Merrill Lynch has doubled the notice period for some of its equity research staff in Europe to deter poaching raids by its rivals and prevent analyst departures.
One equity research analyst at the bank said many staff were asked at the end of February to change their contracts of employment from three months' notice to six months' notice. The analyst said: 'We were told at bonus time that our bonuses were dependent on us signing new contracts of employment.'
John Tacchi, a director of Blue Oak Capital, an independent research firm, said: 'Many firms are making it more difficult for an analyst to leave. Merrill Lynch has apparently extended the notice period in contracts.'
A spokeswoman for Merrill Lynch said the standard notice period for staff was three months.
Merrill Lynch is understood to be the first bank to double the traditional three-month notice period. Another analyst said: 'This effectively prevents analysts from working within the industry for six months and is designed to make them think twice before moving on. Analysts are known to be the biggest prostitutes in the financial services industry when it comes to jumping ship to rivals.'
Merrill has taken the pre-emptive step as equity research departments at all investment banks face considerable upheaval.
Research has been hit since the $1.4bn (€1.1bn) global settlement in 2003 between 10 Wall Street banks and Eliot Spitzer, the New York state attorney-general, over conflicts of interest between investment banking and research.
Investment banks are struggling to make the economics of research add up following regulatory changes and there are constant rumours that bulge-bracket houses are thinking of making radical changes, such as outsourcing all research.