ABN Amro Private Banking has suffered several staff defections as rivals around the world increase the money they are offering to pay wealth advisers.
Large teams are on the move across the industry, making private banks vulnerable as never before. They are being forced to pay over the odds to replace departing staff, according to bankers and headhunters.
ABN Amro has lost its North Asia private client chief Philippe Legrand, who has taken a team of five to BNP Paribas. Middle East adviser Mike Markland has been hired by Morgan Stanley. Richard Nunneley and Michael Betesh have left the Dutch group's UK office after less than a year in their jobs.
ABN Amro's position is not helped by the bank's decision to suspend Mark Henney, head of UK business, the unnamed UK head of human resources and Craig Franklin, head of the Jersey operation. Herman Erbe, chief risk officer, has become acting head of private banking for the UK and Jersey as ABN Amro carries out an internal investigation into its control systems.
The defections follow confirmation from UK boutique Close Brothers that nine advisers have joined from Singer & Friedlander, which was destabilised by its purchase by Kaupthing of Iceland. Adviser Tim Howe will join in January. To steady its ship, Singer has gone on a recruiting drive and six advisers recently signed up from several firms.
Two of the Singer recruits used to for work for Dryden Wealth Management, which has suffered defections since it was bought by Dutch-Belgian insurance group Fortis.
Merrill Lynch's global private clients division has been on the defensive since losing James Gorman, former head of wealth management, to Morgan Stanley. Merrill announced last week the hiring of four advisers, including Jess Larsen, who joined from UBS where he became an associate director last year after a stint at HSBC.
Headhunters say advisers are changing jobs more frequently to lock into higher pay. Just two years after Laing & Cruickshank's wealth management business was bought by UBS, a team of nearly 80 Laing employees, led by Michael Kerr Dineen, defected to Cheviot, a wealth adviser.
"The market is overheating," said Tim Gibson of headhunting firm Gibson Tullberg. Base salaries have gone up by 30% to 40% to about 120,000 over the past year, he said.
Guaranteed bonuses have risen to new highs as employers become more willing to take account of longer-term growth when calculating packages. But Gibson thinks some firms will end up regretting paying large sums to their new staff if they don't perform according to expectations.
Investment bankers say M&A and initial public offering activity is likely to increase. Kleinwort Benson Private Bank could be sold, even though owner Allianz recently said it wanted to develop the business.
Smith & Williamson is seen as a prime float candidate, after saying in 2001 that it would consider the idea. Private equity firm Bridgepoint bought Tilney last year but it is aware it will make a substantial profit if it sells the business.