Contract hitch for Famous Five and Fab Four

The Famous Five who quit HBOS earlier this month will not be allowed to get involved in the operational set-up of their new lender until June next year at the earliest.

Michael Bolton, Alan Cleary, John Nixon, Rob Williams and Mark Smith walked out from the lending giant earlier this month to join The Oakwood Group, a London-based private equity firm fronted by business guru Mike Culhane, looking to launch a lender in 2006.

All five are on gardening leave and, although their three-month notice period expires on January 3 2006, non-compete covenants in their HBOS contracts mean they will not be allowed to get involved in creating their new lender, or indeed have any operational input, until June 3 2006 at the earliest.

The nine-month exclusion will scupper any plans the five had to launch the new lender in the first half of 2006 and could make August or September target months for a soft launch.

All five are believed to have consulted The Oakwood Group’s lawyers regarding the non-compete clause but have been advised it is legally watertight and not to risk breaching the terms and conditions of their HBOS contracts.

Non-compete clauses are not uncommon among employees of large corporate institutions and the Fab Four that quit HBOS subsidiary The Mortgage Business last month to join Deutsche Bank will be bound by the same ties. That means Bill Dudgeon, Mark Bergin, David Parry and Paul Graham will be locked out of any direct input into the creation of Deutsche’s new entity until May 2006, highlighting a July and August launch window.

Both new lenders are believed to be launching into specialist markets and competition is likely to be fierce.