From his 23rd floor office of Citi’s Canary Wharf tower, Tom Bolland can see the old European HQ of Lehman Brothers, where five years ago hundreds of his former colleagues were abruptly turfed out onto the street carrying their belongings in boxes.
The investment bank’s collapse was the symbolic moment of the financial crisis, and it is a surprise to many that Lehman Brothers in Europe still lives on.
It is under administrators, but two-thirds of its 500 staff are former Lehman employees helping to clear up the mess that is left.
“You work for Lehman? I thought that went bust,” Bolland laughs at the typical response when he tells people he works for Lehman Brothers. “Most people are still surprised.”
Bolland is the most senior of the “ex-Lehmanites” and recently celebrated 20 years with the bank — including 15 years pre-crash in a range of senior roles, which included overseeing its expansion in Russia, Turkey and the Middle East.
Now, chief operating officer for Lehman Brothers International Europe (LBIE), he and more than 350 others were drafted in by Tony Lomas, joint administrator and PwC partner, to accelerate the wind-down of the business and maximise the assets that can be recovered.
“Yeah, you are working yourself out of a job. But you go out with an enhanced CV. And if you were at Lehman before you go out with your head held high, because you stayed and returned this money to the creditors,” Bolland told Reuters.
Lomas expects to repay creditors fully and said the integration of LBIE staff with 200 PwC employees has been crucial to that success.
They take up three floors in Citigroup’s London tower, less than 200 metres from the site Lehman occupied from April 2004 and now home to JPMorgan.
“A lot of people walked out with the cardboard box, but were back in two days later,” Bolland said. Many had not realised the skills that administrators would need to unravel thousands of complex trades across dozens of countries and legal entities.
That has included disputes with other parts of the former Lehman group. In bankruptcy, each entity fights for itself.
“In the beginning it was a bit strange. People you had worked with, you were disagreeing with and over time you were negotiating with. There was no fundamental ill-will and if you win a legal argument you win it, that's life. It’s commercial, not personal,” Bolland said.
Finance, operations, legal, risk and asset valuation experts all stayed, or were hired in the months after collapse. Lehman’s operations had also shared an IT system, but that had to be separated and rebuilt.
“It was the biggest IT project Lehman had ever undertaken, and we had to do inside the administration. It has been an enormous task operationally, apart from the legal and valuation issues and negotiations,” Bolland said.
Staff have been paid at commercial rates. They know fewer people will be needed as the major work slows and Bolland said LBIE will have a lot fewer staff by the end of next year.
He said the work has been good experience for mid-level staff, and “rewarding and satisfying” for the senior people.
“People were proud to work for Lehman. A lot of the people who stayed on, part of the reason was to do the right thing.”
Bankruptcy that left the world reeling
Five years ago, a series of black cars and SUVs lined up outside the Federal Reserve Bank of New York in lower Manhattan, ferrying some of the most important people in the US financial system to a series of meetings to discuss the fate of Lehman Brothers.
The regulators and bankers at that meeting hashed out a plan for Barclays to buy Lehman, but UK regulators scotched the plan. The ensuing bankruptcy of Lehman Brothers turned a widening US subprime crisis into a full-blown global banking panic that was only halted through trillions of dollars of government support.