Gene Reilly, a respected veteran in Asian equity markets, has resigned from Goldman Sachs and will join Bank of America Merrill Lynch in Hong Kong.

The move represents BAML's push to become a top-tier broker of Asian equities to the buy side, and may signal its return to prop trading in the region as well.

Reilly is credited with building Goldman Sachs's electronic trading franchise in Tokyo and other regional markets. He was one of the drivers behind the introduction of its dark pool, Sigma-X and has advocated for global investors to increase their exposure to Asian equity markets. Prior to joining Goldman in 2002, he helped build Deutsche Bank's program-trading capability in Asia.

He allegedly became unhappy at Goldman last year. Goldman Sachs officials note that last year Reilly was moved out of a management role. The bank's equity trading business is currently run by co-heads Bobbie McTameney and Mark Agne in Tokyo.

People on the buy side say Reilly got shunted aside after the firm realised he was looking to leave.

"Gene is a very good hire," says one buy-side trader. "His experience in the trading area, especially for Asia, is hard to match."

Ranjan Marwah, chairman of Capital Access and a leading headhunter in Hong Kong, says he tried to place Reilly, but didn't win the mandate. "Merrill was one of three banks and six hedge funds that tried to hire him. That's nine bids," he says. "Gene is Asia's best builder of quant- and algorithm-based trading businesses."

The announcement yesterday caught BoA Merrill's own traders off guard, says one buy-side trader. "They were like: What's he going to contribute at such a senior level?"

But a BoA Merrill source says the hire is a huge boost to morale and signals the bank's ambitions in Asia.

A source familiar with both banks says the reason an institution would want a guy like Gene Reilly is obvious; to get back into the game of putting capital at risk. He says that last year Goldman made $2.5 billion in revenues from Asian equity trading. (This figure was not confirmed.)

So why pick BoA Merrill? Old friends. Reilly was hired by his former boss Thomas Montag, New York-based president of global banking and markets at BoA Merrill. Montag joined the bank in 2008 after serving as co-head of the global securities business at Goldman Sachs, and as co-president of Goldman's Japanese operations and of its Asian fixed-income/credit/commodities and equities groups.

It was while working for Montag that Reilly built Goldman's Japanese equity trading franchise, which remains a money spinner to this day.

Although one source says Reilly's job will involve reviving BoA Merrill's prop trading activity in Asia, that's not the formal job description. "Says here that he's going to be head of equity execution services, including program trading, quant, transition management, algo and electronic trading," says a buy-side participant, reading BoA Merrill's terse announcement yesterday. "That's client-focused work."

And a BoA Merrill spokesman says: "Client trading is the focus."

The brief also includes a reference to capital allocation.

"As investment banks come out of the crisis, they're looking to extend their capital to clients again," says a buy-side trader who has been Reilly's client. "They'll have to be more discerning. Gene's the kind of guy who can allocate capital to the correct people."

He adds that Merrill Lynch had been steadily losing talent in Asia for the past two years and severely reduced its principal-trading activities. It has also suffered in terms of its client interface. The Reilly hire represents a new thrust in this area and comes as the firm is looking to hire more sales traders.

And BoA Merrill is not the only one poaching Goldman traders. Masaharu Kubo, co-head of Japanese equity sales trading, has left to join Société Générale in Tokyo. Jesse Lentchner, co-head of equity sales trading for Asia ex-Japan in Hong Kong, moved to agency broker BTIG last week. And the pain is spreading to the fixed-income/currency/commodities trading desk, as reported today by FinanceAsia.com.

Reilly is on garden leave and isn't expected to start working at BoA Merrill until the third quarter. His title will be head of Asia-Pacific equity execution services. He will report to Michael Stewart and Thomas Patrick, global co-heads of equities in New York, and to Yasuhiro Fujiwara and Michael Halloran, co-heads of Asia-Pacific global markets, in Hong Kong and Tokyo respectively.