Investment banking and Lehman brothers....?
What investment banking is all about?What is the work done in Lehman brothers?Why they were affected in the current crisis?
The answer can be pretty long.I don't mind reading them:)
- 1 decade agoFavorite Answer
Investment banks profit from companies and governments by raising money through issuing and selling securities in the capital markets (both equity and bond), as well as providing advice on transactions such as mergers and acquisitions. To perform these services in the US, an advisor must be a licensed broker dealer, and is subject to SEC (FINRA) regulation. Until the late 1980s, the United States and Canada maintained a separation between investment banking and commercial banks.
A majority of investment banks offer strategic advisory services for mergers, acquisitions, divestiture or other financial services for clients, such as the trading of derivatives, fixed income, foreign exchange, commodity, and equity securities.
Trading securities for cash or securities (i.e., facilitating transactions, market-making), or the promotion of securities (i.e., underwriting, research, etc.) is referred to as the "sell side."
Dealing with the pension funds, mutual funds, hedge funds, and the investing public who consume the products and services of the sell-side in order to maximize their return on investment constitutes the "buy side". Many firms have buy and sell side components.
The last two major bulge bracket firms on Wall Street were Goldman Sachs and Morgan Stanley until both banks elected to convert to traditional banking institutions on the 22nd of September, 2008, as part of a response to the US financial crisis. Citigroup, Credit Suisse, Deutsche Bank, HSBC, JP Morgan Chase, and UBS AG are "universal banks" rather than bulge-bracket investment banks, since they also accept deposits
Lehman Brothers Holdings Inc. (Pink Sheets: LEHMQ) (pronounced IPA: /ˈliːmən/) was a global financial-services firm prior to its bankruptcy and sale in 2008. The firm did business in investment banking, equity and fixed-income sales, research and trading, investment management, private equity, and private banking. It was a primary dealer in the U.S. Treasury securities market. Its primary subsidiaries included Lehman Brothers Inc., Neuberger Berman Inc., Aurora Loan Services, Inc., SIB Mortgage Corporation, Lehman Brothers Bank, FSB, Eagle Energy Partners, and the Crossroads Group. The firm's worldwide headquarters were in New York City, with regional headquarters in London and Tokyo, as well as offices located throughout the world.
On September 15, 2008, the firm filed for Chapter 11 bankruptcy protection; the filing marks the largest bankruptcy in U.S. history. The following day, Barclays plc announced its agreement to purchase, subject to regulatory approval, Lehman's North American investment-banking and trading divisions along with its New York headquarters building. On September 20, 2008, a revised version of that agreement was approved by Judge James Peck.
On September 22, 2008, Nomura Holdings, Inc. announced it agreed to acquire Lehman Brothers' franchise in the Asia Pacific region including Japan and Australia. The following day, Nomura announced its intentions to acquire Lehman Brothers' investment banking and equities businesses in Europe and the Middle East. A few weeks later it was announced that conditions to the deal had been met, and the deal became legally effective on Monday, 13 October. In 2007, Non-US subsidiaries of Lehman Brothers were responsible for over 50% of global revenue produced.
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 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.
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. Within a few years this business grew to become the most significant part of their operation. Following Henry's death from yellow fever in 1855, the remaining brothers continued to focus on their commodities-trading/brokerage operations.
Emanuel and Mayer Lehman
Emanuel and Mayer Lehman
By 1858, the center of cotton trading had shifted from the South to New York City, where factors and commission houses were based. Lehman opened its first branch office in New York City's Manhattan borough at 119 Liberty Street, and 32-year-old Emanuel relocated there to run the office. In 1862, facing difficulties as a result of the Civil War, the firm teamed up with a cotton merchant named John Durr to form Lehman, Durr & Co. Following the war the company helped finance Alabama's reconstruction. The firm's headquarters were eventually moved to Ne
- Anonymous4 years ago
The government didn't save any investment banks. Goldman got a cash infusion from Warren Buffet's Berkshire Hathaway. Morgan Stanley got a cash infusion from a Japanese insurance giant. Merrill got taken over by Bank of America. Bear Stearn's got taken over by JPMorganChase. All the other investment banks (like Smith Barney) were already subsidiaries of somebody (like Citigroup). AIG wasn't an investment bank; it's an insurance company. FannieMae and FreddieMac were US chartered mortgage dealers and as such were "special federal entities". Lehman went belly up because they were too far gone to save.
- Anonymous5 years ago
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- Anonymous1 decade ago
they went bankrupt.