The resignation of a star portfolio manager from First Union Corp.'s mutual fund complex highlights how even a bank with a strong commitment to the business can have trouble retaining top talent.

Warren Isabelle, chief investment officer for equities at the bank's Evergreen Keystone fund division, resigned in May to start his own firm. He had joined First Union only three months earlier, after an impressive 12- year-run at the Pioneer Funds.

His departure is the latest example of the difficulties banks face keeping up with the lofty salaries some high-profile portfolio managers command. It is all the more poignant as Charlotte-based First Union, which has bought a number of mutual fund companies, is one of a handful of banks that has been willing to pay up for talent.

The bank has also been a heavy recruiter of executives from the fund industry. And it has generally allowed its recruits to control the business.

"I am not suggesting it is impossible for a bank to maintain a good manager, but it is difficult," said A. Michael Lipper, president of Lipper Analytical Services, Princeton, N.J.

"If they (portfolio managers) don't get the same ego massage inside the bank as they do outside, and somebody suggests that another place will give them the ego massage, they're likely to listen," Mr. Lipper added.

Mr. Isabelle could not be reached for comment. He told The Boston Globe in May that he left First Union to try something more entrepreneurial.

Observers said the strong stock market might be to blame. The long bull run is tempting successful money managers, like Mr. Isabelle, to strike out on their own-and possibly strike it rich.

"That's what makes people really rich, rather than incredibly comfortable," said Nancy Miller, a money manager recruiter at Mark Elzweig Co., New York. Star portfolio managers that run their own firms can get a slice of their funds' fat returns.

"The market is driven by two things-fear and greed," said Gerald Thomas, president of the brokerage at Chicago-based St. Paul Bancorp. "I think right now it is being driven by greed."

Observers were quick to add that Mr. Isabelle's departure is not necessarily a sign of anything wrong with First Union's program.

First Union, for its part, said in a statement that "both parties agreed that he would be more satisfied on his own. He is a skillful money manager with a strong entrepreneurial spirit."

Mr. Isabelle's responsibilities as chief investment officer for the bank's equity funds are now shared by Walter McCormick, portfolio manager of the Evergreen Keystone Fund for Total Return, who now is also responsible for core growth equities; and Gary Craven, portfolio manager of Evergreen Keystone Small Company Growth fund, who adds oversight of small- cap equities to his responsibilities, a company spokesman said.

Before joining First Union's Keystone Investment Management Co., Boston, Mr. Isabelle was head of Pioneer's special equities group.

He had managed the Pioneer Capital Growth Fund since its inception in 1990 and was awarded Morningstar's highest mutual fund rating as of Dec. 31.

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