As emerging markets continue to recover, banks are beefing up the research, trading, and investment staff they slashed barely 18 months ago.

The turnaround comes amid a surge in prices for emerging-market debt and equity as investors who fled the market after financial crises in Asia, Russia, and Brazil return in force.

Chase Manhattan, for example, brought Joyce Chang, a top fixed-income analyst, on board from Merrill Lynch & Co last fall. More recently, Chase Capital Partners, the bank's equity investment arm, hired John Neiva de Figueiredo from Goldman Sachs to beef up its investments in emerging-market countries.

Similarly, Deutsche Bank, which acquired Bankers Trust Corp last year, has beefed up its staff by hiring Brent Erensel, a top ranking Latin American bank analyst, from Warburg Dillon Read. J.P. Morgan has strengthened staff in Asia, hiring Ming Wong, a veteran China expert, from Canadian Imperial Bank of Commerce to handle corporate relationships in the region.

Foreign banks such as Spain's Banco Santander Central Hispano, Holland's ING Group and ABN Amro NV, and U.S. investment banks such as Lehman Brothers are also moving to recruit emerging-market staff in anticipation of a rebound in business.

One clear signal that business in emerging markets is again becoming attractive is Banco Santander's announcement Wednesday that it has reached an agreement to acquire Brazil's Banco Meridional Group, more than doubling its offices in that country to 400 branches and boosting assets 65%, to $12.5 billion. The acquisition would also give BSCH control over Bozano Simonsen, a leading Brazilian investment bank and subsidiary of the group.

The hiring sprees follow savage cutbacks in 1998, when both U.S. and European financial companies such as Merrill Lynch & Co, FleetBoston Corp., and the former Bankers Trust Corp. trimmed hundreds of emerging-market staff.

Analysts said they don't see the renewed interest in recruiting emerging-market staff as surprising.

"The economies of emerging-market countries are coming out of the doldrums, Asia is starting to show signs of life, and Latin America has been O.K.," said Lawrence Cohn, a banking analyst at Ryan, Beck & Co.

"The result is an increase in optimism in the outlook for these economies."

After a sharp downturn early last year, the J.P. Morgan emerging markets bond index, the leading basket index for emerging-market debt, posted a 5% increase in December. The index, which tracks total returns for U.S. dollar-denominated debt instruments in 27 emerging-market countries, showed total returns of 25% for all of 1999. Bonds issued by Brazil rose more than 40% in value. Mexico's bonds climbed 27%, and Russia's a staggering 167%.

Testifying to the rebound in business in emerging markets, J.P. Morgan announced a threefold increase in fourth-quarter earnings, to $509 million, from $175 million for the fourth quarter of 1998.

Emerging-market business at other banks is also picking up. Chase, for example, together with Goldman Sachs Group Inc., is underwriting $1 billion worth of 20-year bonds for Brazil. After being virtually shut out of global capital markets last year, Brazil hopes to sell $4 billion to $6 billion in bonds this year.

"Basically, the markets have punished anyone who was underinvested," said Deutsche Bank's Mr. Erensel.

Equity prices in emerging markets are also climbing fast.

"There's an amazing correlation between emerging markets and the rise in the Nasdaq," Mr. Erensel noted. "As risk has declined, volatility has increased, with stocks moving up and down 5% in a single day."

Banks in emerging markets and in Latin America in particular have been the big winners. In Brazil, share prices for Banco Bradesco, one of the country's largest banks, tripled to around $7 over the last 12 months. Banco Itau, another leading private bank, also rose threefold, to $75, as did Unibanco, to $23.

A similar tale is unfolding in Mexico as that country's economy continues to grow at around 4% to 5% annually. Share prices for Banamex-Banacci, one of the country's two top banking groups, rose fivefold, to $3.75 Bancomer, the other top Mexican bank, tripled to nearly 40 cents a share, while Grupo Banorte, a fast-growing banking group based in Monterrey, more than doubled to $1.30, from 60 cents.

Analysts such as Mr. Erensel predict there is further room for improvement.

"We're seeing improving asset quality and ebullient trading markets," the analyst noted. "All this is great for banks and makes Latin American banks an attractive investment."

Still, analysts also caution that the renewed buildup in emerging-market staff could easily be cut short if these markets suffer another downturn.

"Historically, business in emerging markets has been a cyclical phenomenon," Mr. Cohn said. "I wouldn't view an increase in head-count as any kind of long-term commitment; rather an opportunistic re-staffing as opportunities show up."

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