Lehman Brothers invested in IT despite credit crunch
It spent $309M on technology and communications in the past quarter
Computerworld UK - Lehman Brothers Holdings Inc. was boosting its investment in IT even as it headed toward bankruptcy.
In the quarter ended Aug. 31, the New York-based company spent $309 million on technology and communications, up from $282 million in the same period last year.
Lehman Brothers' ICT (information and communications technology) costs rose 18% in 2007 from 2006 to reach $1.145 billion, reflecting increased costs from the continued expansion of its investment management systems, according to filings by the bank.
The firm is also heavily involved in a number of technology-related projects in London and elsewhere. Earlier this summer, Lehman Brothers announced a joint venture with London Stock Exchange Group PLC (LSE) to create a high-speed trading platform for equities called Baikal.
Slated for launch in the first quarter of 2009, Baikal would combine a "dark liquidity pool" with algorithmic trading functionality to allow anonymity to traders so that their strategies remain secret.
Industry commentators see the project as the LSE's attempt to shore up its offerings in the face of increased competition from new rivals that have blossomed in the past year.
An LSE spokeswoman said the exchange remains committed to its Baikal dark-pool project remains even after its project partner filed for bankruptcy protection. "Baikal is an important market-efficiency solution for institutional business," she said.
"Since its announcement in June, we have held around 80 meetings with potential users of the platform," the spokeswoman said. "It has had a very positive reception from institutional investors, and a number of investment banks and brokers have expressed an interest in taking an equity stake in Baikal as well as using its services."
On Sept. 5, Credit Suisse Group announced a partnership deal with Lehman Brothers to link their respective dark pools in the U.S. -- named AES CrossFinder and LXSM. Credit Suisse declined to comment on the impact of Lehman's announcement on that deal.
"The units of Lehman currently selling technology to other banks are likely to be sold off," said Ralph Silva, a senior analyst at financial services advisory firm Tower Group Inc.
"All banks are concerned about the ramifications of losing technology, and want more technology to be in-house," he said. "So in this kind of situation, they tend to negotiate to get hold of the code or the entire systems. In Lehman's case, the phone calls are probably already happening."
Sorting out the future of Lehman Brothers' IT partnerships could prove easier than winding down its complex financial deals. Meanwhile, Lehman Brothers' bankruptcy is likely to have a profound spillover effect to the IT industry, according to Katy Ring, an analyst at The Bathwick Group.



- Excel 2010 Cheat Sheet
- Register for this Computerworld Insider Cheat Sheet and gain access to hundreds of premium content articles, guides, product reviews and more.
- Overcome Top 7 Admin Challenges of Active Directory
- As Active Directory's role in the enterprise has drastically increased, so has the need to secure the data. Gain insight on creating repeatable,...
- Insiders Can Ruin Your Company. Take Action.
- Did you know that 80 percent of threats to an organization come from the inside? The threat from insiders is often overlooked in...
- Smarter Commerce is redefining value chain visibility
- Smarter Commerce is redefining the value chain in the age of the customer. It starts with putting the customer at the center of...
- Identity Governance: The Business Imperatives
- This white paper describes the business challenges and opportunities that are driving interest in Identity Governance while discussing considerations your organization should make...
- The Executive Buyer's Guide to Project Portfolio Management
- The Innotas Executive Buyer's Guide provides you with a concise overview of Project Portfolio Management (PPM) and delivers important buying criteria to help... All Management and Careers White Papers
- Live Webcast
Integrated IT Operations Management in the Cloud - Join award-winning technology editor Stan Gibson and Andrew White, CMO at Numara Software, to learn how asset management and service management are converging...
- Integrated IT Operations Management in the Cloud
- Join award-winning technology editor Stan Gibson and Andrew White, CMO at Numara Software, to learn how asset management and service management are converging...
- Optimizing Networks for the Cloud
- Join guest speaker, Rohit Mehra, IDC Director of Enterprise Communications Infrastructure, to explore current trends, discuss best practices for optimizing Data Center and...
- Apps QuickStart Series Part 2: Designing and Deploying SQL Server on VMware vSphere
- Download this webcast to learn about the design considerations for virtualizing SQL workloads, performance and scalability information and high-availability options, as well as...
- Apps QuickStart Series Part 1: Designing and Deploying Exchange 2010 on VMware vSphere
- Download this webcast to learn the virtual hardware design considerations for Exchange 2010, deployment using the building block approach, options for high-availability and...
- Customer Spotlight: How IPC The Hospitalist Company Implemented Oracle on VMware
- Have you been looking to hear about customer's experiences with the new VMware vCenter Site Recovery Manager product? View this webcast to learn... All Management and Careers Webcasts