Cashing out at ABN

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ABN AMRO's historic generosity with stock and options means its bankers stand to do rather well out of the sale to RBS.

"ABN AMRO had a habit of paying a ridiculously high proportion of bonuses as restricted stock or options," says one headhunter. "In some cases it could be as high as 50%. Those people will be sitting on healthy gains following the sale of the wholesale bank to RBS."

Royal Bank of Scotland's purchase of ABN AMRO's wholesale banking business in Europe, its global clients business, its international cash management system, and its Asia Pac operations will be finalized this week. The Scots bank is offering €38 a share, almost entirely in cash - which isn't bad considering ABN stock was trading at €20 this time last year.

Headhunters say RBS's generosity is an incentive for staff at the Dutch bank to actively pursue redundancy: anyone getting the chop should be able to cash in their stock and options immediately.

However, according to one ex-ABN AMRO banker all restricted stock and options owned by the bank's employees are being converted to cash following the purchase - which is also very good news, given that recently issued securities would previously only have been accessible after at least three years.

RBS declined to comment on the machinations surrounding the ABN employee stock ownership scheme, saying only that it will honour all existing contractual obligations.

Antony Broadbent, an analyst at Sanford Bernstein in London, says it's not uncommon for options to vest automatically following a change of control. He also predicts redundancies in ABN's trading platforms and relationship manager functions: "ABN will bring a bunch of new customer relationships to RBS but they will probably be looking to replace them with some of their own more effective relationship managers."

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