Questions were last night growing over the ability of New Star Asset Management to retain top managers after the company was handed over to lending banks with provisions for a new remuneration scheme deemed substantially weaker than a plan announced just six months ago.

New Star yesterday announced a deal with its lending banks in which they will exchange most of its debt for a 75% equity stake. The banks will convert the fund manager's debt for a combination of ordinary shares and £94m (€109m) in convertible redeemable preference shares.