Private equity professionals now being yanked from the bosoms of investment banks

Since a watered down version was passed, the Volcker rule no longer appears to be the huge, hairy regulatory beast leering over the financial sector it was initially deemed to be, but banks are still making move to shake up their operations.

First, there was the prospect was prop traders shifting across to hedge funds or asset management functions - at Citigroup, Goldman or indeed of their own volition.

Morgan Stanley is now considering spinning off its hedge fund unit FrontPoint Partners, according to CNBC. The worrying aspect about this move is that certain staff members have reportedly already been told they need to seek employment elsewhere. This is thought to be one of many such moves by investment banks.

As we've alluded to before, it's a fairly barren job market for hedge fund professionals currently should other firms follow Morgan Stanley's lead in this regard.

Now, however, banks appear to turning their attention to private equity functions. Goldman is pondering the prospect of spinning off part or all of its private equity arm in a bid to reassure investors around the potential impact of the Volcker rule, according to Fox Business.

Bank of America has already made such a move, announcing yesterday that its private equity team has branched off to form Ridgemont Equity Partners. 19 investment professionals will transfer across as a result.

"There were a lot of factors that went towards our decision, but the discussions were accelerated against the backdrop of regulatory reform in Washington," said Travis Hain, partner at Ridgemont Equity Partners.

Barclays is also believed to be considering a similar move. JPMorgan, meanwhile, has over 100 project teams looking into the implications of the new rules and how they should adapt accordingly.

Obviously, this trend doesn't necessarily spell bad news for employment, with investment teams likely to remain in tact despite the spin-offs.

However, should this result in any fallout (or indeed prompt people to look for pastures new), private equity professionals are likely to find their employment prospects severely limited currently.

Not that banks appear in any great hurry to implement these moves - they have five to seven years in which to spin out these assets.