman’s assets.

“The world of investment banking has changed dramatically in a short space of time because of mistakes made in the last five years. Nomura has not made many of these mistakes,” he said.

The bank said its immediate task is to get the Lehman businesses back operating under the Nomura name. Sayeed said he was confident it will retain the best talent.

Nomura and PwC declined to comment on talk among dealers that some Lehman bankers have been offered guaranteed bonuses, possibly based on last year’s bonus, with 75 percent paid in January and the rest if they stay until next August.

Most of Lehman’s European business is based in London, where Nomura has its European headquarters and 1,500 staff. Before this week’s deals, it had 18,000 staff in 30 countries.

PwC said the deal included investment banking and equities in Britain, the Netherlands, Spain, Italy, Germany, Sweden, Qatar, Dubai and Kuwait.

Barclays had also bid for some of Lehman’s Asian and European assets, but it didn’t want all of the businesses, people familiar with the matter said.

A deal for Lehman’s investment management unit, including the crown jewel, Neuberger Berman, is inching closer. Private equity firms Bain Capital and Hellman & Friedman have teamed up to bid for the assets, people familiar with the matter said.

Additional reporting by Tom Bergin in London and Megan Davies in New York; Editing by Jason Neely and Andy Bruce

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