Warburg Dillon Read, extending its bid to build a leading U.S. syndicated finance team, has landed two more top loan executives from Lehman Brothers.

Former Lehman executives Steve Rielly and Brendan Dillon, who headed par loan trading and sales, respectively, are expected to join Warburg today. There they will find Chris Ryan, their former boss at Lehman, who made the jump in early December. Taken together, it is a rare exodus by members of one of Wall Street's most prolific syndication teams in the battle against commercial banks.

Though corporate finance executives often move after yearend bonuses are paid, rarely have whole or substantial parts of teams bolted from one shop to another. The arrivals of Messrs. Dillon, Rielly, and Ryan suggest that Warburg may be poised for a big entrance into U.S. leveraged lending and that Lehman will be pressed to maintain its No. 12 ranking.

"We all share a common philosophy," said Mr. Ryan, "that in terms of the institutional customer base secondary trading and liquidity have become as important as deal flow."

During their time at Lehman, the team aggressively tackled institutional fund managers who specialized in loans. They would often act as market makers, buying or selling loans to create liquidity for their best customers. Among them: Indo Suez Capital, with $3.5 billion of loan funds, and Alliance Capital Management, a leading provider of collateralized loan obligations.

"If you look at this as a block trade, I can't think of a bigger one in our market," said a veteran loan executive. "Maybe there have been more people, but in terms of a significant group that will have continuity, this is big."

Mr. Rielly, 34, had spent four years at Lehman after working at Kidder Peabody and Heller Financial in the early 1990s. Mr. Dillon, 30, joined Lehman in 1996 after working at Chase Manhattan Corp. under Chad Leat and, later, Peter Gleysteen.

Lehman is not the only place where Warburg is recruiting talent. On Jan. 19, it said it had hired J.H. Whitney & Co.'s Gina Hubbell and Michael Reddick to structure collateralized debt obligations for high-yield and emerging-market debt. The CDO team will work closely with the syndicated finance shop, Mr. Ryan said.

"We recognized that you have to be customer-driven, not deal-flow-driven," said Mr. Dillon.

For its part, Lehman appears to be marching along even as it sought to play down the loss of the two executives. Last week it increased the amount of a loan for Birch Telecom to $125 million, from $50 million. The loan is to be used for working capital by Birch, a company partly owned by the highly-sought-after financial sponsor Kohlberg Kravis Roberts & Co.

Mr. Ryan's role has been filled, in part, by Julian Entwistle, a managing director of loan syndications in Lehman's London office. Mr. Entwistle is best known for his role in structuring and syndicating a $23.5 billion loan for Olivetti SpA - the largest syndicated loan on record - last spring with Chase Manhattan Corp., Donaldson Lufkin & Jenrette, and Mediobanca.

In New York, Lehman's head of loan originations, Bill Gates, has been joined by David Juge in filling Mr. Ryan's former role. A spokesman for Lehman would not say whether the changes are permanent, but he said Mr. Rielly and Mr. Dillon were not key members of the syndications team. Mr. Gates declined to comment.

Said one source at Lehman, "You're talking about a couple of junior guys who got their bonus checks yesterday [Thursday] … it's just not worth talking about."

Not so, according to other sources at Lehman, who said Mr. Rielly and Mr. Dillon had stepped into the void left by Mr. Ryan. Though Lehman continues to make loans on the momentum it built during Mr. Ryan's eight-year tenure, Lehman almost certainly will be forced to hire loan executives from outside firms and ask current employees to "step up."

"They need to reload the gun," said one insider.

Ultimately, Lehman may have competition for such executives. Mr. Ryan said he was still two or three senior hirings short of completing his team. Warburg still needs origination and syndication executives.

"This is just the first step," he said.

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