Another big day in the market. Lehman Brothers capital markets division is getting a second chance through the acquisiton by Barclays. It seems like a great fit, and a great deal for Barclays who will in one week raise its presence in the U.S. capital markets by unprecedented levels.

There are still many questions to be asked. Will all 10,000 Lehman Brothers employees retain their jobs? How will the operations be integrated in regards to both business and technology?
Will Lehman’s capital markets business remain in tact?

According to Larry Tabb, Founder of TABB Group, “Barclays is a great partner for the Lehman Brothers. They don’t have much of an equity business in the U.S., so Lehman’s equity business will likely stay intact.”

He notes, that Barclays does have a strong fixed income group, but he says Lehman’s is a lot stronger. Tabb says, there will likely be redundancies there but it’s hard to say at this point who the winner will be in this deal.”

“Barclays certainly bought Lehman at a great price and didn’t have to take the stuff they didn’t want. It’s a shame that they weren’t able to manage before bankruptcy filing," he notes.

Technology is another critical area where there will be redundancies. Tabb says that “Technology will be a critical issue—our estimates were Lehman had a $2.5 billion technology budget (which included people). That will be cut once they consolidated. There will be a lot of savings there. What will stay and what will go who knows, but I could see that being cut by $1 billion.”

Of course the bigger question everyone in the industry is wondering about it what this means to the shape of financial markets? Will the model for the larger investment banks go away? Will the fixed income model change to mimic the equity model? Will the large conglomerates be broken down into smaller businesses and new types of firms form to fill the gaps?

Tabb believes that we will know soon enough. “I think within a couple of years this will all be settled. The market is going to change relatively quickly. The government is bailing out all these banks and they are not going to want to do this again. They are putting out the fires now and after that we’ll see some regulatory reform.”

Here are some links to other related stories in today's news.
Morgan Stanley and Goldman slide, HBOS in takeover talks

Stocks Dive in Early Trading

Lehman, Workers Score Reprieve