Barclays to acquire some units of Lehman

British bank Barclays P.L.C. has agreed to acquire Lehman Bros. Holdings Inc.'s investment-banking and trading operations for $1.75 billion, potentially throwing a lifeline to more than 9,000 employees.

The deal, announced by Barclays' board in a statement last night, still needs approval of a Bankruptcy Court. It came after Lehman filed Monday for bankruptcy protection. Lehman collapsed from massive exposure to risky real estate holdings.

"This is a once-in-a-lifetime opportunity for Barclays," the bank's president, Robert E. Diamond Jr., said in the statement. "We will now have the best team and the most productive culture across the world's major financial markets, backed by the resources of an integrated universal bank."

Under the deal, Barclays will acquire Lehman's investment-banking and capital-operations businesses for $250 million and its New York headquarters and two data centers in New Jersey for $1.5 billion, the statement said. The division will be merged into Barclays Capital, its investment-banking arm.

Barclays, the third-biggest bank in the United Kingdom, earlier had withdrawn from weekend talks with Lehman about a possible outright acquisition.

Lehman's first bankruptcy hearing began late yesterday afternoon in a crowded courtroom at the U.S. Bankruptcy Court in Manhattan - just steps from Wall Street's iconic bull statue.

Shai Waisman, a lawyer from Weil, Gotshal & Manges L.L.P., representing Lehman Bros., argued in his opening statement that Lehman Bros.' downfall was the result of a "chain reaction" of events largely out of the investment bank's control.

"Lehman operated in an extremely unfavorable business environment," Waisman said, referring to declining asset values and low levels of liquidity.

Requests to get from a judge initial approval of potential asset sales and to obtain loans to operate while in bankruptcy were postponed by one day to a hearing scheduled for today.

Peck also approved a motion that JPMorgan Chase & Co. would remain Lehman's clearinghouse through the bankruptcy proceedings. The issue arose over the last two days, during which JPMorgan advanced Lehman $138 billion to allow it to keep trading and to "avoid a disruption of the financial markets," according to court filings.

JPMorgan advanced Lehman $87 billion when the market opened Monday, acting in part on a request by the Federal Reserve Bank of New York. The New York Fed later repaid JPMorgan that amount. Yesterday, JPMorgan advanced an additional $51 billion.

Also yesterday, the House Committee on Oversight and Government Reform said it would hold a hearing Sept. 25 to examine the "regulatory mistakes and financial excesses" that led to Lehman's bankruptcy filing. It asked Lehman chief executive officer Richard Fuld to testify before the committee.