Lehman Brothers’ Bankruptcy

Lehman Brothers Holdings Inc, a 158 year old investment bank of USA filed for bankruptcy. The fourth biggest investment bank said that it had to file for bankruptcy in order to protect its assets and maximize value and the move was authorized by board of directors.

It had no other option as Bank of America Corp and Barclays Plc moved out of talks to buy the company. On the other hand bank of America acquired Merrill Lynch. Lehman said that its broker-dealer subsidiaries would not be part of bankruptcy filing. It said that it was exploring sale of its broker-dealer operations and it was in advanced talks with potential buyers for investment management division.

This news was not a surprise but most of the people over the world thought that some one would buy the investment bank. The share price declined by 41% and reached $4 on Thursday. Lehman’s stock plunged by 45 percent on Tuesday after its plans for a major investment from a Korean bank had fallen through, and is down more than 90 percent from the peak at the start of the year.

It affected all global markets immediately. Sensex opened with a wide gap of 335 points and at one stage it was trading at a discount of 850 points. At the end of the session it gained on account of buying in the selected counters and ended loosing 470 points at 13,530. I think the market will be bearish in the near future as there might be some more bad news from US.

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September 15, 2008 | Filed Under Market Analysis

Comments

2 Responses to “Lehman Brothers’ Bankruptcy”

arun on October 25th, 2008 7:38 pm

i think this article does not have a strong essence in it.
Satyam on October 26th, 2008 8:10 am

Agreed. Thanks for pointing this out. Forgot to add the details after the post was written on the very first day of bankruptcy. Now it doesn’t make any sense to add since every one knows the effects Instead I have modified the title accordingly.