NEWYORK / SINGAPORE - Employees of U.S. investment banks Merrill Lynch and Lehman Brothers struggled to
come to terms with the speedy redrawing of Wall Street's financial landscape after Lehman filed for bankruptcy and Merrill was sold to Bank of America.

'Everybody has been shellshocked,' a Merrill Lynch & Co Inc trader said on Monday on his way into the company's New York headquarters.

'Nobody thought we'd be bought by Bank of America in a million years. At least we won't be bankrupt.

'It should be a interesting day at work.'

The New York contingent of Merrill's 60,000 employees marched into the world's largest retail brokerage under a cloud of uncertainty after Bank of America agreed on Sunday to buy Merrill in an all-stock deal worth $50 billion.

'Traders were in an hour earlier than usual this morning and the mood is really grim and quiet in there,' said one Merrill employee.

Another said, 'I've been e-mailing colleagues in London. The mood over there is not bad. The feeling is it could have been worse, we could have been Lehman ... I'm sad as I believed in this firm and the Merrill Lynch name.'

Times were far more dire for Lehman Brothers Holdings Inc's more than 25,000 employees, with some wondering when they would get their next paycheck, perhaps their last from the 158-year-old investment bank.

'Everyone is just packing up and exchanging contact details, and just giving assurance that we will be helping each other in the weeks to come,' a Lehman employee in London said.

'Headhunters are phoning us, which is good. We are just waiting to see how the industry will respond to so many unemployed bankers.'

In Asia, one long-time Lehman employee called the mood "surreal".

'The end for Lehman was pretty ugly,' the Hong Kong-based employee said. 'They just ran out of options and time. It's hard to believe there will be no more Merrill Lynch.'

RECENT EXPANSION IN ASIA

Lehman employs about 3,000 staff in Asia, excluding the India back office, and the region has proved a sweet spot for the U.S. bank as it made inroads into new markets. Lehman had expanded aggressively in Asia in the last two years, ramping up foreign exchange and investment banking operations in Singapore, Hong Kong and Mumbai.

It was also planning a bigger presence in China, where it recently advised Aluminum Corp of China (Chinalco), which teamed up with Alcoa to buy a stake in Rio Tinto for $14 billion.

The bank has been representing buyout firm Silver Lake in its bid for a stake in the mobile handset business of Chinese telecoms gear maker Huawei Technologies.

But Lehman's downfall leaves the fate of its advisory mandates uncertain.

'That hasn't been thought through yet,' said an Asia-based Lehman investment banker, who did not want to be named. 'Nobody's been down this road before.'

Another Lehman banker in Asia said, 'On the investment banking side, we need to take care of existing business with clients. Obviously, our clients are concerned. There is an existing mandate issue across the globe.'

UNCERTAINTY REIGNS

For many employees, news was hard to come by as Monday was a holiday in Hong Kong and Tokyo, home to Lehman's larger Asian offices. At Lehman's Singapore office at the downtown Suntec Tower, only a trickle of staff arrived for work, dodging reporters' questions.

Asked if it was business as usual, a Lehman trader contacted by telephone told Reuters, 'What business is there? There's nothing to do. All I've heard is what's being reported on the news.'

A colleague in Hong Kong, talking by telephone and asking not to be named because of the sensitivity of the situation, said, 'There are very few instructions at this point. I just need to look around and see what opportunities there are. Basically, I have to figure out something new to do.'  

There was more uncertainty in Australia, where Lehman entered markets last year through the acquisition of Grange Securities for $98 million. Earlier this year, it moved into a new office tower in Sydney's central business district to accommodate its expanded team.

'If, for example, there's a filing for Chapter 11, where would that leave all of us ... probably we stand behind other creditors,' said one of the bank's Sydney-based employees.

The mood among Merrill staff in India was a mix of anxiety and some initial optimism over the bank's sale to Bank of America.

'Morale has actually lifted after news of Bank of America taking us over,' said one Merrill employee by phone on his way to work in Mumbai.

'One, the uncertainty ends about Merrill's survival, and, two, we can actually look forward to Bank of America strengthening or expanding India. It has almost no presence here.'

Lehman employees in Mumbai, where the company runs back office functions including technology support and development and operations support, said they were still waiting for some indication of what happens next.

'The atmosphere here is tense, but the management is continuing to run the show as usual,' said one employee.

Looking ahead, financial market analysts asked when the credit crisis would end.

'This is like Voldemort. You think he's dead and he resurfaces time and again. It's shadowy and refuses to die,' said Nomura Australia equity strategist Eric Betts, referring to the evil character in the Harry Potter novels. -- Reuters