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Lehman staff set to get bonuses

14 November 08 20:14 GMT

UK Lehman Brothers staff winding up European operations at the failed investment bank will get annual bonuses despite it being in administration.

Just over 1,000 people still are employed by Lehman's administrators as they try to unwind the company's complex financial positions.

The head administrator, Tony Lomas, also said some of the bank's creditors will likely lose their money.

However, it will take time before it becomes clear how much, he added.

Billions of dollars of bad debt forced Lehman Brothers to file for bankruptcy protection on 15 September.

'Significant pay packages'

Mr Lomas confirmed that current employees will be paid a bonus roughly similar to the amount received last year.

"In order to keep these people, we need to offer them broadly what they've been paid in the past," said Mr Lomas.

"So there will be significant pay packages, but that's the price of hiring that sort of resource."

PricewaterhouseCoopers is the administrator to the European arm of Lehman and the process of unravelling the firm's trades is expected to take many years.

"The prospect is that some creditors will lose money. How much - we can't determine that for a significant time," said Mr Lomas.

The process could take as long as seven years and would be "10 times" more complicated that the bankruptcy of US energy firm Enron, Mr Lomas said.

Around 1,000 creditors or their representatives listened to the administrators explain the long process ahead of them.

PWC said that they had recovered around just $5bn of a potential $550bn of obligations to creditors on the bank's balance sheet.

Lehman Brothers has more than $1 trillion worth of outstanding trades for PWC to work through.

Deals

PWC has already negotiated a deal with Nomura, which is to buy Lehman's European and Middle Eastern equities and investment bank operations.

It plans to retain an 1,000 staff in London and will pay them their 2007 bonuses.

Nomura is also buying the bank's franchise in the Asia Pacific region.

Barclays has bought Lehman's North American investment banking and capital markets divisions.

Lehman is also facing legal actions around the world.

Deutsche Bank said it has sued the bank to recover $72.5m (£49.2m) it says was accidentally transferred to Lehman after it had filed for bankruptcy.

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