* Newcomers creating a frenzy for top bankers
* Talent war pushing up pay expectations in Asia
* Asia headcount growth not commensurate with market's
* Citi launching "Asia Desk"; UBS tapping university
* "It's more intense now than ever" - UBS APAC Co-CEO
By Denny Thomas and Michael Flaherty
HONG KONG, Jan 17 (Reuters) - The gloves are off in the fight for talent in the Asia investment banking industry, with newly arrived financial institutions establishing a foothold in the rapidly growing region.
While competition for talent is always intense for the banking sector, Asia based executives, recruiters and analysts say the talent wars in the region have reached new heights.
Increased regulation and pay curbs, together with an industry shake-out and Asia's growth potential have combined to make talent retention a heated issue since the sector picked up its recovery pace in the fall.
Staff from established banks in places like Hong Kong and Singapore are being poached through offers of promotions and top-dollar pay packages from the upstarts.
That happened last year to a degree, but industry insiders say it's getting worse.
"There is still a tremendous demand for talent out here right now. It's shocking," said Mike Werner, a banking analyst with Bernstein Research. "If you want to show growth, you have to come here. The problem is, this herd mentality is resulting in a high level of competition."
Banks such as Standard Chartered and Barclays and brokerages like Jefferies , BTIG and MF Global have continued their push to expand across Asia, putting pressure on Wall Street and European giants to fend them off.
With annual compensation expected to be down at established global investment banks, especially for stock and bond traders, rival institutions have a promising card to play to tempt away talent.
Not all newcomers will succeed, which is why industry professionals believe the competition level will eventually recede. At the moment, though, there are few signs it will lessen in the near term.
"It's more intense now than ever," said Alex Wilmot-Sitwell, the Co-CEO and Chairman of UBS Asia Pacific. "Asia is no longer a well kept secret."
One way that UBS has dealt with the increased competition, he said, is by relying on its research and talent development center in Singapore. Known as UBS Business University, the three-year old facility has allowed the bank to develop professionals who can fill in where positions open, either through expansion, attrition or a rival poach.
One place where the talent competition is intense is China. Banks see big opportunities with China clients inside and outside the mainland. They are doing everything they can to grow and retain Chinese speaking bankers.
For its part, Citigroup is launching an 'Asia Desk' initiative which involves taking Mandarin speaking bankers and putting them in markets like Brazil, Russia, Africa, London and New York to capture new business from Chinese-speaking clients.
Citi, which has also been hiring in Asia, has started a similar initiative with Korean bankers.
PRESSURE ON PAY
Not so long ago, Asia was seen as an outpost by Wall Street banks, with the lure of dealmaking lulled by the region's higher political and economic risks compared to developed markets.
Now, several Asian and global banks are adding staff in M&A, equities research and sales and trading. Daiwa Securities Group and Samsung Securities are also among the new entrants building equities platform in the region.
Other banks bolstering their trading and investment banking departments include Nomura Holdings and HSBC .
The aggressive hiring by new entrants is putting pressure on global banks to pay top dollar to retain employees.
Fixed-income trading is one area where some banks are likely to scale back after a tough year compared to last year's boom.
What has intensified the fight is that the growth potential in Asia among established banks has not translated to increased headcount. While the investment banking fee intake for Asia, excluding Japan, last year was only around 15 percent of the global pool, according to Thomson Reuters, its share has grown quickly in the last few years.
"The relevant war for talent out here, is frenzied. If you look at the number of people, and the GDP growth of the US and Europe, you haven't seen a massive adjustment down," according to one top Hong Kong-based investment banker at a Wall Street bank.
"So in Asia, you've got smaller headcount trying to chase a growing opportunity. Every year that goes by, those people get to be more expert." (Additional reporting by Kelvin Soh in HONG KONG and Rachel Armstrong in SINGAPORE; Editing by Muralikumar Anantharaman)