The Ulster Bank-owned NCB Stockbrokers has been badly affected by one of the biggest staff walk-outs in Irish stockbroking history after seven executives, headed by deputy managing director Mr John Conroy, left yesterday to form a financial services group, Merrion Capital.

NCB reacted angrily to the sudden departures and accused Mr Conroy specifically of being in breach of his contract and not acting in the best interest of NCB and its customers.

Mr Conroy declined to comment on the breach of contract accusation, but sources close to the group indicate they are happy they are not in breach of contract.

It is understood that Mr Conroy and NCB managing director Mr Conor O'Kelly held an acrimonious meeting yesterday morning. Informed sources said Mr Conroy's resignation and his dismissal by NCB coincided. Once Mr Conroy had resigned, the six executives did likewise and by lunchtime had packed their bags and left NCB's offices in the IFSC.

NCB refused to comment further but market sources believe the broker became aware of the plans of Mr Conroy and his colleagues before they were finalised and decided to dismiss them. Sources believe that by taking this decision, NCB hoped to forestall any further defections to the new Merrion Capital. It is thought that over a dozen other NCB employees had been approached by the Merrion group and indicated their willingness to join. It remains to be seen if these now remain with NCB or move on.

"Whether they resigned or were sacked doesn't really matter, what does matter is that this is a body blow for NCB on the equity side of the business," said a market source.

The other six executives are: Barry Connell, NCB's head of equity sales; Shane Nolan, head of equity research; Pat Landy, director of corporate finance; Martha Nolan, head of equity research production; Kevin Kilty, head of IT development, and Derek Crawley, head of telecommunications.

All seven have been with NCB for a long time and the average length of service is eight years. Mr Conroy and Mr Connell have been with NCB since the broker set up an equity sales division in 1986. Mr Conroy was seen as a candidate for the post of NCB managing director this year following the retirement of Mr Padraic O'Connor, but had to settle for deputy managing director after NCB's head of bonds was given the top job.

It is also understood that relationships between the Ulster Bank parent and some of the NCB executives had deteriorated since Mr O'Connor's departure, with one source saying: "They felt they were being run out of Georges Quay not the IFSC."

Five of the seven benefited from the earn-out arrangement that was part of the £20 million Ulster Bank takeover of NCB, and the final part of this earn-out was paid late last year. Given their seniority and length of service, the biggest beneficiaries under the earn-out are likely to have been Mr Conroy, Mr Connell, who are thought to have received more than £500,000 each, with Mr Nolan and Mr Landy receiving lesser amounts.

Mr Connell, in particular, was seen as largely responsible for building up NCB's equity business with international investors, while Mr Conroy and Mr Nolan are acknowledged as being among the top analysts in the Irish stockbroking industry. Mr Landy was a senior executive in NCB's corporate finance arm and specialised in corporate finance for the technology sector.

The other three may have had a lower public profile, but market sources said they played key roles in the research, IT and telecommunications support and that the new company could not be got off the ground quickly without the support of support staff of this calibre.

NCB's managing director Mr Conor O'Kelly was quick to put out the "business as usual" message yesterday stating: "NCB has a strong market position that the new management team is committed to enhancing in the months and years ahead."

But the view in the market is that NCB has little option but to head-hunt senior equity sales and research staff from other stockbrokers if it is to maintain its position in the market. Estimates vary, but NCB is thought to have about 25 per cent of Irish equity sales.

Needless to say, the other main stockbroking firms will see NCB's latest staff problems as an opportunity to increase their own market share at NCB's expense.