Barclays and ABN: redundancies on the cards

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Barclays is said to be sizing up ABN AMRO. It doesn't augur well for employees at the Dutch bank.

"The real overlap in any merger will be in the investment banking divisions of the two banks," says Simon Adamson, banking analyst at independent research firm CreditSights.

According to Adamson, the biggest cuts are likely to be in fixed income sales and trading, where Barclays Capital is at its best and therefore likely to have little use for ABN's less successful teams.

And while ABN is strong in equities, Adamson says there's no guarantee Barclays would maintain this side of the business, either: "Barclays might be interested in the equity derivatives side of ABN's operation, but it would take a strategic U-turn for it to build up in equities to any extent. This would seem to be an area where they might look to make cuts."

Barclays has promised it will make a statement clarifying the situation before the start of business tomorrow. In the meantime, ABN shares have soared (which is good news for its bankers, who are looking to cash in on the bank's stock and options). The price tag for the Dutch bank? The Times says it's likely to be around €60bn (41bn).

The director of banking research at another investment bank agrees that redundancies would be 'inevitable' in a merger between ABN and Barclays Capital: "Fixed income sales and trading would be most at risk," he says.

ABN bankers exploring their options

Headhunters and recruiters are likely to make the most of any uncertainty at ABN, although one headhunter says that as the bank made around 200 redundancies at the end of last year, this won't be anything new. "At the end of last year they cut the whole of credit research and credit strategy," he tells us. "Frankly, a lot of people there have been exploring their options already."

Even if Barclays doesn't pounce, ABN's bankers may fall prey to another European predator. According to Bloomberg, BNP Paribas and Société Générale are also interested in its assets.