Jonathan Epstein, MD and head of Lehman Brothers' Principal Transaction Group (PTG) in Asia and Kevin Aujer, a senior vice president and Korea Country Manager were both asked to resign from Lehman last week. Sources at Lehman confirm that the pair have now left the Lehman payroll.

"They have left the firm to pursue other opportunities," says Mia Trinephi, a corporate communications executive at Lehman Brothers in Tokyo. Trinephi would not comment on the reasons behind the departure.

However, sources close to the issue say the departures stemmed from problems at the Korean arm of Capital Management, the Lehman subsidiary that services the firm's non-performing loan and distressed asset portfolio.

The departures will come as a shock to many in the market as Epstein and the PTG were considered the leading players in their field and have made Lehman a huge amount of money in recent years. This quarter, their numbers were said to be the highest on record. Last year, such was the success of the business he ran that Epstein is said to have paid the highest amount of tax of any non-Japanese working in Japan.

While there is no suggestion that Epstein has been personally involved in any wrong doing, it appears he has been forced to take responsibility for problems that may have happened under his watch.

In addition, some talk of a power struggle at Lehman between members of the fixed income group and the PTG. The latter has consistently been the more successful part of the business in Asia, although ex-Lehman employees say the fixed income department runs the bank and was jealous of PTG's success. Thus compliance issues could have been used to oust Epstein for more political reasons.

Competitors will no doubt be eager to get hold of the services of Epstein, who has considerable expertise in completing NPL and real estate deals, two of the hottest areas of the regional banking market. It is known, for instance, that both Goldman Sachs and HSBC are in the market looking for seasoned real estate bankers with considerable deal experience.

Epstein could not be reached for comment.