Credit crunch sparks tech crunch as bank buy-outs escalate

Credit crunch sparks tech crunch as bank buy-outs escalate

The purchase of Lehman Brothers' North American investment banking business by UK bank Barclays will include most of the defunct institution's technology, according to early reports.

Barclays, the UK's third largest bank, has stumped up $1.75 billion of which only $250 million will pay for the trading assets of the investment banking and capital markets business.

The remaining £1.5 billion will be used to pay for Lehman's New York headquarters, two data centres in New Jersey and some related technology.

Alongside Lehman's internal technology infrastructure it also has a number of commercial, technology-related projects include FXLive, an electronic FX trading platform, LMX Trading Strategies, an algo trading and execution suite, and LX, its global crossing network.

In addition Lehmans has also been involved in a number of multi-bank trading platform initiatives.

In March it became the sixth bank to join online forex trading platform Interbank FX and has also been an investor in multilateral trading facility Turquoise and fixed income trading platform TradeWeb.

Most recently Lehmans signed up to participate in the August launch of Swiss-based exchange SWX's dark liquidity service SWX Swiss Block.

Meanwhile a Bank of America spokesman admitted that it could be some time before the technology implications of its recent acquisition of Merrill Lynch are fully addressed.

Like Lehman's, Merrill Lynch has also been involved in a number of multibank initiatives, including Turquoise and TradeWeb. The bank also has its own smart order routing service and an algorithmic trading product called X-ACT.

Bank of America expects to complete the legal side of the acquisition by January 1st, after which it will look to address the integration of the two banks' systems as well any decisions regarding the future of Merrill's commercial technology offerings.

In the UK, meanwhile, Lloyds TSB's blockbuster take-over of rival high street bank HBOS is likely to lead to significant job losses and branch closures. Analysts estimate that up to 40,000 jobs could be lost from the banks' combined 145,000 staff following the deal and that hundreds of branches could close.

Call centre operations and tech processing centres are also expected to be in the firing line, as LloydsTSB moves to eliminate duplication across the merged bank's overlapping operations.

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