CS kicks First Boston out of mothballs
When CS paid more than 200 million to senior bankers
Credit Suisse is reviving its old investment bank, CS First Boston. The name symbolizes a time when Wall Street was famous for its wages, transfer excesses, and speculative bubbles.
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Credit Suisse is revitalizing its former investment bank, CS First Boston.
The investment bank Credit Suisse has always lost the luster of the good old days. The business has turned into a real money destroying machine. Parts are now being outsourced, the big bank announced Thursday morning. Credit Suisse is planning a drastic restructuring, as investment banks should not drown their income statement in deep red.
The new investment bank will be known as CS First Boston. Thus, Credit Suisse is taking out an old brand from the mothballs fund, which it already canceled in 2006. At that time, the bank wanted to combine all areas of business under one brand. Now step back.
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Transfer fee as in football
Investment bank CS First Boston (CSFB) began in 1978 when Credit Suisse merged with First Boston Corporation – originally still as Financière Crédit Suisse-First Boston.
CSFB stands for an eventful and up-and-coming history in which top employees received salaries in the tens of millions – and a rumored $225 million “transfer fee” was paid to a senior banker. The astronomical amount that even stood out on Wall Street at the time, and in today’s football circus, was reached only once when Neymar was transferred. The Brazilian joined Paris Saint-Germain from Barcelona in 2017 for 222 million euros.
In 1989, Credit Suisse took over the majority of CSFB and helped him out of serious financial difficulties. Previously, CSFB had financed an expensive acquisition, but failed to repay hundreds of millions of dollars. In 1996, CS subsequently purchased all of the shares.
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The majority stay with CS
In the 1990s and early 2000s, CSFB was at the forefront of high-risk investment banking deals. Top bankers can make hundreds of millions in a short period of time – or lose a lot and more. One of those miracle workers was Frank Quattron (67), because CSFB acquired it from Deutsche Bank in 1998 for allegedly $225 million. Quattrone is said to have earned $40 million annually and hundreds of millions in bonuses within three years.
The same risk-taking mindset has caused CS billions of losses in investment banking in recent years with hedge fund Archegos and Greensill funds. With the revival of CS First Boston – where CS will continue to hold the majority – things are set to improve. According to CS, a “respectable” investor with $500 million will also participate. The bank still keeps the name a secret.
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