Lehman Brothers, the collapsed Wall Street investment bank, is hiring bankers and paying generous bonuses in London to stop employees defecting elsewhere.

Lehman's European business is recruiting middle and back office staff to help administrators PwC wade through the millions of transactions that must be reconciled with clients and trading partners to determine what is owed or can be claimed.

A judge overseeing Lehman's US bankruptcy in New York last week approved an extra $50m in bonus pay-outs to some 230 derivatives traders working to unwind the dead bank's $10bn portfolio. The pay-outs come as bankers in the US and Europe face public anger over probable multi-million dollar bonuses at the end of this year and, in Britain and France, additional taxes on these pay-outs.