SBI Caps, Lehman Bros change tie-up structure

MUMBAI, July 20: The relation between SBI Capital Markets Ltd and Lehman Brothers is facing a rough weather with the two partners decided to change the "strategic alliance" between the two parties into a simple alliance. Banking circles perceive this step as a prelude to the formal separation in the near future.

Earlier this year, the joint venture between ICICI Securities and JP Morgan fell apart as ICICI did not want to part with a higher stake to JP Morgan in I-Sec. The investment banking subsidiary of State Bank of India will no longer be the first choice for Lehman Brothers for GDR issues while the global investment firm will no longer be the first choice partner of SBI Caps in domestic debt securitisation, advisory services, disinvestment of PSUs and research.

Confirming the move, managing director of SBI Capital Markets, AR Barwe said that the investment firm can go it alone. "They can go ahead and do their own advisory services straightaway. They need not come to us. Similarly we can go ahead andparticipate in GDR issues without them," he saidAccording to Barwe, the alliance is still on but the terms have been tinkered with. "They are no longer first choice partners," a source said.

The strategic alliance meant that the both the firms would be first choice partners in five areas — GDR issue, corporate advisory services, debt securitisation, disinvestment of PSUs and research.