Lehman in fresh shake-up of top executives

The head of Lehman Brothers’ international operations is stepping down, triggering a broader shake-up of senior management at the embattled Wall Street bank. Jeremy Isaacs, the long-serving chief executive of Lehman’s businesses in Europe and Asia, is giving up his executive role and will leave the bank at the end of the year.

Benoit Savoret, chief operating officer for Europe and the Middle East, and Andrew Morton, promoted this year to run Lehman’s key fixed income division, are also stepping down. The shake-up, the latest in a series of management changes at Lehman in recent months, comes as the bank tries to shore up its balance sheet, which has been weakened by the credit crunch. The bank has been talking to the Korea Development Bank about buying a stake and the Financial Times has learnt that Royal Bank of Canada considered buying the bank in July, but decided against a deal.

One leading institutional shareholder in Lehman says the investment bank’s negotiations with RBC and other potential investors raise doubts about whether the current round of talks will succeed. Lehman’s executives had taken on new jobs in recent months and the latest appointments are likely to trigger further management changes. Mr Isaacs’ position has been in question since Dick Fuld, Lehman’s chairman and chief executive, in June chose Bart McDade, head of the bank’s equities division, as president, replacing Joe Gregory, who was ousted after heavy losses.

Mr Isaacs, a respected former Goldman Sachs banker who has masterminded Lehman’s expansion in Europe and Asia, was also considered for the role but was passed over. Though he signalled his desire to leave at the time, he was persuaded to stay on for the summer. In his place, Lehman is promoting two highly regarded younger bankers to take joint charge of operations in Europe and the Middle East. They are Christian Meissner, currently head of Lehman’s investment banking division in the region, and Riccardo Banchetti, the bank’s chief executive in Italy.

Mr Savoret’s departure has come after he was passed over as a possible replacement for Mr Isaacs. Mr Morton leaves after Lehman’s fixed-income business reported disappointing results. He will be replaced by Eric Felder, currently Lehman’s head of global credit products and municipal finance, and Hyung Lee, head of capital markets in Asia. Lehman’s international businesses have accounted for much of the bank’s growth in recent years and are expected to play an increasingly important role.

In 2007, Lehman’s operations in Europe, the Middle East and Asia accounted for more than half the bank’s income of $6bn. However, the expansion has involved heavy investment which rival bankers believe may prove difficult to maintain during a downturn. By promoting Mr Meissner and Mr Banchetti, Lehman is attempting to maintain the confidence of its clients while tackling the problems in the fixed-income business. Mr Meissner, who has helped to raise Lehman’s profile in investment banking in Europe since joining from Goldman Sachs, is well regarded by colleagues and by corporate clients. Mr Banchetti, a former fixed income salesman, brings expertise on the trading side of the business.

In recent months a number of former Lehman executives have returned to the firm. They include Michael Gelband, the bank’s former fixed income chief, who is now global head of capital markets.

Source: FinancialTimes