At least half a dozen firms are seeking to recruit members of Kidder Peabody & Co.'s municipal bond department, despite the industry's overall contraction.

Most of the interest in Kidder's staff of muni traders, sales representatives, and bankers is coming from boutique firms, regional players, or firms that do not have a major New York presence.

Among those in talks with Kidder personnel are Citicorp Securities Inc., Wertheim Schroder & Co., PNC Securities Corp., Tucker Anthony Inc., A.G. Edwards & Sons Inc., and First Albany Corp., sources said.

"Anyone not overstaffed is looking at this as a period of opportunity to add people or upgrade," said the head of one regional firm who asked not to be identified.

"The Street has looked at Kidder's banking and marketing side and sees there are a handful of talented people on both sides," he said. "A lot of overtures have been made."

Said Justin D'Affronte, senior vice president at Tucker Anthony: "We're certainly in a recruiting mode, [and] Kidder Peabody has had a very stable, nicely run municipal bond department with some good people. We've been having conversations, but it has not gotten to the point where we've made any offers. I would like to see some of the talks consummated."

Other firms also acknowledged that they are interested in Kidder employees but stressed that no formal agreements have been reached.

"Overall, this is a period of opportunity to put in place the team of people that are going to drive the business forward," said Arthur T. Murphy Jr., senior vice president at First Albany Corp. "The current situation is similar to the NFL draft. Our feeling is that this is the right time to selectively add to sales, trading, and banking."

None of the officials would reveal the names of the Kidder employees that they have been interviewing.

Since Oct. 16, when General Electric Co. agreed to sell Kidder to PaineWebber Group Inc., the fate of Kidder's staff has been uncertain.

PaineWebber officials are expected to determine the destiny of most of Kidder's muni employees as early as sometime this week, sources familiar with the developments say.

Terry Atkinson, managing director of PaineWebber's municipal securities group, said that timetable is "valid" but "might be optimistic."

"We are trying to do a complete evaluation of the capabilities of Kidder Peabody and the strategic needs of PaineWebber," Atkinson said. "I'm hopeful we can get this resolved within the course of this week, but I don't know what the number" of Kidder employees retained by PaineWebber will be.

Market sources and analysts believe that the vast majority of the Kidder muni employees will be let go, but a select few are expected to be absorbed by PaineWebber.

Among the latest to receive firm offers from PaineWebber to stay on board are: Paul E. Ladd, a managing director in Kidder's municipal banking department, and the staff of Kidder's Philadelphia office, which is led by managing directors George Longo and Ralph Saggiono, sources say.

The Kidder officials could be reached for comment, and Atkinson declined to comment on that matter.

The developments with Kidder's employees come amid news of layoffs elsewhere in the industry.

Public Financial Management Inc., a Philadelphia-based financial advisory firm, is laying off 10% of its workforce effective next year, according to F. John White, chief executive officer of the firm.

Public Financial is also restructuring its Denver office, and has dismissed Janet Sachs, a managing director and head of its arbitrage rebate compliance team.

White said the cuts stem from a "significant drop" in market volume. "We're thinking of the most effective way to serve our clients."

The cuts call for a reduction of 16 employees, bringing Public Financial's workforce to 145 employees from its current 161. White says the cuts are not targeted against any specific department in the firm, but are essentially for "tightening measures."

"Our firm must be the right size for the market -- this is a problem facing nearly everyone in public finance," he said.

The dismissal of Sachs is the most noteworthy because of her high rank. Most of the other cuts affect lower-level employees.

A source with knowledge of the Denver office said Sachs' dismissal stems in part from the decision of her husband, Ira Sachs, to leave the firm and start his own rebate business. The source said that Sachs intended eventually to join her husband in the venture and that Public Financial decided to move first to avoid potential conflicts of interest.

Sachs could not be reached for comment.

John Kamplain contributed to this article.

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