Barclays held out hope yesterday of a reprieve for the devastated UK staff of Lehman Brothers when the British bank said that it was in talks with teams from key divisions of the defunct investment bank.

Barclays snapped up Lehman Brothers’ North American investment banking and capital markets businesses for $1.75 billion (£965 million) in the early hours of yesterday morning.

The deal, which will make Barclays the third-biggest investment bank in the United States, was hailed by analysts, who described the price as amazingly good.

Ten thousand American workers will transfer to Barclays in the US. About 5,000 people lost their jobs In the UK when the investment bank went into administration on Monday.

John Varley, chief executive of Barclays, said yesterday that he was looking “quickly and seriously to see what else might fit in with the businesses we are developing around the world”.

Although Barclays is not thought to be interested in buying large chunks of Lehman’s European and Asian businesses, it is eyeing entire teams of staff in divisions such as cash equities.

Bob Diamond, president of Barclays, said: “Within the US business, cash equities is an absolute machine, very profitable. We wouldn’t want to miss the opportunity to add talent from the UK and Europe to that team.”

Barclays is strong in commodities, foreign exchange, interest rates and investment-grade debt, while Lehman had a stronger presence in mergers and acquisitions, equities sales and trading and capital markets.

Mr Diamond said that any other teams picked up would “typically be where Lehman has a strong position and Barclays has a weak one”. He said that there would be a small amount of overlap between the two banks. “I don’t want to be disingenuous. We’ve got a three-month integration plan. All the people have to be adult about this because we want to get on with this quickly.”

Barclays will spend $250 million on Lehman’s US trading assets, worth $72 billion, and its $68 billion trading liabilities. It will pay a further $800 million for Lehman’s New York headquarters and two buildings in New Jersey.

Mr Diamond revealed that Barclays had spent 72 hours doing due diligence on Lehman and found that only 5 per cent of the $72 billion assets were backed by mortgages. These risky assets had already been written down once and Barclays marked them to market a second time before announcing the deal, he said.

As a result, the $4 billion gap between the assets and liabilities acquired in the deal was more likely to go up than down, Mr Varley said: “We expect to preserve that buffer.”

Barclays has been criticised for not marking down its assets as viciously as other banks, but Mr Diamond said that the process of going through Lehman’s books had made Barclays more comfortable about its own writedown methods. “If anything, it confirmed our marks,” he said.

The acquisition will boost Barclays’ earnings in its first year. It immediately added between 30 and 40 basis points to the bank’s vital Tier 1 capital ratio, which Barclays plumped up with a recent £4.5 billion rights issue.

Despite not needing extra capital, the bank said that it would raise a further £600 million from “certain Barclays shareholders”. It did not give any details on the capital-raising, which is likely to be supported by one or more of the bank’s new foreign investors: the Qatar Investment Authority, Qatar’s Prime Minister and his family and Sumitomo Mitsui Banking Corporation, the Japanese financial group.

British fund managers said that they had not been asked by Barclays to participate in the capital-raising. Unless it is structured so that they can claw back new stock from the foreign investors, shareholders face a modest dilution of their holdings.

The Lehman deal did not meet with universal approval. One institutional investor expressed grave reservations about the wisdom of the deal. “This is just fantasy, isn’t it? How exactly is the creation of a ‘premier, bulge-bracket institution’, to quote their words, going to achieve a high price/earnings ratio in view of what’s been happening in the investment banking sector?” the investor said.

Although the shareholder considered the price relatively modest, he worried that Barclays was taking on a huge book of extra assets and liabilities. It would take only relatively small adverse movements in these two numbers for the deal to turn sour, he said. “They might have been better off picking over the bones of HBOS,” the shareholder added.

But another top ten investor was sanguine: “It’s pretty ballsy. They believe in themselves and it looks like they’ve got a good deal. We’ll just have to live with the dilution.”

Moody’s put Barclays’ bank debt and deposit ratings under review, along with its financial strength rating. It also put some of the bank’s subsidiaries ratings under review, saying that they might be cut. It said that it would use its review to try to establish how Barclays would improve its revenues in the wake of the deal.

The deal must be approved by the US Bankruptcy Court for the Southern District of New York. If approval does not come by September 24, the deal could lapse.

Number crunching

10,000 the number of American workers who will transfer to Barclays in the United States

$250m the amount Barclays will spend on Lehman’s US trading assets

$800m the price it will pay for Lehman’s New York headquarters and two buildings in New Jersey

72 the number of hours’ due diligence Barclays carried out on Lehman

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