The perilous plight of ABN bankers - but is it legal?

Lingering hopes that ABN bankers wouldn't fare too badly after being jumped by Barclays or RBS & Co. are being firmly snuffed out.

Johnny Cameron, chief executive of RBS's Corporate Markets division, came out of the closet last week and told Reuters that he planned to make savings of €1.3bn by 2010 - largely through trimming back-office functions such as accounts and IT (the cost/income ratio at RBS's markets division is 40%, compared to 89% for ABN's investment banking efforts).

But yesterday RBS claimed it would be a light touch compared to the bludgeoning hand of Barclays, which it says would slash 11,000 of ABN's UK employees, with investment banking particularly badly clobbered.

It might not be so bad for ABN's bankers if only they could take their skills elsewhere. However, that's going to be rather difficult. Last month we reported ABN had a signed a non-poaching agreement with its advisors and with Barclays; headhunters claim similar agreements are also now in place with all the banks advising Barclays on the deal.

Put simply: if you want to quit you're likely to find it hard to move to Credit Suisse, Deutsche Bank, JPMorgan, Citigroup or Lazard (all advising Barclays), as well as Goldman Sachs, Lehman Brothers, Morgan Stanley and UBS (advising ABN), plus Barclays Capital itself.

In the circumstances, anyone would think the likes of Merrill Lynch and Dresdner Kleinwort might be rubbing their hands at the prospect of picking up ABN's finest, but one headhunter says most are steering clear on the grounds of expense: "ABN have a deferred compensation system through which as much as 50% of their bonus is held back for two years. This is a lot more than other banks, and makes people from ABN expensive to move."

But the head of employment law at one magic circle firm (who represents both ABN and RBS and therefore didn't want to be named) says ABN's attempt to ringfence its employees may not stand up in court: "A clause that specifies the non-solicitation of key employees on confidentiality grounds would be enforceable. It would be more questionable if that were applied to all employees. And it would be more questionable still if instead of a non-solicit clause it was a blanket non-employment clause."