US banking giant on brink of collapse

One of the world’s largest investment banks appeared to be on the brink of collapse tonight after talks to secure a rescue deal for Lehman Brothers broke down.

Barclays had been the front-runner to bail out the ailing firm, but the UK bank walked after failing to obtain guarantees over Lehman’s financial commitments, a source close to the negotiations said.

A consortium led by Bank of America (BoA) followed soon after, leaving the likely prospect that Lehman would have to file for insolvency.