Two high-profile bank merger-and-acquisition specialists, and their team of investment bankers, are leaving UBS Securities for Donaldson, Lufkin & Jenrette.

Richard J. Barrett, who headed UBS' financial institutions group, and managing director Gerard L. Smith are expected to join Donaldson Lufkin today, a spokesman for the firm said Friday.

Many are speculating that UBS' renowned banking analyst Thomas H. Hanley will follow his colleagues to Donaldson Lufkin. Late Friday Donaldson Lufkin's well-known bank analyst Thomas K. Brown said he was leaving the firm to "take some time off."

Mr. Hanley, however, said he has "no plan to leave" UBS.

In all, 23 people are accompanying Mr. Barrett to Donaldson Lufkin, officials there said, including 8 managing directors. Those departing include managing directors Mark Elman, who does insurance work, and Robert Nau, whose clients are finance companies.

Brenda White, managing director in charge of mortgage banking, is expected to stay at UBS.

The departure of most of UBS Securities' bank advisory talent is a continuation of defections that began after the firm's parent, Union Bank of Switzerland, agreed to sell to Swiss Bank Corp.

Swiss Bank has its own investment banking unit, Warburg Dillon Read, and Swiss Bank executives have consistently gained the upper hand in post- merger announcement job shakeouts.

The UBS bankers started talking with other firms seriously two weeks ago, after they collected their 1997 bonuses and their three-year contracts expired, people familiar with the talks say. Among the firms they talked to were ABN Amro, Bankers Trust New York Corp., Lehman Brothers, and Keefe, Bruyette & Woods, the sources say.

Negotiations stalled at several firms because they were reluctant to grant Mr. Barrett compensation comparable to his deal at UBS. Normally investment bankers are paid based on the firm's profits, but at UBS Mr. Barrett was paid based on his group's revenues, before its considerable expenses were accounted for, a source familiar with the situation said.

UBS' financial institutions group had revenues of about $45 million in 1997, and profits of $7.5 million. Operating expenses were $30 million, a source said. UBS advised on $17.8 billion worth of U.S. financial sector mergers in 1997, according to Securities Data Co., ranking it eighth among investment banks.

The future is still up in the air for Mr. Hanley, who worked with Mr. Barrett and Mr. Smith when the trio were at Salomon Brothers and whose contract expires Tuesday.

Mr. Hanley, who was reunited with his former Salomon Brothers associates in 1996 after a stint at CS First Boston, said Friday that he plans to stay. But few of his colleagues take that claim very seriously.

"Hanley goes back with Barrett and Smith for a long time, and he has powerful clients who don't talk to any other bank analyst," said a former co-worker.

Losing much of its financial institutions group could be a significant blow to UBS as it merges with Swiss Bank and tries to generate investment banking business.

Advising banks on mergers is one of the most lucrative tasks on Wall Street. Typically investment bankers pocket a fee of 0.10% to 0.15% of a transaction's cost when two big banks merge.

For advising National City Corp. in its $7.1 billion merger with First of America Corp., UBS is to collect a $10 million fee, according to a regulatory filing.

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