The destruction of the World Trade Center will leave the financial services industry more scattered than ever and with far fewer employees in Manhattan.
The corporate headquarters of displaced financial giants like American Express and Merrill Lynch are unlikely to relocate, and most investment bankers will insist on being near the heart of the commercial action.

But entire units of those companies may never return, leaving them configured more like the American operations of the big Swiss bank UBS, which owns the UBS Warburg investment bank and the PaineWebber brokerage. UBS lost two employees in the disaster, but its trading and investment banking operations were largely unaffected, because they had already settled miles away from Wall Street.

Top executives of UBS move freely and frequently among the company's buildings on Avenue of the Americas and Park Avenue in Midtown, its trading center in Stamford, Conn., and its brokerage operations in Weehawken, N.J.

That decentralized framework defies a popular view on Wall Street that there are great benefits in clustering groups of employees. John J. Mack, the chief executive of Credit Suisse First Boston, is a champion of keeping a firm together.

When Mr. Mack was a senior executive at Morgan Stanley in the mid-1990's, that firm came close to moving to the property in Stamford where UBS now has its trading floor. Now, he is trying to combine Credit Suisse's investment banking operation — the product of the firm's merger with Donaldson, Lufkin & Jenrette — into a cohesive unit in its headquarters on lower Madison Avenue.

Space for 800

The firm found space in two buildings on Park Avenue, near 50th Street, for more than 800 people who had worked at 5 World Trade Center. Mr. Mack said that he had no plans to move any of the firm's other operations.

Other big financial companies are now stuck somewhere in between. Merrill Lynch, American Express and Lehman Brothers could not recreate the campus-like arrangements they had in the World Financial Center, across the street from the twin towers, any time soon — even if they wanted to.

David H. Komansky, Merrill's chairman, said yesterday that the firm was already thinking about leaving some of its trading operations outside the city after it returned to its headquarters at the World Financial Center. Those activities were relocated to Jersey City last week and could remain there.

UBS officials said that dispersing their operations around the metropolitan area had worked for them.

The connective tissue is a personal videoconferencing system that "internally, is used way more than the telephone," explained John Costas, president and chief operating officer of UBS Warburg. Mr. Costas's business cards carry a still-prestigious New York address, he said. But in reality, home is where the intranet connection is.

"I'm much more tied to my log-in and the suite of services available on our computers than I am to the chair and the desk and the phone, that's for sure," Mr. Costas said in an interview interrupted when the face of his boss, Markus J. Granziol, popped up on his computer screen talking to him live from London.

Mr. Costas spent more time than usual this week making the rounds to see and be seen by employees. But he said his movements were not atypical. He started his day on Tuesday meeting with investment bankers and clients in the firm's offices at 299 Park Avenue, near 53rd Street, then spent the afternoon in the PaineWebber building at 1285 Avenue of the Americas, near 51st Street. On Wednesday, he worked from Stamford, a short drive fron his Greenwich home, and yesterday he was back in Midtown.

Though the firm lost two employees in the twin towers disaster, its operations otherwise were largely unaffected. Were UBS caught up directly in a disaster, Mr. Costas said, the firm's dispersal could be helpful, because some sites could serve as backups for others. Several of UBS's competitors are reconsidering their disaster-recovery plans after being forced to scramble to get back in business last week.

"I think most people's backup and recovery plans proved insufficient," said Mr. Komansky of Merrill Lynch, the nation's largest brokerage firm. "The key issue that came out of this is an overreliance on a common infrastructure."

Consolidation choice

Mr. Komansky said Merrill planned to return to its headquarters at 4 World Financial Center, where it holds a long-term lease, when that building is reopened. But he said that the firm might choose to consolidate its trading of Nasdaq stocks across the river in the Newport office complex in Jersey City, where Herzog Heine Geduld, a trading firm that Merrill bought last year, has its offices. Merrill moved more than half of its stock traders into Herzog's space there last week.

Nobody can say yet how many financial sector jobs will never return to Lower Manhattan. But it is clear that the enormous dislocation caused by the attack, combined with the steep downturn in the fortunes of Wall Street firms, will significantly reduce the industry's presence in the financial district, and in New York City more generally. Jobs in related services, like law and accounting, will follow the financial jobs wherever they go.

UBS Warburg has about 10,000 employees in the New York area, but only about 3,000 of them work in the city, while 3,000 others work in Stamford. If other firms adopted a similar model, the city could lose tens of thousands of jobs.

"These firms are going to be broken up into two or three large blocks," said M. Myers Mermel, chief executive of Tenantwise.com, an online commercial real estate broker. "Everyone believes that New York City is still the financial capital of the world, but the fact is a lot of these jobs are going to be in New Jersey and Connecticut and as far south as D.C."

Mr. Mermel said his company had contacted 42 of the 78 biggest tenants of the World Trade Center, which collectively occupied 44 percent of the space there, and only two said they were taking steps to remain in Lower Manhattan. All of the others were making plans to shift employees, at least temporarily, to buildings in Midtown, New Jersey or surrounding suburbs, he said.

Employee retentionn

Mayor Rudolph W. Giuliani has said that state and city officials will do what they can to retain these companies and their employees, many of whom are among the city's highest-paid workers.

Concerns raised or exacerbated by last week's terrorist assault — a shortage of first-class office space in Lower Manhattan, fears about security and the business risks of having too much of a company's operations in a single place — are driving many of those decisions to disperse. New lessons learned after the attack will also influence changes.

Still, several of the displaced firms have said they are committed to being in New York. Yesterday, at a gathering of American Express employees at Madison Square Garden, Kenneth Chenault, the chief executive, said that the company would keep its headquarters in the city, though it is unsure when it can return to the office space it owns in the World Financial Center.

Until then, Mr. Chenault and his management team will run the company from a building on the Jersey City riverfront. More than 3,000 employees will settle into new space in Stamford and a couple of additional locations in New Jersey.

The firm's old neighbors in Lower Manhattan now are its neighbors across the river. Richard Fuld, the chairman and chief executive of Lehman Brothers, has been working since the attack from back-up offices in Jersey City. Most of Lehman's stock and bond traders are wedged into the offices, too, but executives are planning to move some of them into space they leased last week in a nearby building.

"I absolutely believe that there will be a central financial district in New York and we will be in it," said Jeffrey Vanderbeek, a managing director of Lehman Brothers. But, like any good trader, he hedged that position, saying that where Wall Street firms ultimately wind up will depend "on what kind of deals can be cut."

Shrugging, Mr. Vanderbeek added, "Anything can happen."

Well, not quite anything, Mr. Mack said.

"I think the financial center will hold in the metropolitan area," he said. "I don't think people will say, `I'm going to Kansas.' "