split of Bear Stearns

In the event of a split, Bear has four businesses that could interest buyers: the investment-banking business, which underwrites stocks, bonds and advises on mergers; the fixed-income and capital-markets businesses, which trade stocks, bonds and other securities; the clearing unit, which settles trades and also services and lends to hedge funds via a prime brokerage; and the high-net-worth group, which advises the rich on investments. The first two would have trouble attracting buyers, because of their exposure to volatile markets.

The clearing business, with the prime brokerage, would probably attract the most attention, and several bankers said it might be attractive to rivals including Morgan Stanley, Goldman Sachs Group Inc., UBS AG, J.P. Morgan Chase or Bank of New York Mellon Corp. However, the prime-brokerage business has its risks, and on a conference call today, Bear Stearns executives acknowledged that some of the business hits they have taken were because of prime brokerage.

The clearing unit in which it resides is the only Bear business to turn a profit last year -- about $566 million on revenue of $1.2 billion. London-based HSBC Group is perennially described as a good fit because of the lack of overlap between the two businesses: HSBC's European strength would balance Bear's strength in the U.S., where it draws more than 70% of its revenues. In addition, HSBC doesn't have a large advisory business in the U.S. to compete with Bear Stearns, and it could use Bear Stearns's valuable "high net worth," or wealth-investor, business. HSBC declined to comment. Chapter 11 remains so unappetizing that "to threaten it is almost laughable; it would be like a person holding a gun to their own head and yelling, 'Stop or I will shoot,'" said one person involved in the matter. Bear Stearns may have trouble if it wants to sell its headquarters building quickly. The sales market for all commercial property has seized up as a result of the credit crunch. There have been few deals since SL Green Realty Corp. closed on its $1.6 billion sale-leaseback acquisition of two downtown Manhattan buildings late last year from Citigroup.