Investment bank Lehman Brothers has filed for bankruptcy and Bank of America has agreed to rescue investment bank Merill Lynch for $50m, as the latest casualties of the credit crunch sent more shockwaves through the global banking sector.
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The financial crisis will create a major IT upheaval as businesses, struggling during the downturn, integrate and attempt to cut costs and shore up business.
The IT departments of financial services firms across Europe, responsible for the employment of hundreds of thousands of IT workers as well as the support of a wider IT industry, will continue to consolidate and cut jobs.
PJ Di Giammarino, CEO at financial services think-tank JWG-IT, said, "In Europe we estimate that there are hundreds of thousands of IT workers in the financial services sector. But there are a bigger number of people affected by consolidation because it affects all the suppliers to the industry."
As the banking giants look for ways of surviving the industry's downturn, accountancy firm Pricewaterhousecoopers (PwC) has been named administrator for Lehman Brothers' European headquarters in London.
Tony Lomas, joint administrator and PwC partner, said in a statement, "Because the group managed its funding on a global basis, the UK trading operation found itself unable to meet its obligations when the flow of funds dried up last night. Our priority now is to work with management and trading counterparties to agree the manner in which the assets and liabilities will be handled."
"Clearly the market turmoil calls for consolidation and the businesses that are consolidating need to consolidate the cost base. The IT of companies involved has to become rationalised and support a bigger business," said Di Giammarino.