Lehman creditors told failure bigger than Enron default

IRISH CREDITORS of the failed investment bank Lehman Brothers International (Europe) will have to wait a "significant time" before finding out if they will recover money owed to them.

Following a meeting in London on Friday, held by the administrator of the bank's European subsidiary, PricewaterhouseCoopers, joint administrator Tony Lomas told some 1,000 creditors who attended that the collapse of the bank was "at least 10 times as big" as the bankruptcy of the energy trading company Enron in 2001. He also said that it would take some time to work through the bank's $1 trillion (€790 billion) of positions.

"The prospect is that some creditors will lose money. How much? We can't determine that for a significant time," he said. However, all of the $22.3 billion in client assets will be returned.

A list of the bank's 7,000 counterparties reveals that more than 170 Irish financial institutions have exposure to Lehman's European branch, either owing, or being owed, money by the bank.

While the exact value of the individual exposures is not indicated, the list reads like a who's who of Ireland's financial sector. Most of the major Irish banks, including AIB, Bank of Ireland and Anglo Irish Bank, are listed as being either a creditor or debtor of the bank, while Irish Life has exposure through its investment management and insurance arms.

Earlier this year Irish Life revealed that the failed investment bank had provided the set returns and capital protection on a number of its tracker bonds.

The largest four Irish stockbroking firms - NCB Stockbrokers, Davy Stockbrokers, Goodbody Stockbrokers and Merrion Stockbrokers - also make the list, while asset managers such as PI Investment Management, Hibernian Investment Managers and Setanta Investment Management also feature.

IFSC institutions also figure heavily in the list of Irish-based debtors or creditors. Those listed include Merrill Lynch International Bank, Unicredito Italiano Bank (Ireland), Pioneer Alternative Investment Management and PFPC International as well as the conduit, Ormond Quay Funding, of troubled bank Sachsen LB.

Moreover, financier Dermot Desmond is identified as having exposure to Lehman Brothers through the hedge fund IIU Convertible Fund plc, which is run by his company IIU Asset Strategies, as are Seán Quinn and Derek Quinlan, through Quinn Direct Insurance and Quinlan Private, respectively.

Tiarnan O'Mahony's failed investment vehicle, International Securities Trading Corporation, also makes the list.

Pwc has retained some 1,100 Lehman Brothers staff to help it unwind the business, which is likely to take longer than that of the bank's US unit. - (Additional reporting: Reuters)