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Journalism of Courage
One year after the collapse of US financial giant Lehman Brothers,its business as usual at its offices in Mumbai,but under a new owner financial conglomerate Nomura. The Japanese firm has successfully integrated the failed US giants operations in investment banking and BPO wings in India with its business.
Integration has been smooth and there has been very little voluntary turnover, a spokesperson of Nomura said in a written statement to The Indian Express. There were around 300 people employed at Lehman Brothers main office at Worli while around 1,700 people work at the back office in Powai. A Nomura official,who did not wish to be identified,said there was no unusual employee exit after the takeover in October 2008.
Before the problems in the US started,Lehman was a strong player in the investment banking field,private equity business,stock broking and back-office operations that handle trading settlement duties as well as information technology (IT) research and development in India. Lehman,which set up its BPO operations in India in 2005,saw the number of employees going up by eight times by the middle of this year (2008) and had declared its plans to grow the operations.
Under the terms of the transaction,all employees in Asia Pacific was offered employment with Nomura. The deal did not include any trading assets or trading liabilities of Lehman. We continue to build business momentum in India and globally as we progress to our goal of creating Asias pre-eminent global investment bank, the Nomura spokesperson said.
Nomura,which employs over 2,600 people in India,acquired the equities sales and trading,equity research,fixed income liquid markets sales and trading,and investment banking teams. It recently launched Nomura Fixed Income Securities Private Ltd,saying Indias fixed income market is arguably the second largest in Asia (after Japan).
Lehman Brothers was a strong player in the private equity fund business in India. It had invested close to $1 billion in various Indian companies in the 2005-08 period. It also invested around Rs 430 crore in 14 Indian companies as of March 2008 through two funds registered as FIIs with the Sebi.
Lehman sold its Indian stocks during the crisis period in 2008. It had invested heavily in realty stocks like Unitech,DLF Assets and Future Capital. It also invested in Spice,Edelweiss,Dhampur Sugar,Emkay Global,Development Credit Bank and Anant Raj Ind. As late as June 2008,a real estate fund managed by Lehman bought a 50 per cent stake in a project of Unitech for about $175 million.
Lehman first entered India in the mid-1990s following the opening up of the economy and markets. It wound down its Indian operations in 1999 amid weak business growth and the Asian financial crisis,and re-entered again in 2005.
Financial sector experts said the Indian financial sector has been healthy and sound in spite of many global bank failures and the financial turbulence across the world. There was not a single bank failure in India. The Indian banking system is quite healthy when compared to other countries. Theres no problem here, said Hemendra Kothari,former chairman of DSP Merrill Lynch.
On the other hand,81 banks have failed this year in the US,including 45 in the second quarter and regulators there are bracing for hundreds of small and medium-size banks to collapse in the coming months.
US Federal Deposit Insurance Corporation recently reported that the banking industry lost $3.7 billion in the second quarter due to a surge in bad loans made to home builders,commercial real estate developers and small and mid-size businesses. The number of problem banks in the US increased to 416 from 305 in the first quarter.
