When Lehman Brothers’ European business was plunged into administration a year ago, the first reaction of its newly appointed co-chief executive, Christian Meissner, was that the game was up. In a hastily-arranged town hall meeting, he told staff to move and find new jobs. He then set about phoning friends and contacts within the industry to see if they would recruit his former hands.

In the chaotic days that followed, what appeared to be a complete unravelling of an investment bank that had only recently started to assert itself outside the US, became a coherent rescue that owed much to the collective will of a group of bankers that had made up their minds as to what they wanted: to stick together.

Meissner’s early scepticism about the prospects for survival were borne out of frustration at the haste with which the US operation had struck a deal with Barclays — leaving Europe high and dry. Although reluctant to do a similar deal in Europe, Barclays said it would take the top rainmakers and leave the rest and it booked out the rooms of a hotel near Lehman’s Bank Street offices so that headhunters could conduct interviews with those they wanted to hire. In response, Meissner pointed out that there was no need for secrecy, and that he had plenty of office space that Barclays could use for free.

Meissner’s openness is indicative of his nature, but it was also borne out of his own situation — he and Riccardo Banchetti had been jointly promoted to the top post only a week before, following Jeremy Isaacs’s departure. He therefore had little time to assert his authority — and establish his leadership credentials over people who had been his professional equals a week previously.

Instead, he went into open consultation with a 45-strong group of managing directors about what they wanted to do and even an invitation from Nomura’s special adviser, Sadeq Sayeed, to a meeting at a Kensington hotel failed to immediately raise his hopes.

But that meeting produced results. Through talking to Sayeed, he soon learned that this was no opportunistic approach — Nomura been actively pursuing a credible international foothold in international investment banking for months. It had tried to take parts of Bear Stearns’ European business, while in the days leading up to Lehman’s bankruptcy, it had offered a capital injection to the US firm’s management committee. That offer was rejected but it showed Nomura’s commitment.

What impressed Meissner was that Nomura agreed to his request to save the entire operation first, and then to offer proper severance terms to those people it did not want to keep. This was in stark contrast to the approach taken by Barclays, which tried to cherry-pick the bank’s European rainmakers.

Sayeed agreed to pay staff two year bonuses on the condition that 75% of its managing directors signed contracts with Nomura — and 90% said yes. Cynics might argue that there were not many other options for unemployed investment bankers at the time, but the move preserved the culture and enabled Nomura to keep the majority of Lehman’s best people.

Not all of the team remained and many went to rivals — Barclays and Rothschild have re-stocked their ranks with former Lehman bankers, while others have launched their own operations. Meissner himself at one point in the immediate aftermath considered setting up a boutique — but with the global financial systems in meltdown, he judged it not the best time to be launching a new venture. He was also persuaded by the collective loyalty of a group of bankers, many of whom he had been responsible for recruiting.

Having experienced the excitement of engineering an improbable rescue — and taken a demotion to deputy head of global investment banking at the new firm — Meissner buckled down to the integration. He now faces the more mundane task of re-building a business — the collapse of Lehman and subsequent rescue removed it from the playing field for three months and reduced a healthy pipeline of business to zero. The big issue for Nomura remains how to re-build that

pipeline.

Tooled-up traders

The individuals within the investment bank who worked most closely with Meissner were William Vereker, who runs European investment banking; Adrian Mee, head of European M&A and Bridgit Anderson, who is chief operating officer of investment banking. Rachid Bouzouba, who runs the equities business, also played a big part in the deal. Having shown the sort of admirable qualities of loyalty not usually associated with investment bankers, Meissner’s charges must now start bringing back the deals and the revenues are showing an improving trend. In the first quarter, Nomura’s revenue from investment banking, global markets and asset management outside Japan exceeded its domestic results for the first time.

While the hiatus has hurt the investment banking business, and continues to do so, the trading divisions bounced back much more quickly. The fixed income department endured considerable upheaval, but has been able to reinvent itself. It cherry-picked 250 staff from a pool of 700 and put them together with Nomura’s 300 strong European effort.

"We were effectively a start up because the way the business in Europe was acquired meant that we hired only the best people, and we had no toxic assets to deal with because Nomura had a pristine balance sheet. That gave us time to decide on our strategy," said Georges Assi, co-head of European fixed income at Nomura and a former Lehman banker.

In fixed income, Nomura closed its proprietary operations and its business consists of a flow business and a structured solutions business. Kieran Higgins, Assi’s fellow co-head said that the revenue run-rate since the start of the financial year is higher than at any time at Lehman Brothers.

Meanwhile, Bouzouba is confident his equities team can rebuild market share and replicate Lehman-like revenues. He has set a target to be in the top five banks by market share for European equities by March 2011.

Where are they now?

Not all of Lehman’s senior European bankers stayed on through the transition. While their careers have since taken divergent paths, almost all have ended up at a common destination: investment banking boutiques, many of them start-ups. David Rothnie looks at some of the ones who got away.

Then: Co-chief executive, Lehman Brothers International

Now: Partner, Pactum Advisers.

Banchetti "immediately disengaged" once Lehman went into administration, according to former colleagues. He didn’t formally leave the bank until March this year, but never had a new job or title at Nomura. The Italian fixed income specialist had been promoted at the same time as Meissner to provide fixed income expertise alongside Meissner’s ECM and M&A nous. In March he set up Pactum Advisers, a two-man shop set up with compatriot Antonio Miele, the former head of structured solutions for southern Europe at

Nomura

 

Then: Head of sovereign wealth fund coverage
Now: Head of Middle East, KKR
The highly-skilled former head of the bank’s media investment banking was sometimes known for the speed at which he drove his sports car out of the Lehman building, and he wasted no time in leaving following the bank’s collapse, switching to a plum job launching KKR’s Middle East operation. It looked like great timing in October 2008, but dealflow in the region then dried up. However, KKR pressed ahead with its office opening in Dubai.

 

Then: former co-head, European investment banking
Now: managing director, Lazard
De Rosnay was another who wanted no part in the Nomura project. "He’s somewhere in Switzerland," one colleague commented when asked about his whereabouts in the days following the collapse. He returned as soon as October to take a job at Lazard where he is using his skills as a specialist in healthcare investment banking.

 

Then: former head of UK investment banking
Now: founder, Ondra Partners
Tory was another who plotted his own course, but colleagues remember him being "fully supportive and helpful" in the rescue process. He is understood to have at the time held outline talks with Meissner and Vereker about launching a boutique. He has since hired about a dozen former Lehman bankers to his boutique, Ondra Partners, which is the Basque word for honour.

 

Then: Chief executive, Lehman Brothers France
Now: Chief executive, London Stock Exchange
Rolet took over from Dame Clara Furse at the London Stock Exchange in May and swiftly set about cutting 120 jobs, creating a new structure and reducing fees. When he was head of European and Asian equities at Lehman Brothers he built a reputation as a valued LSE ally and was the driving force behind the exchange’s ambitious plan to develop its dark pool trading system, Baikal.

 

Then: Chief executive, Lehman Brothers International
Then: former global head of fixed income, Lehman Brothers
Now: founders, JRJ Ventures
Isaacs and Nagioff left Lehman shortly before it collapsed, but the departure of both — and Isaacs in particular — foreshadowed the ruthlessness with which Lehman’s US management cut Europe loose.

The bank’s senior management were shocked when Isaacs left after losing an internal power struggle with Bart McDade to become chief operating officer. Meissner is said to have had mixed feelings about being promoted to Isaacs’ position given the nature of his departure. London born and based Nagioff, meanwhile, had become the symbol of Lehman’s ‘one firm’ ethos after he became the first global divisional head to be based outside the US.