Equities departures dent DrKW

Dresdner Kleinwort Wasserstein has been leaking equities staff in recent weeks. If it wants to replace them, recruiters say it may need to pay hefty guaranteed bonuses.

Last week Robert Lister, co-head of equities, left DrKW, following in the footsteps of the bank's head of capital markets, its head of European equity sales trading, and four other senior traders.

In the past week two mid-ranking sales traders are also understood to have quit for Bear Stearns while two traders and one salesperson have made for JPMorgan, which has hired six total to build out its Eurpoean cash equities business.

DrKW is already understood to have brought on at least one new member of staff and one who was on sabbatical to replace the defectors. But unless the bank digs deep into its pockets, recruiters say it could have trouble attracting others. "It will be expensive for them to rebuild the business," says one. "They'll have to offer some big guarantees."

Dresdner's defections are understood to be linked to the bank's decision to withhold as much as two-thirds of end-of-year bonuses in the equities division, conditional on its employees meeting ambitious targets in 2006.

The more staff leave, however, the harder it will be for these targets to be met, and any guarantees to new staff could find workers with deferred bonuses considering their options.

DrKW declined to comment on its bonus structure.

Mark Horlock, a consultant at Alexander Mann Global Markets, says the erosion of talented people will put further pressure on the bank's equities business.

Other departures may well be on the cards. "As competitors start picking off the best staff in DrKW's equities team, it looks like the solidarity of we are all going to stay here and stick this out is beginning to waver," says one recruiter. "There are a lot of people there who would leave if the right opportunity came up."