NEW YORK, Aug 31: Wall Street’s brief affair with benevolence is over. New York’s top investment banks lent small rivals a hand by donating desks and handing them deals after the Sept. 11 attacks killed hundreds of staff and destroyed offices in the twin towers. But competition is back a year later, thanks to a bear market and dwindling profits.

The positive help we received from our competitors was great for the first six weeks, said Thomas Michaud, vice chairman and chief operating officer of niche investment bank Keefe, Bruyette & Woods, which lost 67 employees when planes hit its offices in the World Trade Center.

But the competition, I would say, generally is back, Michaud told Reuters in an interview. And in some cases, I think some firms moved to fill our space (in the market).

Right after Sept. 11, Morgan Stanley and Goldman Sachs Group called two hard-hit banks specializing in advising financial firms — Keefe and Sandler O’Neill & Partners — to give them a piece of lucrative stock offering deals they normally wouldn’t get.

French bank BNP Paribas lent Keefe trading floors until March. Bank of America Corp. did the same for Sandler, which lost a third of its staff in the attacks. Executives filling in at jobs done by people who were killed found support and advice from experienced Wall Street hands.

We didn’t hire a new head of syndicate for a couple of months, Michaud said. I had to pinch hit in that area. I was dealing with the head of syndicate at Goldman, one of the most sophisticated guys in the world in that business, and I’m asking all the dumb questions. He was more than patient with me, more than helpful.

Two retired, seasoned investment bankers, Salomon’s Robert Kleinert and Goldman’s Robert Castrignano, approached Sandler right after the attack with offers to help, and have been at the firm ever since, Fred Price, Sandler’s chief operating officer, told Reuters.

What we needed at that point in time were people who could really bring calmness and clear thinking to the table, Price said. Because it wasn’t a calm time, obviously. It was anything but a calm time.

Wall Street’s help was part largesse, part self-interest. In today’s intertwined markets, banks and brokers trade through each other and work together on many sorts of deals. So they needed money to flow quickly and efficiently through a network of systems, after the attacks wiped out many firms’ computers.

The market’s prolonged slump and the passage of time changed that.

There’s so little business right now that everyone’s scrambling for whatever scraps fall from the table, said Reilly Tierney, an analyst at Fox-Pitt, Kelton who analyzes brokerages and big banks.

Tough times have forced Wall Street firms to fight for merger advisory fees, stock deals and brokerage commissions. A weak economy and myriad corporate accounting scandals have scared investors away from the stock market. The benchmark Standard & Poor’s 500 index has dropped about 19 per cent this year and new stock offering deals are scarce.

In the absence of large merger deals, big Wall Street firms are trying to win more business advising smaller and medium-sized companies — traditional markets for Keefe and Sandler, which specialize in financial services firms.

We always get these cycles, where things are slower, so the bigger firms take a rifle-shot approach into this market, Price said. It won’t last.

To keep up and rebuild, firms that lost the most workers in the attacks like Keefe, Sandler and bond brokerage Cantor Fitzgerald have hired staff, opened new offices in midtown Manhattan and elsewhere, and pushed into new businesses.

Sandler has hired 77 people since the attack, and is expanding its equity sales, trading and research, and investment banking. It plans to provide recommendations on 200 companies by the end of this year. Like others, Sandler operates out of new offices in midtown Manhattan and ultimately will have more space than it had at the Trade Center.

Its top executives also are back to spending more time finding new clients and pitching deals.

The most normal thing we’re all doing right now is that we’re all very involved in pure business, Price said. It is a pretty normal investment bank today. We’re fighting the fight on the equity sales and trading side, the fixed income side, in investment banking and equity research.

Keefe, meanwhile, has hired over 100 new people without using a headhunter. Virtually its whole trading desk and almost its entire research department died in the attacks. The firm also has expanded San Francisco, Boston and Hartford offices, and formed a loan portfolio sales group to help banks trade assets.

Keefe said it also plans to build operations in London to follow European financial services companies and expand its bonds business, Michaud said.

We now have more employees in fixed income than we did pre-9/11, Michaud said. Our goal is still to have a fixed income capability that’s much broader than we had pre-9/11 and early signs are that that’s going well ... And by the end of the year, we’re going to be opening a London office for our sales presence.—Reuters