Scramble to scoop £50m fees jackpot in HBOS takeover

It is the richest of ironies that the day after Lehman Brothers corporate finance bankers were sent home from Canary Wharf jobless, one of their biggest clients was plotting a takeover of Britain's biggest mortgage lender.

Had Lehman not collapsed on Monday, it would, in its role as corporate broker to Lloyds TSB, have been reaping tens of millions of pounds in fees from the takeover of HBOS.

Lehman was crowing two years ago when it captured Lloyds as its first corporate broking client. Now the fees will go elsewhere, as other bankers snap up Lehman's old clients.

Acting as corporate broker consists of providing impartial advice regarding a company's investor base. That is fairly humdrum stuff, until a big deal or fundraising comes along, when they gain the box seat to advise and pick up bumper fees.

Lehman, which acted for Lloyds on the sale of its Abbey Life insurance unit, would have been in line to share as much as £50 million if Lloyds captures HBOS at its current market value of £10 billion.

The fall of Lehman leaves Citigroup as sole broker and in pole position to scoop the fees jackpot. But rivals are already scrambling for a role on the high-profile deal.

Morgan Stanley could be an early winner as the American bank advises Lloyds and is also broker to HBOS.Lehman's rivals are also scrambling to snatch Lehman's five other FTSE 100 brokerships — Legal & General, 3i, Invensys, the London Stock Exchange and Tesco. All are reviewing their broking line-up following Lehman's collapse.

Lehman's presence in corporate broking was small compared to rivals such as Cazenove, the Queen's stock-broker, which has 35 FTSE 100 clients on its broking books, but its client lists will be of interest to Bob Diamond.

Diamond tried to buy Cazenove four years ago before the firm struck a deal with American bank JP Morgan. Barclays is in talks to lift the firm's European investment banking team.