1. Prepared by: Patel Mitalee s. Patel Sonal Shah Pratik Sakaria Ashish Paresh

2. Lehman brothers Henry Lehman Emanuel Lehman

3. Lehman family The Lehman family was a prominent family of Jewish-German- American businesspeople who founded the financial firm Lehman Brothers. Some were also involved in American politics. Lehman BrothersLehman Brothers Some of the family members include: Allan S. Lehman Allan S. Lehman Allan S. Lehman Allan S. Lehman Arthur Lehman, son of Mayer Arthur Lehman, son of Mayer Arthur Lehman Arthur Lehman Emanuel Lehman, brother of Henry, co-founder of Lehman Brothers Emanuel Lehman, brother of Henry, co-founder of Lehman Brothers Emanuel Lehman Emanuel Lehman Harold M. Lehman Harold M. Lehman Harold M. Lehman Harold M. Lehman Henry Lehman, founder of H. Lehman, which became Lehman Brothers Henry Lehman, founder of H. Lehman, which became Lehman Brothers Henry Lehman Henry Lehman Herbert H. Lehman (1878-1963), U.S. senator, son of Mayer Herbert H. Lehman (1878-1963), U.S. senator, son of Mayer Herbert H. Lehman Herbert H. Lehman Irving Lehman (1876-1945), U.S. lawyer and politician Irving Lehman (1876-1945), U.S. lawyer and politician Irving Lehman Irving Lehman Mayer Lehman, youngest brother of Henry and Emanuel, co- founder of Lehman Brothers Mayer Lehman, youngest brother of Henry and Emanuel, co- founder of Lehman Brothers Mayer Lehman Mayer Lehman Philip Lehman (1861-1947), son of Emanuel Philip Lehman (1861-1947), son of Emanuel Philip Lehman Philip Lehman Robert Lehman (1891-1969), son of Philip Robert Lehman (1891-1969), son of Philip Robert Lehman Robert Lehman Sigmund M. Lehman Sigmund M. Lehman Sigmund M. Lehman Sigmund M. Lehman

4. Business Area of Lehman Brothers IndustryIndustry - Investment services Investment services IndustryInvestment services ProductsProducts - Financial Services Investment Banking Investment management Financial ServicesInvestment BankingInvestment management ProductsFinancial ServicesInvestment BankingInvestment management EmployeesEmployees - 26,200 (2008) Employees WebsiteWebsite - Lehman. COM Website

5. How big is Lehman Brothers? Founded in 1850 by three immigrants from Germany, Lehman Brothers has been a prominent investment bank in Wall Street for decades. Founded in 1850 by three immigrants from Germany, Lehman Brothers has been a prominent investment bank in Wall Street for decades. It operates at a wholesale level, dealing with governments, companies and other financial institutions, employing 25,000 people worldwide, including 5,000 in the UK. It operates at a wholesale level, dealing with governments, companies and other financial institutions, employing 25,000 people worldwide, including 5,000 in the UK. Its core business includes buying and selling shares and fixed income assets, trading and research, investment banking, investment management and private equity. Its core business includes buying and selling shares and fixed income assets, trading and research, investment banking, investment management and private equity. As the crisis in financial markets gathered momentum, it saw its share price collapse from $82 to less than $4. As the crisis in financial markets gathered momentum, it saw its share price collapse from $82 to less than $4.

6. History Under the Lehman family (1850–1969) In 1844, 23-year-old Henry Lehman, the son of a cattle merchant,emigrated to the United States from Rimpar,Bavaria.He settled in Montgomery, Alabama, where he opened a dry-goods store, "H. Lehman". In 1847, following the arrival of his brother Emanuel Lehman, the firm became "H. Lehman and Bro." In 1844, 23-year-old Henry Lehman, the son of a cattle merchant,emigrated to the United States from Rimpar,Bavaria.He settled in Montgomery, Alabama, where he opened a dry-goods store, "H. Lehman". In 1847, following the arrival of his brother Emanuel Lehman, the firm became "H. Lehman and Bro." With the arrival of their youngest brother, Mayer Lehman, in 1850, the firm changed its name again and "Lehman Brothers" was founded. With the arrival of their youngest brother, Mayer Lehman, in 1850, the firm changed its name again and "Lehman Brothers" was founded. In the 1850s Southern United States, cotton was one of the most important crops. Capitalizing on cotton's high market value, the three brothers began to routinely accept raw cotton from customers as payment for merchandise, eventually beginning a second business trading in cotton. In the 1850s Southern United States, cotton was one of the most important crops. Capitalizing on cotton's high market value, the three brothers began to routinely accept raw cotton from customers as payment for merchandise, eventually beginning a second business trading in cotton.

7. Merger with American Express (1969–94) Under Peterson's leadership as Chairman and CEO, the firm acquired Abraham & Co. in 1975, and two years later merged with the venerable, but struggling, Kuhn, Loeb & Co.to form Lehman Brothers, Kuhn, Loeb Inc., the country's fourth-largest investment bank, behind Salomon Brothers, Goldman Sachs and First Boston. Kuhn, Loeb & Co.Lehman Brothers, Kuhn, Loeb Inc.Salomon BrothersGoldman SachsFirst BostonKuhn, Loeb & Co.Lehman Brothers, Kuhn, Loeb Inc.Salomon BrothersGoldman SachsFirst Boston Peterson led the firm from significant operating losses to five consecutive years of record profits with a return on equity among the highest in the investment-banking industry. return on equityreturn on equity However, hostilities between the firm's investment bankers and traders (who were driving most of the firm's profits) prompted Peterson to promote Lewis Glucksman, the firm's President, COO and former trader, to be his co-CEO in May 1983. Glucksman introduced a number of changes that had the effect of increasing tensions, which when coupled with Glucksman’s management style and a downturn in the markets, resulted in a power struggle that ousted Peterson and left Glucksman as the sole CEO. investment bankerstradersLewis Glucksmaninvestment bankerstradersLewis Glucksman From 1983 to 1990, Peter A. Cohen was CEO and Chairman of Shearson Lehman Brothers, where he led the one billion dollar purchase of EF Hutton

8. Divestment and independence (1994–2008) In 1993, under newly appointed CEO, Harvey Golub, American Express began to divest itself of its banking and brokerage operations. It sold its retail brokerage and asset management operations and in 1994 it spun off Lehman Brothers Kuhn Loeb in an initial public offering, as Lehman Brothers Holdings, Inc. In 1993, under newly appointed CEO, Harvey Golub, American Express began to divest itself of its banking and brokerage operations. It sold its retail brokerage and asset management operations and in 1994 it spun off Lehman Brothers Kuhn Loeb in an initial public offering, as Lehman Brothers Holdings, Inc.CEOHarvey Golubinitial public offeringCEOHarvey Golubinitial public offering Despite rumors that it would be acquired again, Lehman performed quite well under CEO Richard S. Fuld, Jr.. In 2001, the firm acquired the private-client services, or "PCS", business of Cowen & Co. Despite rumors that it would be acquired again, Lehman performed quite well under CEO Richard S. Fuld, Jr.. In 2001, the firm acquired the private-client services, or "PCS", business of Cowen & Co.Richard S. Fuld, Jr.Cowen & CoRichard S. Fuld, Jr.Cowen & Co and later, in 2003, aggressively re-entered the asset-management business, which it had exited in 1989.Beginning with $2 billion in assets under management, the firm acquired the Crossroads Group, the fixed-income division of Lincoln Capital Management and Neuberger Berman.These businesses, together with the PCS business and Lehman's private-equity business, comprised the Investment Management Division, which generated approximately $3.1 billion in net revenue and almost $800 million in pre-tax income in 2007. and later, in 2003, aggressively re-entered the asset-management business, which it had exited in 1989.Beginning with $2 billion in assets under management, the firm acquired the Crossroads Group, the fixed-income division of Lincoln Capital Management and Neuberger Berman.These businesses, together with the PCS business and Lehman's private-equity business, comprised the Investment Management Division, which generated approximately $3.1 billion in net revenue and almost $800 million in pre-tax income in 2007.Crossroads GroupNeuberger BermanCrossroads GroupNeuberger Berman

9. Prior to going bankrupt, the firm had in excess of $275 billion in assets under management. Altogether, since going public in 1994, the firm had increased net revenues over 600% from $2.73 billion to $19.2 billion and had increased employee headcount over 230% from 8,500 to almost 28,600. Prior to going bankrupt, the firm had in excess of $275 billion in assets under management. Altogether, since going public in 1994, the firm had increased net revenues over 600% from $2.73 billion to $19.2 billion and had increased employee headcount over 230% from 8,500 to almost 28,600. At the 2008 ALB China Law Awards, Lehman Brothers was crowned: At the 2008 ALB China Law Awards, Lehman Brothers was crowned: Deal of the Year - Debt Market Deal of the Year Deal of the Year - Debt Market Deal of the Year Deal of the Year - Equity Market Deal of the Year Deal of the Year - Equity Market Deal of the Year

10. Journey started by Lehman bros U.S. investment bank Lehman Brothers has seen its shares shed three-quarters of their value this week as it announced a record $3.9 billion loss and a restructuring plan. The bank faces the prospect of being acquired by rivals, raising the specter of an end to its 158-year history. 1844 Henry Lehman, an immigrant from Germany, opens a small dry goods store in Montgomery, Alabama, in 1844. Henry Lehman, an immigrant from Germany, opens a small dry goods store in Montgomery, Alabama, in 1844.1850 Henry is joined by brothers Emanuel and Mayer and they name the business Lehman Brothers. Henry is joined by brothers Emanuel and Mayer and they name the business Lehman Brothers.1858 The Lehmans -- who take cotton from farmers to settle accounts and trade the cotton for money and merchandise - - open a New York office. The Lehmans -- who take cotton from farmers to settle accounts and trade the cotton for money and merchandise - - open a New York office.1860s After the Civil War, they move to New York and establish the New York Cotton Exchange. After the Civil War, they move to New York and establish the New York Cotton Exchange.

11. 1887 Become members of the New York Stock Exchange Become members of the New York Stock Exchange1889 Lehman underwrites its first public offering, for the International Steam Pump Company. Lehman underwrites its first public offering, for the International Steam Pump Company.1929 The Lehman Corporation is created, a closed-end investment company. The Lehman Corporation is created, a closed-end investment company. 1930s Lehman underwrites the IPO of DuMont, the first television manufacturer. Lehman underwrites the IPO of DuMont, the first television manufacturer.1950s Underwrites the IPOs of Digital Equipment and Hertz Rent-a- Car Underwrites the IPOs of Digital Equipment and Hertz Rent-a- Car1960 Opens a Paris office. Opens a Paris office.1962 With Salomon Brothers, Merrill Lynch and Blyth and Company, Lehman forms an association nicknamed the "fearsome foursome" that challenges the major firms for underwriting business. With Salomon Brothers, Merrill Lynch and Blyth and Company, Lehman forms an association nicknamed the "fearsome foursome" that challenges the major firms for underwriting business.

12. 1972 Becomes one of the first investment banks to open an office in London to take advantage of the booming bond market in Europe. Becomes one of the first investment banks to open an office in London to take advantage of the booming bond market in Europe.1975 Lehman acquires Abraham & Co. Lehman acquires Abraham & Co.1984 American Express acquires Lehman Brothers and merges it with Shearson. American Express acquires Lehman Brothers and merges it with Shearson.1986 Seat on the London Stock Exchange. Seat on the London Stock Exchange.1988 Seat on the Tokyo Stock Exchange Seat on the Tokyo Stock Exchange1993 American Express divests Shearson, and the independent firm once again becomes known as Lehman Brothers. American Express divests Shearson, and the independent firm once again becomes known as Lehman Brothers.1994 Lehman becomes independent through a public stock offering and Lehman Brothers Holding Inc common stock begins trading on the New York & Pacific stock exchanges. Lehman becomes independent through a public stock offering and Lehman Brothers Holding Inc common stock begins trading on the New York & Pacific stock exchanges.1995 Richard Fuld Jr takes the top job at Lehman. Richard Fuld Jr takes the top job at Lehman.

13. 1998 Fuld fights off rumors that the near collapse of Long Term Capital Management had caused a cash crunch at Lehman. Fuld fights off rumors that the near collapse of Long Term Capital Management had caused a cash crunch at Lehman.1999 Lehman establishes an alliance with Bank of Tokyo- Mitsubishi for Japanese mergers and acquisitions. Lehman establishes an alliance with Bank of Tokyo- Mitsubishi for Japanese mergers and acquisitions.2001 Under pressure to cut costs, Fund decides to pay staff less and in stock, rather than lay off employees. Under pressure to cut costs, Fund decides to pay staff less and in stock, rather than lay off employees.2002 Lehman establishes its wealth and asset management division and acquires Lincoln Capital Management's fixed income business. Lehman establishes its wealth and asset management division and acquires Lincoln Capital Management's fixed income business. 2003 Lehman acquires Neuberger Berman and The Crossroads Group. Lehman acquires Neuberger Berman and The Crossroads Group.2007 Lehman posts record-high net revenues, net income and earnings per common share (diluted) for a fourth consecutive year and the highest volume of trade on the London Stock Exchange for a third year in a row. Lehman posts record-high net revenues, net income and earnings per common share (diluted) for a fourth consecutive year and the highest volume of trade on the London Stock Exchange for a third year in a row.

14. Firm reached to fall On September 15, 2008, Lehman Brothers filed for bankruptcy. With $639 billion in assets and $619 billion in debt, Lehman's bankruptcy filing was the largest in history, as its assets far surpassed those of previous bankrupt giants such as WorldCom and Enron. On September 15, 2008, Lehman Brothers filed for bankruptcy. With $639 billion in assets and $619 billion in debt, Lehman's bankruptcy filing was the largest in history, as its assets far surpassed those of previous bankrupt giants such as WorldCom and Enron. bankruptcyWorldComEnron bankruptcyWorldComEnron Lehman was the fourth-largest U.S. investment bank at the time of its collapse, with 25,000 employees worldwide. Lehman's demise also made it the largest victim, of the U.S. subprime mortgage-induced financial crisis that swept through global financial markets in 2008. Lehman was the fourth-largest U.S. investment bank at the time of its collapse, with 25,000 employees worldwide. Lehman's demise also made it the largest victim, of the U.S. subprime mortgage-induced financial crisis that swept through global financial markets in 2008.subprime mortgagesubprime mortgage Lehman's collapse was a seminal event that greatly intensified the 2008 crisis and contributed to the erosion of close to $10 trillion in market capitalization from global equity markets in October 2008, the biggest monthly decline on record at the time. Lehman's collapse was a seminal event that greatly intensified the 2008 crisis and contributed to the erosion of close to $10 trillion in market capitalization from global equity markets in October 2008, the biggest monthly decline on record at the time.market capitalizationmarket capitalization

15. Bankruptcy On Saturday September 13, 2008, Timothy F. Geithner, the president of the Federal Reserve Bank of New York called a meeting on the future of Lehman, which included the possibility of an emergency liquidation of its assets. On Saturday September 13, 2008, Timothy F. Geithner, the president of the Federal Reserve Bank of New York called a meeting on the future of Lehman, which included the possibility of an emergency liquidation of its assets.Timothy F. GeithnerFederal Reserve Bank of New YorkTimothy F. GeithnerFederal Reserve Bank of New York Lehman reported that it had been in talks with Bank of America and Barclays for the company's possible sale. However, both Barclays and Bank of America ultimately declined to purchase the entire company. Lehman reported that it had been in talks with Bank of America and Barclays for the company's possible sale. However, both Barclays and Bank of America ultimately declined to purchase the entire company.Bank of AmericaBarclaysBank of AmericaBarclays The International Swaps and Derivatives Association (ISDA) offered an exceptional trading session on Sunday, September 14, 2008, to allow market participants to offset positions in various derivatives on the condition of a Lehman bankruptcy later that day. The International Swaps and Derivatives Association (ISDA) offered an exceptional trading session on Sunday, September 14, 2008, to allow market participants to offset positions in various derivatives on the condition of a Lehman bankruptcy later that day.International Swaps and Derivatives AssociationderivativesInternational Swaps and Derivatives Associationderivatives Although the bankruptcy filing missed the deadline, many dealers honored the trades they made in the special session. Although the bankruptcy filing missed the deadline, many dealers honored the trades they made in the special session.

16. Financial fallout Immediately following the bankruptcy filing, an already distressed financial market began a period of extreme volatility, during which the Dow experienced its largest one day point loss, largest intra-day range (more than 1,000 points) and largest daily point gain. Immediately following the bankruptcy filing, an already distressed financial market began a period of extreme volatility, during which the Dow experienced its largest one day point loss, largest intra-day range (more than 1,000 points) and largest daily point gain. What followed was what many have called the “perfect storm” of economic distress factors, from Wall Street layoffs to a spike in "durvexity",[citation needed] and eventually a $700bn bailout package (Troubled Asset Relief Program) prepared by Henry Paulson, Secretary of the Treasury, and approved by Congress. The Dow eventually closed at a new six-year low of 7,552.29 on November 20. What followed was what many have called the “perfect storm” of economic distress factors, from Wall Street layoffs to a spike in "durvexity",[citation needed] and eventually a $700bn bailout package (Troubled Asset Relief Program) prepared by Henry Paulson, Secretary of the Treasury, and approved by Congress. The Dow eventually closed at a new six-year low of 7,552.29 on November 20.perfect stormcitation neededTroubled Asset Relief ProgramHenry PaulsonSecretary of the Treasuryperfect stormcitation neededTroubled Asset Relief ProgramHenry PaulsonSecretary of the Treasury

17. Some reason should be discuss: The Prime Culprit In 2003 and 2004, with the U.S. housing boom (read, bubble) well under way, Lehman acquired five mortgage lenders, including subprime lender BNC Mortgage and Aurora Loan Services, which specialized in Alt-A loans (made to borrowers without full documentation). In 2003 and 2004, with the U.S. housing boom (read, bubble) well under way, Lehman acquired five mortgage lenders, including subprime lender BNC Mortgage and Aurora Loan Services, which specialized in Alt-A loans (made to borrowers without full documentation). bubbleacquiredsubprimeAlt-A bubbleacquiredsubprimeAlt-A Lehman's acquisitions at first seemed prescient; record revenues from Lehman's real estate businesses enabled revenues in the capital markets unit to surge 56% from 2004 to 2006, a faster rate of growth than other businesses in investment banking or asset management. Lehman's acquisitions at first seemed prescient; record revenues from Lehman's real estate businesses enabled revenues in the capital markets unit to surge 56% from 2004 to 2006, a faster rate of growth than other businesses in investment banking or asset management. The firm securitized $146 billion of mortgages in 2006, a 10% increase from 2005. Lehman reported record profits every year from 2005 to 2007. In 2007, the firm reported net income of a record $4.2 billion on revenue of $19.3 billion. The firm securitized $146 billion of mortgages in 2006, a 10% increase from 2005. Lehman reported record profits every year from 2005 to 2007. In 2007, the firm reported net income of a record $4.2 billion on revenue of $19.3 billion.revenue

18. Lehman's Colossal Miscalculation In February 2007, the stock reached a record $86.18, giving Lehman a market capitalization of close to $60 billion. However, by the first quarter of 2007, cracks in the U.S. housing market were already becoming apparent as defaults on subprime mortgages rose to a seven-year high. In February 2007, the stock reached a record $86.18, giving Lehman a market capitalization of close to $60 billion. However, by the first quarter of 2007, cracks in the U.S. housing market were already becoming apparent as defaults on subprime mortgages rose to a seven-year high.market capitalizationmarket capitalization On March 14, 2007, a day after the stock had its biggest one-day drop in five years on concerns that rising defaults would affect Lehman's profitability, the firm reported record revenues and profit for its fiscal first quarter. In the post-earnings conference call, Lehman's chief financial officer (CFO) said that the risks posed by rising home delinquencies were well contained and would have little impact on the firm's earnings. On March 14, 2007, a day after the stock had its biggest one-day drop in five years on concerns that rising defaults would affect Lehman's profitability, the firm reported record revenues and profit for its fiscal first quarter. In the post-earnings conference call, Lehman's chief financial officer (CFO) said that the risks posed by rising home delinquencies were well contained and would have little impact on the firm's earnings.conference callchief financial officerconference callchief financial officer He also said that he did not foresee problems in the subprime market spreading to the rest of the housing market or hurting the U.S. economy. He also said that he did not foresee problems in the subprime market spreading to the rest of the housing market or hurting the U.S. economy.

19. The Beginning of the End As the credit crisis erupted in August 2007 with the failure of two Bear Stearns hedge funds, Lehman's stock fell sharply. During that month, the company eliminated 2,500 mortgage-related jobs and shut down its BNC unit. In addition, it also closed offices of Alt-A lender Aurora in three states. As the credit crisis erupted in August 2007 with the failure of two Bear Stearns hedge funds, Lehman's stock fell sharply. During that month, the company eliminated 2,500 mortgage-related jobs and shut down its BNC unit. In addition, it also closed offices of Alt-A lender Aurora in three states. Even as the correction in the U.S. housing market gained momentum, Lehman continued to be a major player in the mortgage market. In 2007, Lehman underwrote more mortgage-backed securities than any other firm, accumulating an $85-billion portfolio, or four times its shareholders' equity. Even as the correction in the U.S. housing market gained momentum, Lehman continued to be a major player in the mortgage market. In 2007, Lehman underwrote more mortgage-backed securities than any other firm, accumulating an $85-billion portfolio, or four times its shareholders' equity. mortgage-backed securities mortgage-backed securities In the fourth quarter of 2007, Lehman's stock rebounded, as global equity markets reached new highs and prices for fixed- income assets staged a temporary rebound. However, the firm did not take the opportunity to trim its massive mortgage portfolio, which in retrospect, would turn out to be its last chance In the fourth quarter of 2007, Lehman's stock rebounded, as global equity markets reached new highs and prices for fixed- income assets staged a temporary rebound. However, the firm did not take the opportunity to trim its massive mortgage portfolio, which in retrospect, would turn out to be its last chance

20. Hurtling Toward Failure Lehman's high degree of leverage - the ratio of total assets to shareholders equity - was 31 in 2007, and its huge portfolio of mortgage securities made it increasingly vulnerable to deteriorating market conditions. Lehman's high degree of leverage - the ratio of total assets to shareholders equity - was 31 in 2007, and its huge portfolio of mortgage securities made it increasingly vulnerable to deteriorating market conditions.leverage On March 17, 2008, following the near-collapse of Bear Stearns - the second-largest underwriter of mortgage- backed securities - Lehman shares fell as much as 48% on concern it would be the next Wall Street firm to fail. On March 17, 2008, following the near-collapse of Bear Stearns - the second-largest underwriter of mortgage- backed securities - Lehman shares fell as much as 48% on concern it would be the next Wall Street firm to fail.Wall StreetWall Street Confidence in the company returned to some extent in April, after it raised $4 billion through an issue of preferred stock that was convertible into Lehman shares at a 32% premium to its price at the time. However, the stock resumed its decline as hedge fund managers began questioning the valuation of Lehman's mortgage portfolio. Confidence in the company returned to some extent in April, after it raised $4 billion through an issue of preferred stock that was convertible into Lehman shares at a 32% premium to its price at the time. However, the stock resumed its decline as hedge fund managers began questioning the valuation of Lehman's mortgage portfolio. preferred stockpreferred stock

21. On June 9, Lehman announced a second-quarter loss of $2.8 billion, its first loss since being spun off by American Express, and reported that it had raised another $6 billion from investors. On June 9, Lehman announced a second-quarter loss of $2.8 billion, its first loss since being spun off by American Express, and reported that it had raised another $6 billion from investors. The firm also said that it had boosted its liquidity pool to an estimated $45 billion, decreased gross assets by $147 billion, reduced its exposure to residential and commercial mortgages by 20%, and cut down leverage from a factor of 32 to about 25. The firm also said that it had boosted its liquidity pool to an estimated $45 billion, decreased gross assets by $147 billion, reduced its exposure to residential and commercial mortgages by 20%, and cut down leverage from a factor of 32 to about 25.liquidity

22. Too Little, Too Late However, these measures were perceived as being too little, too late. Over the summer, Lehman's management made unsuccessful overtures to a number of potential partners. However, these measures were perceived as being too little, too late. Over the summer, Lehman's management made unsuccessful overtures to a number of potential partners. The stock plunged 77% in the first week of September 2008, amid plummeting equity markets worldwide, as investors questioned CEO Richard Fuld's plan to keep the firm independent by selling part of its asset management unit and spinning off commercial real estate assets. The stock plunged 77% in the first week of September 2008, amid plummeting equity markets worldwide, as investors questioned CEO Richard Fuld's plan to keep the firm independent by selling part of its asset management unit and spinning off commercial real estate assets. Hopes that the Korea Development Bank would take a stake in Lehman were dashed on September 9, as the state-owned South Korean bank put talks on hold. Hopes that the Korea Development Bank would take a stake in Lehman were dashed on September 9, as the state-owned South Korean bank put talks on hold. The news was a deathblow to Lehman, leading to a 45% plunge in the stock and a 66% spike in credit-default swaps on the company's debt. The company's hedge fund clients began pulling out, while its short-term creditors cut credit lines. On September 10, Lehman pre-announced dismal fiscal third-quarter results that underscored the fragility of its financial position. The news was a deathblow to Lehman, leading to a 45% plunge in the stock and a 66% spike in credit-default swaps on the company's debt. The company's hedge fund clients began pulling out, while its short-term creditors cut credit lines. On September 10, Lehman pre-announced dismal fiscal third-quarter results that underscored the fragility of its financial position.credit-default swapscredit-default swaps

23. The firm reported a loss of $3.9 billion, including a write- down of $5.6 billion, and also announced a sweeping strategic restructuring of its businesses. The firm reported a loss of $3.9 billion, including a write- down of $5.6 billion, and also announced a sweeping strategic restructuring of its businesses.write- downwrite- down The same day, Moody's Investor Service announced that it was reviewing Lehman's credit ratings, and also said that Lehman would have to sell a majority stake to a strategic partner in order to avoid a rating downgrade. These developments led to a 42% plunge in the stock on September 11. With only $1 billion left in cash by the end of that week, Lehman was quickly running out of time. Last-ditch efforts over the weekend of September 13 between Lehman, Barclays PLC and Bank of America, aimed at facilitating a takeover of Lehman, were unsuccessful. On Monday September 15, Lehman declared bankruptcy, resulting in the stock plunging 93% from its previous close on September 12. The same day, Moody's Investor Service announced that it was reviewing Lehman's credit ratings, and also said that Lehman would have to sell a majority stake to a strategic partner in order to avoid a rating downgrade. These developments led to a 42% plunge in the stock on September 11. With only $1 billion left in cash by the end of that week, Lehman was quickly running out of time. Last-ditch efforts over the weekend of September 13 between Lehman, Barclays PLC and Bank of America, aimed at facilitating a takeover of Lehman, were unsuccessful. On Monday September 15, Lehman declared bankruptcy, resulting in the stock plunging 93% from its previous close on September 12.downgrade takeoverdowngrade takeover

24. IMPACT OF LEHMAN BROTHERS BANKRUPTCY to different sectors ON THE TECHNOLOGY SECTOR The bankruptcy of Lehman marks a milestone that will bear a direct impact on the technology sector overall. The tech sector was already experiencing some level of pain but it was mostly contained to limited to a few companies with specific exposure in the financial services arena and even then was mostly limited to smaller tech firms. The bankruptcy of Lehman marks a milestone that will bear a direct impact on the technology sector overall. The tech sector was already experiencing some level of pain but it was mostly contained to limited to a few companies with specific exposure in the financial services arena and even then was mostly limited to smaller tech firms. Most tech companies are likely to be affected by current events, regardless of size. In our estimates, the financial services sector represents about 20% of overall tech spending worldwide and about 27-28% of purchases of leading edge, advanced technology. Most tech companies are likely to be affected by current events, regardless of size. In our estimates, the financial services sector represents about 20% of overall tech spending worldwide and about 27-28% of purchases of leading edge, advanced technology. This spending is going to come under pressure as IT organizations in finance are going to freeze and/or limit their discretionary spending budgets and try to contain their day-to-day operating budgets. This spending is going to come under pressure as IT organizations in finance are going to freeze and/or limit their discretionary spending budgets and try to contain their day-to-day operating budgets.

25. Companies that are vertically focused on financial services will feel the direct impact of this crisis, but many firms that provide hardware, networking gear, and software will feel the slowdown as the additional feedback loop of slower economy and unfavorable exchange rate trends will spread to the sector as a whole. Companies that are vertically focused on financial services will feel the direct impact of this crisis, but many firms that provide hardware, networking gear, and software will feel the slowdown as the additional feedback loop of slower economy and unfavorable exchange rate trends will spread to the sector as a whole. It believe that the current phase of the financial services crisis will bring about a more negative investor outlook for the tech industry and meaningfully destroy much of the optimism that was holding the tech industry above the fray

26. Little impact of Lehman Brothers' collapse on India New Delhi/Mumbai: Even as global markets tottered under the impact of the buyout of Merrill Lynch and collapse of Lehman Brothers, the world's third and fourth largest investment banks, the India impact will be limited, experts said on Monday. New Delhi/Mumbai: Even as global markets tottered under the impact of the buyout of Merrill Lynch and collapse of Lehman Brothers, the world's third and fourth largest investment banks, the India impact will be limited, experts said on Monday. "The impact will be limited and restricted to three areas mainly - stock markets, realty and outsourcing," a person familiar with Lehman and Merrill's operations in India said on condition of anonymity. "The impact will be limited and restricted to three areas mainly - stock markets, realty and outsourcing," a person familiar with Lehman and Merrill's operations in India said on condition of anonymity. "A large part of the impact on equity markets has already been discounted by today's slide in Indian markets," said Naresh Pachisia, managing director of leading merchant banker and securities brokerage house, the Kolkata-based SKP Securities Ltd. "I do not expect any more bad news at least in the next few months," he said, adding that markets may fall a little more but should begin to recover once the Indian festive season kicks in. "A large part of the impact on equity markets has already been discounted by today's slide in Indian markets," said Naresh Pachisia, managing director of leading merchant banker and securities brokerage house, the Kolkata-based SKP Securities Ltd. "I do not expect any more bad news at least in the next few months," he said, adding that markets may fall a little more but should begin to recover once the Indian festive season kicks in.

27. It will certainly have a negative impact on those areas in India where these two companies have operations, specifically in the realty sector,? said Anuj Puri, country head, Jones Lang Lasele Meghraj, a global real estate consultancy firm. "The sector is already facing a fund crunch. Even if the immediate implication on India cannot be assessed it will certainly shake the confidence of the industry in general which was banking too much on foreign institutional investors," Puri said. It will certainly have a negative impact on those areas in India where these two companies have operations, specifically in the realty sector,? said Anuj Puri, country head, Jones Lang Lasele Meghraj, a global real estate consultancy firm. "The sector is already facing a fund crunch. Even if the immediate implication on India cannot be assessed it will certainly shake the confidence of the industry in general which was banking too much on foreign institutional investors," Puri said. Earlier during the day, however, many Indian information technology companies such as software and outsourcing giants Wipro and TCS issued statements that they may not see much impact. Earlier during the day, however, many Indian information technology companies such as software and outsourcing giants Wipro and TCS issued statements that they may not see much impact. Lehman has investments in Indian companies such as Spice Communications, Spice Mobile, Edelweiss Cap, IVRCL Infra, Development Credit Bank, Champagne Indage, Golden Tobacco and Emkay Global. "Many Indian companies draw liquidity from these investment firms and may be impacted,? said Religare Securities President Amitabh Chakraborty. Lehman has investments in Indian companies such as Spice Communications, Spice Mobile, Edelweiss Cap, IVRCL Infra, Development Credit Bank, Champagne Indage, Golden Tobacco and Emkay Global. "Many Indian companies draw liquidity from these investment firms and may be impacted,? said Religare Securities President Amitabh Chakraborty.

28. "I believe the US Federal Reserve Bank chairman Ben S. Bernanke will come out with a statement any time to help stop this financial tsunami," said Jagannadham Thunuguntla, equity head of Nexgen Capitals Ltd, India's fourth largest securities brokerage firm SMC Group. "I believe the US Federal Reserve Bank chairman Ben S. Bernanke will come out with a statement any time to help stop this financial tsunami," said Jagannadham Thunuguntla, equity head of Nexgen Capitals Ltd, India's fourth largest securities brokerage firm SMC Group. With regard to Merrill's acquisition by Bank of America, experts said the impact is likely to be limited as Merrill Lynch was already in the process of offloading its India assets. With regard to Merrill's acquisition by Bank of America, experts said the impact is likely to be limited as Merrill Lynch was already in the process of offloading its India assets. BlackRock Inc, one of the largest quoted asset management companies in the world, is currently in the process of acquiring Merrill Lynch's 40 percent stake in its joint venture with noted Indian investor Hemendra Kothari's DSP group. BlackRock Inc, one of the largest quoted asset management companies in the world, is currently in the process of acquiring Merrill Lynch's 40 percent stake in its joint venture with noted Indian investor Hemendra Kothari's DSP group. DSP Merrill Lynch, had announced a few months ago that once BlackRock picks up Merrill's stake, the two joint venture entities in India - the investment banking arm and a mutual fund - will be renamed DSP BlackRock Investment Managers and DSP BlackRock Mutual Fund. While BlackRock currently manages assets worth $1.3 trillion, DSP Merrill Lynch has some $9 billion worth of assets under its management. (IANS) DSP Merrill Lynch, had announced a few months ago that once BlackRock picks up Merrill's stake, the two joint venture entities in India - the investment banking arm and a mutual fund - will be renamed DSP BlackRock Investment Managers and DSP BlackRock Mutual Fund. While BlackRock currently manages assets worth $1.3 trillion, DSP Merrill Lynch has some $9 billion worth of assets under its management. (IANS)

29. Short term impact of Lehman crisis on outsourcing industry: Nasscom NEW DELHI: With the tentacles of Lehman Brothers fiasco unfolding on the Indian software companies, the industry body Nasscom today said there would be short term and company specific impact. Stating that the Indian IT-BPO sector is a part of the global financial system that has seen a lot of turbulence in the recent past, the apex body said "our preliminary analysis of the current situation indicates that the impact will be short term and company specific; we will continue to keep a watch on any further downstream impacts." With nearly half of their revenues coming from banking and financial services segments, India's top software exporters are closely monitoring the financial crisis spreading across markets. NEW DELHI: With the tentacles of Lehman Brothers fiasco unfolding on the Indian software companies, the industry body Nasscom today said there would be short term and company specific impact. Stating that the Indian IT-BPO sector is a part of the global financial system that has seen a lot of turbulence in the recent past, the apex body said "our preliminary analysis of the current situation indicates that the impact will be short term and company specific; we will continue to keep a watch on any further downstream impacts." With nearly half of their revenues coming from banking and financial services segments, India's top software exporters are closely monitoring the financial crisis spreading across markets. While Infosys and TCS, the country's two largest IT firms, said they do not comment on individual clients, the third largest IT firm in the country, Wipro said it was in dialogue with failed Lehman Brothers, although revenues from it were modest. While Infosys and TCS, the country's two largest IT firms, said they do not comment on individual clients, the third largest IT firm in the country, Wipro said it was in dialogue with failed Lehman Brothers, although revenues from it were modest.

30. HCL Technologies, however, said that the two US majors -- Lehman and Merrill Lynch -- were not its clients and therefore would not adversely affect the company. When one puts all of this together, there is some loss but given that most of the top five companies have over 40-45 per cent exposure to BFSI space, then mood is worried and concerned right now, said an analyst. Already finding it tough to cope with the slowdown in the US, the beleaguered Indian IT vendors are likely to see some reversal in revenues coming out of their banking practice with the recent happenings at global level. HCL Technologies, however, said that the two US majors -- Lehman and Merrill Lynch -- were not its clients and therefore would not adversely affect the company. When one puts all of this together, there is some loss but given that most of the top five companies have over 40-45 per cent exposure to BFSI space, then mood is worried and concerned right now, said an analyst. Already finding it tough to cope with the slowdown in the US, the beleaguered Indian IT vendors are likely to see some reversal in revenues coming out of their banking practice with the recent happenings at global level. Nasscom, which is of the view that the current crisis is a consequence of the sub-prime crisis which began last year, said many companies that were being directly impacted by the turmoil last year had prepared for this eventuality. Nasscom, which is of the view that the current crisis is a consequence of the sub-prime crisis which began last year, said many companies that were being directly impacted by the turmoil last year had prepared for this eventuality.

31. But the association is optimistic on the challenge being contained as it said "India's value proposition continues to be strong. As an industry, we have worked as partners with our customers and will continue to do so, even as the financial services sector realigns itself." But the association is optimistic on the challenge being contained as it said "India's value proposition continues to be strong. As an industry, we have worked as partners with our customers and will continue to do so, even as the financial services sector realigns itself." But analysts and industry watchers holding a not so optimistic view, feel India's outsourcing industry could be cut to size coupled with lower revenue, job loss and poorer salary hikes. But analysts and industry watchers holding a not so optimistic view, feel India's outsourcing industry could be cut to size coupled with lower revenue, job loss and poorer salary hikes.

32. ICICI Bank has Rs 375 crore exposure in Lehman Brothers Country's largest private sector lender, ICICI Bank today said its London subsidiary has 57 million Euro (about Rs 375 crore) exposure in the Lehman Brothers which has filed for bankruptcy protection. Country's largest private sector lender, ICICI Bank today said its London subsidiary has 57 million Euro (about Rs 375 crore) exposure in the Lehman Brothers which has filed for bankruptcy protection. "ICICI Bank UK Plc holds 57 million euro of senior bonds of Lehman Brothers Inc...Potential losses are not material," the bank said in a statement. "ICICI Bank UK Plc holds 57 million euro of senior bonds of Lehman Brothers Inc...Potential losses are not material," the bank said in a statement. The bank said it had undertaken transactions with the US- based troubled investment banker as part of treasury operations. The bank said it had undertaken transactions with the US- based troubled investment banker as part of treasury operations. "The exposure to Lehman Brothers' entities on account of these transactions and potential loss thereon are not material," it said. "The exposure to Lehman Brothers' entities on account of these transactions and potential loss thereon are not material," it said. ICICI Bank shares plunged by 5.82 per cent to Rs 591.35 on the Bombay Stock Exchange. ICICI Bank shares plunged by 5.82 per cent to Rs 591.35 on the Bombay Stock Exchange.

33. Lehman Brothers, which is a 158-years-old-financial institution has filed for bankruptcy protection, after losing around $60 billion (About Rs 2,76,000 crore) in sinking real-estate market. Lehman Brothers, which is a 158-years-old-financial institution has filed for bankruptcy protection, after losing around $60 billion (About Rs 2,76,000 crore) in sinking real-estate market. Another investment bank Merrill Lynch is being bought over by Bank of America for $50 billion, while world's largest insurer American International Group (AIG) is also facing financial crisis. Another investment bank Merrill Lynch is being bought over by Bank of America for $50 billion, while world's largest insurer American International Group (AIG) is also facing financial crisis. Meanwhile, Lehman has suspended operations of its three Asian arms. Meanwhile, Lehman has suspended operations of its three Asian arms. Lehman Brothers Asia, Lehman Brothers Securities Asia and Lehman Brothers Futures Asia Ltd have suspended its operations with immediate effect, including ceasing to trade on the Hong Kong Securities Exchange and Hong Kong Futures Exchange, until further notice. Lehman Brothers Asia, Lehman Brothers Securities Asia and Lehman Brothers Futures Asia Ltd have suspended its operations with immediate effect, including ceasing to trade on the Hong Kong Securities Exchange and Hong Kong Futures Exchange, until further notice.

34. How does it affect to common people? Nobody has a Lehman Brothers cheque book or current account. The company is an investment bank that specializes in big and complex deals and investments. Nobody has a Lehman Brothers cheque book or current account. The company is an investment bank that specializes in big and complex deals and investments. Despite this, Lehman's collapse and the troubles of other financial institutions will probably be felt by millions of people around the world - at least indirectly. Despite this, Lehman's collapse and the troubles of other financial institutions will probably be felt by millions of people around the world - at least indirectly. Most of our banks and pension funds have dealings with Lehman, or with firms like hedge funds that traded extensively with Lehman. Most of our banks and pension funds have dealings with Lehman, or with firms like hedge funds that traded extensively with Lehman. Unwinding Lehman's complex deals will take months if not years. During that time the global financial system will be snarled up. Many banks won't know for sure how much they are exposed to Lehman, and will have difficulty freeing up the money in those deals. Unwinding Lehman's complex deals will take months if not years. During that time the global financial system will be snarled up. Many banks won't know for sure how much they are exposed to Lehman, and will have difficulty freeing up the money in those deals. This in turn is likely to intensify the credit crunch, with potentially dire consequences for businesses and consumers. This in turn is likely to intensify the credit crunch, with potentially dire consequences for businesses and consumers. And the dramatic collapse of Lehman Brothers has also shaken the financial markets, with share prices slumping around the world. And the dramatic collapse of Lehman Brothers has also shaken the financial markets, with share prices slumping around the world. You will feel the impact even if you are not a banker or shareholder. You will feel the impact even if you are not a banker or shareholder. Your pension fund may have a wobble. Your employer may find it more difficult to do business. And you yourself may have more difficulty getting a personal loan or mortgage. Your pension fund may have a wobble. Your employer may find it more difficult to do business. And you yourself may have more difficulty getting a personal loan or mortgage.

35. Points to be remember Why has Lehman Brothers collapsed? Why has Lehman Brothers collapsed? In short, other banks refused to trade with it. Without the ability to trade, and without investors prepared to bet on its long-term viability, Lehman effectively had no business. Lehman Why would the other banks not trade? Why would the other banks not trade? It is a repeat of the Northern Rock debacle. Lehman, while it was a large and complex business trading in a web of assets, also supported 100% mortgage loans offered by specialist lenders to people with few visible means of support. When interest rates jumped, borrowers could no longer afford their monthly payments. Northern RockNorthern Rock Like Northern Rock, it mattered less that 80% of its assets were rock solid if 20% were considered toxic. We don't know the exact proportions at Lehman and neither do the bank's trading partners, which is why they refused in growing numbers to do business or buy it once the bank was up for sale.

36. Could the US government have stepped in? Could the US government have stepped in? The US treasury has reached the limit of taxpayer funds it is willing to gamble on propping up investment banks. Henry Paulson, the treasury secretary, committed £3 trillion last week to saving Fannie Mae and Freddie Mac. If they had failed, the mortgage market in the US would have collapsed and hundreds of banks around the world that invested in US property would suffer huge losses. Paulson bailed out Bear Stearns earlier this year, but he appears to believe a trading house like Lehman, which has little direct connection with retail markets and ordinary homeowners, could be allowed to go bust without causing the kind of systemic risk posed by Fannie and Freddie. Bear StearnsBear Stearns Why was Barclays interested? Why was Barclays interested? BarclaysBarclays joined the talks at the weekend to buy Lehman because it was interested in picking up the bank on the cheap. It is a re-run of the proposed deal for Northern Rock by Lloyds TSB at the time of its collapse last summer. Lloyds TSB BarclaysLloyds TSB Lloyds TSB offered to buy Northern Rock and accept its liabilities if the government was prepared to set aside £30bn in discounted loans to support the takeover. Barclays asked Paulson for the same kind of guarantee. He refused. The main City regulator, the Financial Services Authority, was also believed to have expressed concerns to Barclays boss John Varley that it was unwise to buy a US investment bank at this time.

37. Will everyone at Lehman's get the sack? Will everyone at Lehman's get the sack? The administrators, PricewaterhouseCoopers, said the bank was centrally run from New York and therefore all its main businesses across Europe are wrecked. That puts 5,000 people who are employed at the bank, largely in Canary Wharf, out of work. Will the whole bank be liquidated? Will the whole bank be liquidated? in the US allows PwC to take its time while it tries to find buyers for the least affected businesses. The year-long protection offered by Chapter 11 shields a company from creditors while it is reshaped or sold as a whole or in parts. PWC said a number of group companies remain solvent and will continue to trade. "These companies include Lehman Brothers Asset Management (Europe) and a series of special-purpose vehicles designed to manage portfolios of residential and commercial real estate assets and non- performing loans."

38. What are the risks for other banks? Share prices have tumbled and are likely to fall further as investors take flight from a sector that appears to be run by a group of bankers who are in denial about the extent of their mistakes and the problems their firms now face. What are the risks for other banks? Share prices have tumbled and are likely to fall further as investors take flight from a sector that appears to be run by a group of bankers who are in denial about the extent of their mistakes and the problems their firms now face. A flight of investors will make their situation worse because they are to a great extent dependent on their shareholders for capital. The capital provided by shareholders is the bedrock for their lending and without it they cannot continue trading. What is the position with Bank of America and Merrill Lynch? What is the position with Bank of America and Merrill Lynch? In many ways the sale of Merrill Lynch to Bank of America is a more startling development in the year-long credit crunch than the collapse of Lehman. It is understood that once it was obvious Lehman's was going under, Merrill realised it was vulnerable. The "thundering herd", as Merrill is affectionately known, was approached by Bank of America earlier this year, but rebuffed takeover talks. Now it was Merrill that went cap in hand to the US's largest retail bank for a rescue deal. Sceptics say the deal does little to resolve the problems faced by both firms, which are heavily mired in the US sub-prime home debacle. Merrill LynchMerrill Lynch

39. Who's next? Who's next? Washington Mutual is named by several analysts as the next to find itself in serious trouble. It was the subject of a rescue led by private equity firm Texas Pacific group in the spring. But the billions poured into its coffers no longer look sufficient to satisfy investors and they are taking flight. It is possible shareholders will flee Bank of America, if they consider Merrill Lynch a bad buy. Another victim could be the US mono line insurers, so called because they only insure the bonds of large companies, including mortgage lending institutions. Like AIG, the insurance cover they provide could be invoked by customers and, like a tsunami, overwhelm their finances. In the UK, mortgage banks such as Halifax owner HBOS, Alliance & Leicester and Bradford & Bingley, could suffer further if investors switch to safer havens. Will it make a recession worse? Will it make a recession worse? Yes. The CBI predicts a "shallow recession" next year, but this now appears optimistic. If the last five years of our decade-long economic boom were characterised by reckless lending, then living standards, along with property prices, have a long way to fall. "shallow recession" "shallow recession" We are all spending money we simply don't have and when we stop it will spell the end for many jobs in retail, hospitality and may other industries. A fall in the value of the pound will help exporters and that will offset the worst of the economy's problems. But without banks willing or able to lend money to millions of people, except at sky-high interest rates, a long and deep recession seems inevitable

40. Conclusion Lehman's collapse roiled global financial markets for weeks, given the size of the company and its status as a major player in the U.S. and internationally. Lehman's collapse roiled global financial markets for weeks, given the size of the company and its status as a major player in the U.S. and internationally. Many questioned the U.S. government's decision to let Lehman fail, as compared to its tacit support for Bear Stearns (which was acquired by JPMorgan Chase) in March 2008. Many questioned the U.S. government's decision to let Lehman fail, as compared to its tacit support for Bear Stearns (which was acquired by JPMorgan Chase) in March 2008. Lehman's bankruptcy led to more than $46 billion of its market value being wiped out. Its collapse also served as the catalyst for the purchase of Merrill Lynch by Bank of America in an emergency deal that was also announced on September 15. Lehman's bankruptcy led to more than $46 billion of its market value being wiped out. Its collapse also served as the catalyst for the purchase of Merrill Lynch by Bank of America in an emergency deal that was also announced on September 15.