by Nathalie Knowles BBC Radio 4

HSBC was dealt a severe blow this week as a number of high-profile fund managers announced their decision to move to rival investment bank Cazenove.

Concern spread across the City and among financial advisors as five of the bank's fund managers resigned, including HSBC Asset Management's Head of UK Equities Tim Russell.

The news comes just two months after the bank announced ambitious plans to triple its fund values within five years.

The US credit agency, Standard and Poors' reacted by placing the 10 HSBC funds and two of the Cazenove funds under immediate review.

'Teams not individuals'

HSBC has been doing its best to play down the loss.

"We're obviously disappointed about these departures.

"It is the nature of the business that people do move on.

"But it is worth remembering that HSBC's investment approach is based on teams, not individuals" a spokesman for the bank said.

The team managed 10 of the bank's flagship funds sold to UK investors.

Working conditions

Reuter's reported that frustration with working conditions at HSBC rather than an attractive pay deal was the reason the managers decided to move.

Philippe Alter has taken charge of HSBC's UK equity team in addition to his existing responsibilities as Chief Investment Officer for European Equities.

The UK funds, including UK Growth & Income, will now be run by Bob Morris, who currently runs the HSBC Household Names Fund.

Cazanove's floatation

The moves will be seen as a coup for Cazenove, which advises around half of the UK's top 100 companies.

The private bank is preparing to break into the retail savings market ahead of its stock market flotation in spring 2003.

Cazenove's fund management operations focus on wealthy private clients and charities.

BBC Radio 4's Money Box broadcasts on Saturday, 7 September at 1200hrs.