New banks may be born out of wreckage

Big banks are firing workers by the thousands and scaling back businesses, creating real opportunities to hire talent and focus on niche areas.

Compensation is sinking, office space is getting much cheaper and the big players have a lot more on their minds than serving their clients as they seek to deal with toxic debt, poor morale among staff and pressures from new government overseers following bank bailouts.

"Talent in this industry is going to be looking for the best opportunities," said Don Marron, chief executive of private equity firm Lightyear Capital, which provides financing to the financial services sector. "Starting from scratch may well be the best way to go."

Raising capital for a full-scale investment bank with sales and trading operations would likely be difficult. But firms focusing on merger advisory require little capital, just principals with Rolodexes.

Boutique banks, including Lazard Ltd and Evercore Partners Inc, concentrate on advising corporate clients and they have survived the credit crisis better than larger rivals by steering clear of financing or sales and trading, which resulted in losses for the major banks.

OBSTACLES

Of course, with the turmoil ripping across the financial sector there will be major risks. And not every new venture will succeed.

"It's a good idea on paper and it may work, but it's not going to work as quickly as people think and it might not work at all," said Lee Delaporte, director of research at Dreman Value Management in Jersey City, New Jersey, which manages about $15 billion (10.4 billion pounds).

Among the major obstacles: They will likely have trouble raising capital and convincing investors and companies to work with them.