Banks wage pinstripe war talent

Just as the City calms down after the excitement of the mobile phones licence battle, another bidding war is set to kick off, with the prospect of yet more outrageously inflated offers.

Just as the City calms down after the excitement of the mobile phones licence battle, another bidding war is set to kick off, with the prospect of yet more outrageously inflated offers.

This time, however, the recipients of the cash will not be the Government, but the pinstriped analysts and associates of the big investment banks.

Over the past year these employees have become a highly prized commodity within the banking world. The premium attached to them has arisen from the brain-drain to dot-com start-up companies.

What has been happening is that the banks have recruited university graduates in the time-honoured way, but rather than sitting pretty and waiting for the six-figure salaries to roll in after 10 years, these graduates have upped and left in search of paper millions.

Having received their financial training at the hands of the best, the young employees soon receive phone calls from their old university chums, who are after the kudos of a heavyweight name on their business plan.

But as the number of junior bankers who actually want to be bankers dwindles, so the amount of cut-throat poaching between the institutions rises.

The enticement, as ever, revolves around the annual bonus and, on the back of record years for deals, the stakes are sure to be high. The first player to make a move was Prudential, which hinted that its bonuses for junior analysts would be between $30,000 and $60,000 (£19,000 and £38,000).

Never one to miss a trick, Merrill Lynch then quietly indicated it would be offering a range of between $40,000 and $70,000, and hoped this would ensure its key teams remained relatively intact.

However, the next round of bidding was convincingly trounced by Goldman Sachs, which paid a one-off bonus to analysts and associates of 10 per cent of their salaries in shares.

Waiting in the wings are JP Morgan and Morgan Stanley, both of whom are expected to come up with something fairly weighty, or be forced to watch their workforce migrate. After that, the rounds of bidding are likely to begin again.

But even when all the banks have tacitly agreed on a financial sticking point, they may have tricks up their sleeves for clinging on to their human assets.

One major complaint by British graduate trainees is that the career structure imposed by the US banks is far too rigid, and even a star analyst can only get promoted at a set rate. A strong likelihood is that Merrill Lynch might lower the minimum time before becoming an associate from three years to two and a half.