Stampede out of banking gathers pace

The outcome is an orderly withdrawal from the senior ranks. Whether it is in pursuit of a life of pure leisure or a new career aligned to hobbies, top staff are leaving the industry.

Among those to have gone recently are Lawton Fitt, a Goldman Sachs partner who left to become secretary of the Royal Academy of Arts in London; Jeremy Duckworth, a UBS Warburg corporate financier who became finance director at Williams Formula One; Diane Glossman, a UBS Warburg banking analyst who left to pursue a career in show jumping; and John Thornton, president and joint chief operating officer of Goldman Sachs, who is becoming a professor at Tsinghua University in Beijing.

They share long service and the wealth to make staying in banking a choice rather than a necessity. One former senior corporate financier at a bulge-bracket house says: "The past 10 years have been extremely good and people have made enough money to make life choices. People in their 40s are able to say they don't want to work any more."

Fitt, who spent 23 years at Goldman before moving to the Royal Academy, says: "It's a case of having a chance to turn a hobby into a vocation." She says the opportunity to move into the new position had been irresistible.

This is a good time to make the move. Bonuses in corporate finance and equities are likely to be poor again this year, guarantees have all but petered out and the loss of talented staff to redundancy is having a demoralising effect on those left behind.

One departing senior banker says: "The industry is less fun in a downturn. Downsizing a firm is not nice to organise and clients are much more cynical and sceptical about what we do. The kudos of working in investment banking has gone; it's seen as a bit of a parasitic existence."

Duckworth agrees. Sitting in his new office overlooking the Oxfordshire countryside he says: "Banking was good for me in the late 1980s and early 1990s. But the reward-to-effort ratio is now inverted and the opportunity cost of moving on is low. People are saying they've had a good time but there is more to life than banking."

The trend presents banks with a problem. It may be necessary and relatively easy to make thousands of mediocre staff redundant. But there are some important players they do not want to lose and they have to find ways to keep them.

Lucia Ferreira, a corporate finance partner at search firm Russell Reynolds, says: "These are very high quality bankers who have survived rounds and rounds of redundancies. When they decide to leave the industry to do something else, it's hard for banks to retain them because it's not money they're after. There's a whole generation who have sacrificed personal lives and they are open to seeing what else is out there."

Employers are developing strategies to keep would-be escapees. Maria Wallace, a consultant at the Rose Partnership search firm, says non-traditional methods of retention are increasingly important. "There is no more money to retain people. Banks are having to look at what else makes people want to stay."

The result is that senior individuals in areas such as corporate finance are able to work on a "project-only", or part-time basis. Others are being offered sabbaticals as a palliative. The hope is that six months or a year away from the industry will subdue the urge for more permanent separation.

Nick Draper, former chairman of European mergers and acquisitions at JP Morgan, is among those working part time. He spends a few days each week at the US investment bank looking after clients, and the remainder studying for a masters degree in the history of London.

He says: "It's a privilege to be able to continue to work with clients and colleagues while also pursuing other interests."

Other senior bankers are also interested in part-time arrangements. "The reaction of a lot of people has been 'me too please'," says one. She says banks might be forced to offer senior staff the option to work "semi-detached" to keep them.

However, part-time workers need to put in long hours when clients require them. People looking for even greater freedom are more likely to opt for a sabbatical.

Robert Hingley, global co-head of the financial institutions group at Citigroup, where he has worked for 18 years, has been given a year off to study history. He says: "I wanted to have a break and do something that has no purpose other than pure interest in the subject. This is not a bad time to be doing it."

When senior individuals are adamant about leaving, banks are doing little to stand in their way. Ferreira says staff are often allowed to leave with deferred stock and option packages even though they may not be contractually entitled to them. Wallace agrees: "If senior staff are determined to go and are not heading for a competitor, they can generally leave with their stock intact."

These changes may also benefit others. One headhunter says: "There will be a short-term effect on relationships with clients but it gives people coming up beneath them more of a chance."