UPDATE 1-Goldman, M.Stanley lose top Qatar bankers to local firms-sources

* M.Stanley's al-Subeai to join Barwa Bank arm - sources

* Goldman's Qatar CEO al-Kawari quit to join QInvest

* Qatar banks lure global bankers with pay, security

(Recasts, adds details on Goldman Qatar head)

By Dinesh Nair and Mirna Sleiman

DUBAI, Oct 8 (Reuters) - Morgan Stanley and GoldmanSachs Group Inc have lost their two top Qatar executivesto local firms, three sources said on Monday, as the gas-richGulf Arab state lures back high-profile citizens with better payand prospects.

The recruitments come as the tiny Gulf Arab state, home tosovereign wealth fund Qatar Investment Authority, spendsbillions on overseas acquisitions and invests in Arab states toboost its political clout.

Morgan Stanley's Qatar head Khalid al-Subeai resigned lastweek to join the investment banking division of unlisted BarwaBank, while Goldman's Qatar Chief Executive Tamim al-Kawari hasjoined investment bank QInvest, part-owned by Qatar Islamic Bank, as deputy CEO, according to several sources aware ofthe matter.

Morgan Stanley and Barwa Bank declined to comment. A GoldmanSachs spokeswoman confirmed Kawari's departure, which took placethis summer but was not publicly announced. The sources spoke oncondition of anonymity as the matters had not been made public.

"You can see that the top brass (of Qatar) is grooming theyoung talent to take up bigger roles and the hirings could bepart of that move," one of the sources said of Qatar, which hasless than 300,000 citizens.

"These are the kind of people who will run the sovereignfund in future. It's a very smart move and very much expected ofQatar."

Qatar's lenders, led by state-controlled Qatar National Bank, are on an expansion spree and are scouting for assetsput on the block by big European banks who are scaling back inthe region.

The Gulf state itself is investing about $30 billion a yearglobally through its sovereign wealth fund, which has picked upstakes in high-profile assets such as miner Xstrata ,Volkswagen and Porsche .

Subeai will join The First Investor, a unit of Barwa Bank,as deputy chief executive, effective Jan. 1, one of the sourcessaid. He had joined Morgan Stanley in 2010 from state-ownedQatar Petroleum.

Barwa, a Qatari lender part-owned by Qatar Holding, has beenramping up its presence since its inception about three yearsago. The lender is planning an initial public offering, itschief executive said earlier this month.

QInvest is in talks to acquire the investment banking arm ofEgypt's EFG Hermes .

(Additional reporting by Regan Doherty in Doha; Editing byAmran Abocar and David Holmes)

((dinesh.nair@thomsonreuters.com)(+ 971 4 366 4265)(ReutersMessaging: dinesh.nair.reuters.com@reuters.net))