Page last updated at 09:22 GMT, Tuesday, 16 September 2008 10:22 UK

Barclays eyes core Lehman assets

Barclays bank branch
Barclays has also been hit by US sub-prime losses

British bank Barclays is in talks to buy the core assets of Lehman Brothers - the US broker-dealer business and the mergers-and-acquisitions team.

Lehman - the fourth-largest investment bank in the US - filed for bankruptcy protection on Monday.

BBC Business Editor Robert Peston says Barclays does not want Lehmanís "toxic investments in the residential and commercial property markets".

Nor, he says, does it want Lehman's surviving, unsettled transactions.

However, our correspondent adds that Barclays does want the 8,000 to 10,000 US employees of Lehman - which it sees as formidable profit generators. But for the 5,000 Lehman staff in London, the outlook remains uncertain.

Market turmoil

In a statement, Barclays confirmed that it was discussing with Lehman Brothers the possible acquisition of certain assets "on terms that would be attractive to Barclays shareholders".

"There can be no assurance that the discussions will result in an agreement. A further announcement will be made in due course," Barclays added.

The collapse of Lehman, which had incurred billions of dollars of losses from the failing US mortgage market, has led to big falls on the global equity markets, with banking shares especially hard hit on worries that there could more victims.

There have also been fears that AIG, once the world's largest insurer, could face collapse. On Monday, the State of New York announced a "multi-billion dollar financing plan" to help stabilise AIG's finances.

In August, Barclays reported a 33% drop in pre-tax profits for the first half of 2008 following more credit crunch related write-downs.

The bank made £2.75bn, down from £4.1bn, which it said at the time was "acutely disappointing".

Barclays said last month it had taken charges of £2.45bn for bad debts, including exposure to US sub-prime mortgages and other credit market problems.

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