Barclays in billion pound Lehman deal

By Steve Slater and Lorraine Turner

LONDON (Reuters) - Barclays, which over the weekend balked at acquiring stricken Lehman Brothers Holdings, agreed to pay about $1.75 billion (1 billion pounds) for some of the bank's prime U.S. assets following its bankruptcy filing.

Most of the price tag was accounted for by Lehman's New York headquarters and two data centres, while Barclays will pay just $250 million in cash for Lehman's North American investment banking and capital markets businesses.

The operations include fixed income and equities sales, trading and research, and investment banking, giving Barclays a major U.S. investment banking presence and helping its president Bob Diamond realize his ambition to take on Wall Street investment banks on their own turf.

The deal, announced late on Tuesday, would unite two big debt trading houses and could staunch the flow of customers fleeing Lehman in the wake of the largest bankruptcy in U.S. history.

It comes after days of intense upheaval on Wall Street, which also saw the U.S. government agreeing late on Tuesday to rescue American International Group with an $85 billion loan from the Federal Reserve.

The Lehman operations to be acquired have about 10,000 employees, estimated trading assets of $72 billion (40 billion pounds), and $68 billion (38 billion pounds) in liabilities. The businesses will be merged into Barclays Capital, which is headed by Diamond, a former executive of Credit Suisse First Boston and Morgan Stanley.

'ONCE IN A LIFETIME'

"This is a once in a lifetime opportunity for Barclays," Diamond said.