Mixed fortunes for Merrill and Lehman IT staff?
You would have thought that technology staff at Lehman and Merrill Lynch would be among the first to go in the wake of takeovers and mergers. However, while there will undoubtedly be redundancies, many IT staff may escape the axe.
Barclays and Nomura are buying up the scraps of Lehman. Nomura has already bought Lehman's Asian operations and is the sole bidder for the European arm, which could secure 1,000 UK jobs. It has also expressed an interest in its trading and IT systems.
The Barclays-Lehman US entity, meanwhile, is likely to spend around $1bn on technology globally next year, according to research by the TABB Group. This isn't great, though: Lehman alone would have spent $2.5bn this year.
Merrill's IT is decidedly more cutting edge than Bank of America's which could mean techies are in for a rough ride.
Robert Iati, partner with TABB Group, says: "While many of Merrill Lynch's current businesses will run in a manner similar to the past, some operating redundancies are inevitable, forcing reduction of staff and systems by at least $1.5bn to $2bn. Bank of America is more conservative, with a less aggressive plan for technology spending."
The TABB report suggests the Merrill purchase and Lehman's downfall could leave an IT spending hole of up to $3bn.
Global IT spend across capital markets is likely to shrink by up to 16% over this year and into 2009, according to research by TowerGroup. And TABB reckons US financial players are set to slash technology budgets by 27.3% next year, which will inevitably leave software vendors reeling.
But Bank of America, Barclays and Nomura are going to have to balance tighter IT budgets with the need to integrate technology systems and staff while avoiding unnecessary redundancies, says TowerGroup.
Bob McDowell, senior analyst at TowerGroup, reckons the banks' technology systems are likely to remain segregated in the short term as the new ventures focus on bigger integration issues.