Last year, a steady stream of executives, traders and analysts poured out of Japan's banking system to join foreign investment banks.

The exodus was so bad that at one point, top executives asked Brian Murdoch, president and CEO of Merrill Lynch Investment Managers, to stop recruiting staff from Japanese banks.

Murdoch said he understands their concern and avoids recruitment that could antagonize his clients. "In the financial services, the only real asset you have is the people," he said.