Newspaper article The Evening Standard (London, England)

Out to Lunch at Lehman before the Fortress Fell; Closing Ranks: Employees Owned 30% of Lehman's Shares, a Benefit That Turned into a Weakness for Their Employer

Newspaper article The Evening Standard (London, England)

Out to Lunch at Lehman before the Fortress Fell; Closing Ranks: Employees Owned 30% of Lehman's Shares, a Benefit That Turned into a Weakness for Their Employer

Article excerpt

Byline: CHRIS BLACKHURST

ONE of the best lunches I've ever had in a career of many lunches was at Lehman Brothers. It was earlier this year, with Jeremy Isaacs, the bank's head of Europe. We sat at the top of Lehman's Canary Wharf tower in conditions of utmost splendour. The food and service was worthy of Le Gavroche. The room we were in was vast, the furnishings impeccable. I'd just come from seeing the Financial Services Authority, also in Canary Wharf.

We spent a good few minutes considering the plight of Northern Rock, and finding it hard to understand how anyone could not have seen that particular train crash coming. Much of the rest was about how Lehman was doing so well, how it had risen to the peak of the fixed-income trading rankings, how Goldman Sachs was right to keep an anxious eye on its US rival.

On the way back down in the lift, there were notices trumpeting the new interns. They were all champion this and star that. There were sportsmen who had thrown in promising professional careers to be with the bank.

Every one of them a born leader, and they had chosen Lehman.

Quite how those interns feel now probably doesn't bear repetition. The world-conquering organisation that they joined is a broken, busted shell.

Isaacs, the most convivial of hosts, has departed. Yet again, as with Northern Rock, people who should have known are saying they couldn't foresee the impending disaster.

Even those who used to work at the highest level are surprised. "I always had the view that Lehman was very tightly managed and had a really good appreciation of risk," said a former senior Lehman banker. "It's apparent that assumption was completely wrong.

It had taken a much bigger punt on the property market than virtually anyone in the organisation knew, apart from those doing it." One of the shames of the Lehman collapse is that, among the banks, it had one of the biggest staff share schemes the 20,000 employees owned 30% of the equity. …

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