Weakness in Asian stock markets weighed on the Indian rupee as it fell further by two paise to 40.1650/1750 against the greenback in late morning deals.
Friday, September 19, 2008
World stocks rocket as governments step up rescue efforts
Global equity markets soared on Friday, lifted by mammoth share price gains for banks, as governments worldwide stepped up their fight against the worst financial crisis in decades.
Lehman in India: 2,500 jobs at stake
SINGAPORE/SYDNEY: Employees of US banks Lehman Brothers and Merrill Lynch in Asia struggled to come to terms on Monday with the speedy redrawing of Wall Street's financial landscape, as Lehman filed for bankruptcy and Merrill was sold to Bank of America
"It's a little surreal," one long-time Merrill employee in Hong Kong told Reuters. "The end for Lehman was pretty ugly. They just ran out of options and time.
"It's hard to believe there will be no more Merrill Lynch. It's just shockingly fast how it happened."
Lehman employs about 3,000 staff, excluding the India back office, in Asia and the region has proved a sweet spot for the US bank as it made inroads into new markets.
The Wall Street bank had expanded aggressively in Asia in the last two years, ramping up foreign exchange and investment banking operations in Singapore, Hong Kong and Mumbai.
It was also planning a bigger presence in China where it recently advised Aluminum Corp of China (Chinalco), which teamed up with Alcoa, on its $14 billion purchase of a stake in Rio Tinto
For many employees, news was hard to come by as Monday was a holiday in Hong Kong and Tokyo -- home to Lehman's larger Asian offices.
At Lehman's Singapore office at the downtown Suntec Tower, only a trickle of staff arrived for work, dodging reporters' questions. At a nearby coffee bar, two Lehman staffers said they had been called at 2200 GMT Sunday to be at work early next morning.
Asked whether it was business as usual, a Lehman trader contacted by telephone told Reuters: "What business is there? There's nothing to do. All I've heard is what's being reported on the news."
A colleague in Hong Kong, talking by telephone and asking not to be named because of the sensitivity of the situation, said: "There are very few instructions at this point. I just need to look around and see what opportunities there are. Basically, I have to figure out something new to do.
"Nothing has been relayed to employees yet. As far as I'm concerned tomorrow is supposed to be another workday. No one prepares for things like this - you go along as things move along.'
There was more uncertainty in Australia, where Lehman entered markets last year through the acquisition of Grange Securities for about $98 million. Earlier this year, it moved in to a new office tower in Sydney's central business district to accommodate its expanded team.
"If, for example, there's a filing for Chapter 11, where would that leave all of us ... probably we stand behind other creditors," said one of the bank's Sydney-based employees. The mood among Merrill staff in India was a mix of anxiety amid the uncertainty and some initial optimism over the bank's sale to Bank of America.
"Morale has actually lifted after news of Bank of America taking us over," said one Merrill employee by phone on his way to work in Mumbai.
"One, the uncertainty ends about Merrill's survival and, two, we can actually look forward to Bank of America strengthening or expanding India. It has almost no presence here."
Looking ahead, financial market analysts queried whether this was the end of the credit crisis.
"This is like Voldemort. You think he's dead and he resurfaces time and again. It's shadowy and refuses to die," said Nomura Australia equity strategist Eric Betts, referring to the evil character in the Harry Potter novels.As regards Lehman's India operations, sources say:
Settlements will be done through courts
70 locations will have outright sale of assets
2500 jobs in India, 3000 plus jobs in Asia
Their KPO operation in Powai may soon become a takeover target.
No broker dealer subsidiaries to be included in it.
Holdings in Lehman will be sold off in phased manner
"It's a little surreal," one long-time Merrill employee in Hong Kong told Reuters. "The end for Lehman was pretty ugly. They just ran out of options and time.
"It's hard to believe there will be no more Merrill Lynch. It's just shockingly fast how it happened."
Lehman employs about 3,000 staff, excluding the India back office, in Asia and the region has proved a sweet spot for the US bank as it made inroads into new markets.
The Wall Street bank had expanded aggressively in Asia in the last two years, ramping up foreign exchange and investment banking operations in Singapore, Hong Kong and Mumbai.
It was also planning a bigger presence in China where it recently advised Aluminum Corp of China (Chinalco), which teamed up with Alcoa, on its $14 billion purchase of a stake in Rio Tinto
For many employees, news was hard to come by as Monday was a holiday in Hong Kong and Tokyo -- home to Lehman's larger Asian offices.
At Lehman's Singapore office at the downtown Suntec Tower, only a trickle of staff arrived for work, dodging reporters' questions. At a nearby coffee bar, two Lehman staffers said they had been called at 2200 GMT Sunday to be at work early next morning.
Asked whether it was business as usual, a Lehman trader contacted by telephone told Reuters: "What business is there? There's nothing to do. All I've heard is what's being reported on the news."
A colleague in Hong Kong, talking by telephone and asking not to be named because of the sensitivity of the situation, said: "There are very few instructions at this point. I just need to look around and see what opportunities there are. Basically, I have to figure out something new to do.
"Nothing has been relayed to employees yet. As far as I'm concerned tomorrow is supposed to be another workday. No one prepares for things like this - you go along as things move along.'
There was more uncertainty in Australia, where Lehman entered markets last year through the acquisition of Grange Securities for about $98 million. Earlier this year, it moved in to a new office tower in Sydney's central business district to accommodate its expanded team.
"If, for example, there's a filing for Chapter 11, where would that leave all of us ... probably we stand behind other creditors," said one of the bank's Sydney-based employees. The mood among Merrill staff in India was a mix of anxiety amid the uncertainty and some initial optimism over the bank's sale to Bank of America.
"Morale has actually lifted after news of Bank of America taking us over," said one Merrill employee by phone on his way to work in Mumbai.
"One, the uncertainty ends about Merrill's survival and, two, we can actually look forward to Bank of America strengthening or expanding India. It has almost no presence here."
Looking ahead, financial market analysts queried whether this was the end of the credit crisis.
"This is like Voldemort. You think he's dead and he resurfaces time and again. It's shadowy and refuses to die," said Nomura Australia equity strategist Eric Betts, referring to the evil character in the Harry Potter novels.As regards Lehman's India operations, sources say:
Settlements will be done through courts
70 locations will have outright sale of assets
2500 jobs in India, 3000 plus jobs in Asia
Their KPO operation in Powai may soon become a takeover target.
No broker dealer subsidiaries to be included in it.
Holdings in Lehman will be sold off in phased manner
SBI Lehman exposure $5mn
State Bank of India (SBI) said it sees little impact on the balance sheet from the $5 million exposure to Lehman Brothers. The bank is expecting to recover 60-70% of the exposure. Although interest rates may not fall immediately, the bank would be comfortable with a loan growth of 24-25% in FY09.
SBI officials confirmed that while deposit growth has been robust, liquidity may stay tight, and also warned that bad debt in the Indian banking sector may rise.
SBI officials confirmed that while deposit growth has been robust, liquidity may stay tight, and also warned that bad debt in the Indian banking sector may rise.
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