A few short years ago, CEO John Duffy wasn't sure his boutique investment bank was going to make it. On September 11, 2001, the terrorist attack on the World Trade Center in New York killed 67 Keefe, Bruyette & Woods employees. Among those lost was Duffy's 23-year-old son, Christopher. But the firm, which caters to financial services providers, has overcome the devastating emotional and business losses and has begun to grow again. Last month in London, Duffy and vice chairman Tom Michaud announced the firm's first European venture.

"What happened on 9/11 in an odd way was an inspiration," says Duffy, 54. "We wanted to make sure that the firm recovered. If we are a vibrant growing business, we are better able to support the families, should they need us."

Although the official launch of its European business was last month, the firm has been getting ready since early in 2004. It hired 34 analysts, sales traders and bankers in London -- half of the European lineup joined from archrival Fox-Pitt, Kelton last spring. (Because of gardening leave, they've only just arrived.) KBW has also secured membership on the four major European exchanges. Research will remain the firm's priority, Duffy says.

Within a few months the firm plans to increase the number of European banks, insurance companies and specialty finance firms it covers from 73

to 110. In the not-too-distant future, Duffy expects no less than 10 percent of employee-owned KBW's earnings to be generated in Europe.

Opening shop in London is the most significant strategic move in the firm's history, the CEO says: "The need has got ever more clear as the world keeps shrinking." In fact, KBW had been looking at Europe well before 2001. "Today we're a bigger firm with new businesses," Duffy notes. "I would hope that those we lost are looking down kindly upon us and admiring the job we have done."