Lehman assets could benefit Barclays

By Steve Slater

LONDON (Reuters) - Barclays (BARC.L) is one of the few banks in a position to take a look at troubled U.S. rival Lehman Brothers LEH.N and could see some of its assets as a way to accelerate its U.S. expansion.

Barclays continues to be named in association with Lehman as the fourth-biggest U.S. investment bank holds intensive talks with U.S. officials to find a rescue package

Bank of America (BAC.N) has been tipped as most likely to emerge as a rescuer, but potentially as part of a consortium.

The Financial Times said Bank of America was mulling a joint bid with private equity investor JC Flowers and sovereign wealth fund China Investment Co, and said Barclays was also interested.

Barclays declined to comment.

Lehman's shares continued to tumble, however, amid fears it could fail to find a buyer or that any deal would leave little for shareholders. Its shares were down 10 percent at $3.79 at 4:35 p.m., cutting the bank's market value to under $3 billion (1.6 billion pounds). They traded above $48 as recently as May.

The involvement of the U.S. Treasury, Federal Reserve and others made the situation fluid and the outcome hard to predict, analysts said.

Bob Diamond, head of the Barclays Capital investment bank arm, said last month a move for Lehman was unlikely, but he did not rule it out.