Ten years ago today, at 7.56am, the fourth largest investment bank in the world filed for bankruptcy. It triggered the global financial crisis and led to governments scrambling to avoid a meltdown.
PwC was appointed as administrators and, as the bankers walked out, they walked in.
A decade later, having managed the most complex administration in history, the firm ensured that every unsecured creditor owed money by the UK arm of Lehman Brothers has been paid back in full. The final total was £10bn.
What’s not so well known is the story of the 80 people from PwC Northern Ireland firm who spent over five years in Lehmans. IT specialist Stephen McCullough spent two spells in London and his was a critical role – enabling the Administrators to figure out where the money was, and who was owed what.
“My primary role when I started was to make sure the right people were able to get access to the systems. As you’d expect, everything stopped when the bank shut. Everything was gone… there was literally no records - nothing. We had to recreate all the trades – it was the only way we could be certain what the creditors were owed.
“My first experience was eye-opening. Everything was extra-large: the desks, the chairs, even the canteen. It was all very impressive. There were a lot of PwC people working on this project and we worked very long hours, past midnight frequently. There was simply an enormous amount of work which had to be done. I remember going home one night after a very long shift and I couldn’t work out why my hotel key didn’t work. It turned out I was in the wrong hotel.
And everything had to be done in the most cost-efficient manner possible. Stephen delivered a project which reduced IT spend in one area by as much as 70%. As well as managing and updating systems, Stephen found himself reducing the bank’s data centres and cutting tens of millions of pounds in IT infrastructure.
“Lehman Brothers had two data centres in London. These were each the size of a football pitch and were state-of-the-art. However naturally as time goes on, the technology expired and so as they were no longer fit for purpose, we had to remove them.
“Again, when you walked in, your breath was taken away. This wasn’t just your average data centre. The machinery had been sprayed in the bank’s colours, some had the logo imprinted – it was very impressive.
“All in all, it took a year and a half to close this down. It wasn’t a process you could do overnight. There were thousands of systems and tens of thousands of servers – you need that for a working bank, not one in Administration. I brought it down to a couple of dozen systems and a hundred servers. The estate was reduced so it provided what was needed, and it saved millions and millions of pounds.”
Stephen ended up working on the administration twice in a five year period. With his varied expertise and deep knowledge of the IT systems, he was a valuable asset. Twice he finished contracts, and with a leaving card in hand at the lifts, was met by a manager who asked him to stay on to fix one more thing.
“There was a lot of pressure, and we felt it internally trying to get people’s money returned to them as well as externally in our own lives. And as much as people felt angry towards the bankers, many of them were going through very difficult times too – as the UK bank was going into administration there were people relocating from the States to join it, having sold their homes and with quite literally all their possessions being shipped over.
“I am very proud of the work the team did which ultimately saw everyone who was owed money getting it back. Being part of delivering a result like that makes is all worthwhile”.