US court backs Barclays over Lehman acquisition

THE City yesterday welcomed a US federal judge's ruling that Barclays' $1.85 billion (£1.14bn) acquisition of much of collapsed investment bank Lehman Brothers American business during the financial crisis was fair.

Lehman had argued that Barclays got a sweetheart deal in acquiring its US investment banking and brokerage business as the deal came just five days after the company's Chapter 11 bankruptcy filing in September 2008. But bankruptcy judge James Peck said in his 103-page judgment late on Tuesday: "The sale process may have been imperfect, but it was still adequate under the exceptional circumstances of Lehman Week."

Seymour Pierce analyst Bruce Packard wrote in a research note yesterday: "This is a good decision for Barclays." He said a ruling against Barclays could have resulted in it making payments to the Lehman side, thereby hitting the British bank's core Tier 1 capital ratio.