ID :
19614
Mon, 09/15/2008 - 20:21
Auther :
Shortlink :
https://oananews.org//node/19614
The shortlink copeid
Lehman bankruptcy impacts 130 local jobs
The collapse of Wall Street investment bank Lehman Brothers Holdings Ltd could affect 130 jobs at its Australian arm but National Australia Bank Ltd and Macquarie Bank Ltd say their exposure to the Wall Street giant is negligible. The 158-year-old Lehman Brothers announced on Monday it intended to file for bankruptcy after emergency talks in New York over the weekend failed.
At the same time as Lehman Brothers was hoisting up the white flag, Merrill Lynch was sold to Bank of America for $US50 billion ($A61.19 billion). The sale will create the world's largest financial services institution. Earlier Monday, a consortium of 10 US and European banks moved to create a $US70 billion borrowing facility to shore up liquidity, reduce counter-party risks, and facilitate an orderly resolution of over-the-counter derivatives exposures between Lehman Brothers and its counter-parties.
Lehman Brothers's announcement, released before trading closed in Australia, said it intended to file for bankruptcy "in order to protect its assets and maximise value". The firm's collapse came after emergency weekend talks in New York failed to secure a buyer when British bank Barclays walked away from talks because of concerns it would have to guarantee Lehman Brother's trading commitments.
Lehman Brother's Australian operation is included in the filing and around 130 jobs could be effected, a spokeswoman for Lehman Brothers Australia told AAP.
Lehman Brothers Australia would talk to its parent in New York about the next steps for the local arm and would know more about its short-term operations in the coming days, she said. Lehman Brother's Sydney and Melbourne employees were calling clients Monday afternoon about the intention to file for bankruptcy, while their boss Jim Ballentine remained in Australia and in talks with the New York head office.
Earlier Monday, Lehman Brothers Australia had its status as an Australian Securities Exchange (ASX) market participant suspended for one month, effective immediately, after third-party clearers terminated their services with the firm. Lehman Brothers Australia was formerly known as Grange Securities Ltd. Locally, a spokeswoman for National Australia Bank told AAP it had "a negligible exposure to Lehman". "We have no counter-party risk," she.
The spokeswoman said there was no provisioning issues on the bank's $4.5 billion portfolio of corporate bonds, collateralised loan obligations, commercial mortgage backed securities and synthetic collateralised debt obligations (CDOs).
Australia's largest investment bank, Macquarie Group Ltd, has "no material exposure," a spokeswoman for Macquarie told AAP, while declining to comment further. Commonwealth Bank, Westpac Banking Corporation and ANZ Banking Group declined to comment on any exposures to Lehman Brothers. All banks declined to comment on the newly created banking consortium's borrowing facility.
Events on Wall Street spilled over into the Australian market producing a sea of red across banking and financial stocks. NAB and Macquarie were among the hardest hit stocks amid a wider sell-off among financials on the local bourse on Monday. Macquarie shares dropped $4.55, or 10.34 per cent, to $39.46, while National Australia Bank lost $1.14, or 4.76 per cent, to $22.82.
"NAB has been hit a little bit harder than the other domestic banks because there's still a belief NAB global operations may have exposure to offshore debt that some of the other domestic banks haven't got," Dominic Vaughan, senior dealer at CMC Markets said.
"Macquarie - they're tarred with the same brush as Babcock, which is under pressure on the fact they are an investment bank."
At the same time as Lehman Brothers was hoisting up the white flag, Merrill Lynch was sold to Bank of America for $US50 billion ($A61.19 billion). The sale will create the world's largest financial services institution. Earlier Monday, a consortium of 10 US and European banks moved to create a $US70 billion borrowing facility to shore up liquidity, reduce counter-party risks, and facilitate an orderly resolution of over-the-counter derivatives exposures between Lehman Brothers and its counter-parties.
Lehman Brothers's announcement, released before trading closed in Australia, said it intended to file for bankruptcy "in order to protect its assets and maximise value". The firm's collapse came after emergency weekend talks in New York failed to secure a buyer when British bank Barclays walked away from talks because of concerns it would have to guarantee Lehman Brother's trading commitments.
Lehman Brother's Australian operation is included in the filing and around 130 jobs could be effected, a spokeswoman for Lehman Brothers Australia told AAP.
Lehman Brothers Australia would talk to its parent in New York about the next steps for the local arm and would know more about its short-term operations in the coming days, she said. Lehman Brother's Sydney and Melbourne employees were calling clients Monday afternoon about the intention to file for bankruptcy, while their boss Jim Ballentine remained in Australia and in talks with the New York head office.
Earlier Monday, Lehman Brothers Australia had its status as an Australian Securities Exchange (ASX) market participant suspended for one month, effective immediately, after third-party clearers terminated their services with the firm. Lehman Brothers Australia was formerly known as Grange Securities Ltd. Locally, a spokeswoman for National Australia Bank told AAP it had "a negligible exposure to Lehman". "We have no counter-party risk," she.
The spokeswoman said there was no provisioning issues on the bank's $4.5 billion portfolio of corporate bonds, collateralised loan obligations, commercial mortgage backed securities and synthetic collateralised debt obligations (CDOs).
Australia's largest investment bank, Macquarie Group Ltd, has "no material exposure," a spokeswoman for Macquarie told AAP, while declining to comment further. Commonwealth Bank, Westpac Banking Corporation and ANZ Banking Group declined to comment on any exposures to Lehman Brothers. All banks declined to comment on the newly created banking consortium's borrowing facility.
Events on Wall Street spilled over into the Australian market producing a sea of red across banking and financial stocks. NAB and Macquarie were among the hardest hit stocks amid a wider sell-off among financials on the local bourse on Monday. Macquarie shares dropped $4.55, or 10.34 per cent, to $39.46, while National Australia Bank lost $1.14, or 4.76 per cent, to $22.82.
"NAB has been hit a little bit harder than the other domestic banks because there's still a belief NAB global operations may have exposure to offshore debt that some of the other domestic banks haven't got," Dominic Vaughan, senior dealer at CMC Markets said.
"Macquarie - they're tarred with the same brush as Babcock, which is under pressure on the fact they are an investment bank."
