Restructuring: Piper Jaffray's Month of Layoffs, Merging, and Realignment.

In an ongoing restructuring that has left some public finance professionals without a job, Minneapolis-based U.S. Bancorp Piper Jaffray has realigned its fixed-income division, blending its tax-exempt and taxable businesses together, company officials said in an interview yesterday.
February was a busy month for the broker-dealer's parent. On Tuesday, U.S. Bancorp completed its $23 billion merger with Firstar Corp. The timing of the deal's completion also coincided with a round of layoffs in the firm's asset management, individual investor services, and fixed-income divisions.
Public finance falls under the firm's fixed-income section, and its managers said the layoffs included investment banking, sales, and trading professionals in several of the firm's 15 public finance offices. Company representatives declined to comment on the overall number of employees laid off, but sources said they included a handful of bankers.
Several professionals were cut in the firm's Chicago office, which was bolstered in staff following U.S. Bancorp's 1999 acquisition of John Nuveen Co.'s municipal group. No managing directors or senior vice presidents were cut from the Minneapolis headquarters.
The layoffs were made as part of a restructuring of the division and are aimed at strengthening the municipal group's business in its three core sectors -- health care, housing, and higher education, according to Frank Fairman, the head of public finance investment banking, and David MacLennan, head of fixed-income capital markets.
The cuts were made in the wake of a difficult year for the parent bank, which also took certain restructuring steps and implemented a hiring freeze in an effort to boost its sagging earnings. Despite the bank's difficult year, the public finance group's rankings remained strong. In 2000, the broker-dealer maintained its ranking as the 10th busiest senior manager, according to rankings released by Thomson Financial Securities Data.
The combination of the cuts and the merger with another major bank -- a situation that sometimes results in a firm's public finance business being overlooked in favor of the more profitable business areas -- has raised questions among Midwestern market participants as to U.S. Bancorp's commitment to municipals.
Fairman and MacLennan stressed that the firm's goal is to grow and noted that Piper Jaffray Co.'s public finance sector was bolstered significantly on a national level, not hurt, after it was acquired by U.S. Bancorp in 1998. "The layoffs and restructuring are an integral part of the strategy to strengthen our business," Fairman said. "In no way are we backing off from our commitment to fixed income."
The remaining public finance group is no stranger to restructuring. It was just last summer that several key positions were changed. At that time, William Henderson moved into a newly created position of head of the tax-exempt public finance group. His position was created after Thomas E. Stanberry stepped down as head of fixed income to return to investment banking.
Henderson's counterpart on the taxable side was Joseph Tessmer. Fairman shared the management of public finance investment banking with Nuveen's Clifton Fenton. Last summer, Fenton was cut and Fairman took over the job alone.
In September, the firm hired MacLennan from Cargill Inc. to serve as head of fixed-income capital markets, and earlier this year he decided to make structural changes that blended the taxable and tax-exempt sectors under one umbrella. "The goal is to improve communication and teamwork ... and management," he said.

Tessmer and Henderson's positions were eliminated and they moved elsewhere in the firm. Fairman continues in his position and Barry Nordstrand moved from another position at the firm to become head of institutional sales and trading. Both report to MacLennan.