Several investment banks, including Merrill Lynch and Lehman Brothers, have moved some operations across the Hudson river after being forced to evacuate offices damaged by the collapse of the twin towers.

Traders are having to cope with less space, unfamiliar journeys to work and an acute shortage of the delis and Starbucks coffee shops that are an essential part of Manhattan's financial services infrastructure.

However, executives in charge of the moves say their back-up arrangements allowed them to be full participants when equities markets reopened last week.

"It was a Herculean effort," says David Goldfarb, Lehman's chief financial officer, "but our disaster recovery planning for the year 2000 covered every aspect of the business."

Some Lehman staff left their headquarters in the World Financial Center soon after the twin towers were hit by the hijacked aircraft, and moved to a Jersey City office block earmarked as a back-up centre. The firm had 15 floors there, used for administrative and information technology staff, who were moved out.

Under the disaster recovery plan, three floors were to be used for trading with places already allocated to named traders. The various feeds they need to get information and deal were already wired in, allowing the firm to switch the existing terminals to their new role.

Some alterations had to be made: the partitions separating work stations were too high for traders who need to talk to each other, so the top panels were removed. But Lehman was able to bring people back in within days of the attack and is trading in all products with the only difficulty being the loss of some telecommunication links to clients because of the chaos in lower Manhattan.

"I was pleasantly surprised to find we could execute complicated programme trades," says Mark Benson, head of derivatives. "Staff have been invigorated by the way we've put things together so quickly after that frightful moment."

Merrill's equities trading staff are just along the river in the offices of its Herzog Heine Geduld subsidiary. This was not part of the firm's recovery plan but the attack damaged its back-up location forcing it to seek alternatives. As a result, the traders are working with a lot of brand new equipment, fresh from the boxes.

"We've survived some very active days in the markets last week," says Bob McCann, chief operating officer of the investment banking operation. "The biggest challenge has been to re- establish connections with clients and exchanges."

The influx of Wall Street staff to Jersey City has, however, put strain on local food providers. Cosi, a sandwich bar chain, has seen a 50 per cent surge in sales since Merrill moved into a neighbouring block.

"We've brought in extra people, including some of those who used to work in our lower Manhattan branches," says Mark Hornsby, area manager.

Even so, "you can't find a pizza for love or money in Jersey City," says one Lehman executive.

Back to business impact stories index