Lehman saga still being unraveled in London

One year ago cameras caught shocked Lehman Brothers' employees leaving the building with boxes.
One year after the collapse of banking stalwart Lehman Brothers, the administrator of its European business says the full impact on creditors may not be known until 2010.

Tony Lomas, a partner for PricewaterhouseCoopers, has been sorting through the financial remains of the banking giant’s European division since last September, when it became clear the bank would file for bankruptcy. He says administrators are still some months from finalizing the total amount owed to Lehman’s creditors. “That will come at some point, maybe in the course of calendar 2010,” Lomas said. “But up until that point we won’t know the quantum of claims are. We have very complex trading relationships with a very large proportion of our counterparties. And we’ve got six thousand or so live counterparties out there.” Watch the full interview with Tony Lomas Within a week of Lehman’s collapse, Lomas sold Lehman’s equity trading business to Nomura. The deal saw about half of Lehman’s 5,000 employees in Europe move over to the Japanese investment bank. The agreement didn’t include Lehman’s trading positions, the infrastructure, the intellectual property, or the building. “One of the big reasons why we retained the infrastructure here was because we knew we were going to be dependent on it for many years to come because of the complexity of what we were unraveling,” Lomas said.

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Some 400 to 500 Lehman’s staff still work in the London office for its administrators, poring through trading records and unwinding complex financial positions. “We expect a significant number of those people to be with us for a reasonably significant time to work through all this,” Lomas said. Among those who lost their jobs from Lehman Brothers, some such as former employee Caroline White, have turned their backs on the financial sector. White has since forged a new career in fashion and plans to unveil her first piece on Tuesday night. The former banker hasn’t put her last career completely behind her. Her collection includes a laptop bag with the Lehman’s logo. “I themed it with a Lehman’s theme because I think its quite appropriate. I wanted to show where I have come from, and where I am going,” the designer said. The future is less clear for the London-based administrators who say their job will not be done for several years. “This could well take more than 10 years to resolve, all the issues,” Lomas said. “By that time, it will outdate me.” He is confident creditors will receive some of their money. In the past year the administrators have recouped $9 billion dollars in cash, most of which has been invested in government-backed securities. “Our priority is to keep it safe and make sure we don’t lose it,” Lomas said. One year on, he said the job hasn’t become any easier.

“Reflecting back on the astonishment if you like of being appointed administrator here in the UK and contemplating what lay ahead of us, I don’t think I underestimated or understated the complexity of the task. It has proved to be every bit of that.” “There remains a very significant amount of complex still work to do,” he added.