Insight: Wall St commodity talent wars - Return of the merchants

The dozen or so merchants that buy and sell a trillion dollars worth of commodities every year are finding it easier to skim the cream of the trading crop, promising unfettered bonuses and a future share in their typically private firms.

"The Mercurias, Trafiguras and Glencores are back to ruling the commodities world," says Wall Street headhunter Vikram Tandon. Those hiring most aggressively are the biggest energy, metals and agricultural trading firms in Europe and Asia.

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"We have experienced an increase of very talented professionals at banks seeking potential roles at boutique commodity firms and trading houses," said Tandon, executive director at The Options Group, a New York-based global talent search agency.

It is not a particularly hard sell: After the deep bonus cuts, deferred pay-outs or $125,000 cash caps announced this year, change comes easy for traders long accustomed to million-dollar bonuses based on a percentage of their book profits.

It is yet another sign of the growing pressure on the world's investment banks, most of which have already throttled back their high-risk, high-reward speculative dealings -- leaving them more dependent than ever on the specialized traders who can help translate hard-to-read signals in opaque physical market into profitable trading positions.

COMMODITIES MERCHANTS' WORLD

Not too long ago, moving from a merchant trading firm to an investment bank was regarded as the ultimate career step. Now experienced bank traders are happy to go the other way.

"There have been emails in the middle of the night from people," said George Stein, managing director for Commodity Talent in New York. "We've had a lot of candidates going in for first, second and even third rounds of interviews."

Geneva-based Mercuria, one of the world's top five energy traders, has recruited Ben Green and Liam Brown, two London-based metals traders from Goldman Sachs, industry sources said last week. Mercuria had hired a gas trading team from Barclays Capital and Nordic power traders from Bank of America last year.

Deutsche Bank's physical iron ore dealer Richard Shelley joined Trafigura, an independent energy and metals trader based in Lucerne, Switzerland, late last year. Refined oil product traders Jan-Jaap Verschoor and Chris Dorfman left Bank of America for New York-based Hetco recently.

"There's always been a two-way flow, but it's now much more one directional to trading houses," said an analyst at a European bank who has worked with merchant trading firms. "People at the big banks, which turn over huge amounts of cash and are paying only $125,000 bonuses, are not happy."