CS takes First Boston out of mothballs
When CS paid over 200 million for the best bankers
Credit Suisse revives its old CS First Boston investment bank. The name indicates a time when Wall Street was known for wage and transfer excesses and speculative bubbles.
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Credit Suisse is reviving its former investment bank CS First Boston.
The Credit Suisse investment bank has long since lost the luster of the old days. The company has degenerated into a real money-shredding machine. It is now partly outsourced, as announced Thursday morning by the big bank. Credit Suisse is planning a radical restructuring, in which investment banking should no longer plunge the income statement into the deep red.
The new investment bank will be known as CS First Boston. Credit Suisse is thus pulling an old brand out of the mothball box that it effectively scrapped in 2006. At the time, the bank wanted to bring all lines of business together under one brand. Now step back.
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Transfer fees like in football
CS First Boston investment bank (CSFB) began in 1978 when Credit Suisse merged with First Boston Corporation, originally still under the name of Financière Crédit Suisse-First Boston.
The CSFB represents an eventful history full of ups and downs, in which the best people received salaries in the double-digit millions – and a “transfer fee” of approximately $ 225 million was paid to a high-ranking banker. level. An astronomical figure that at the time also stood out on Wall Street and, in today’s football circus, was only reached once when Neymar was transferred. The Brazilian joined Paris Saint-Germain from Barcelona in 2017 for € 222 million.
In 1989, Credit Suisse took over the majority of CSFB and helped it overcome severe financial difficulties. Previously, CSFB financed an expensive acquisition but failed to repay hundreds of millions of dollars. In 1996 CS then bought all the shares.
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The majority remain with CS
In the 1990s and early 2000s, CSFB was at the forefront of high-risk investment banking deals. The best bankers could win hundreds of millions in a short period of time, or just lose as much and more. One such thaumaturges was Frank Quattrone (67), because the CSFB had obtained it from Deutsche Bank in 1998 for allegedly $ 225 million. Quattrone is said to have pocketed 40 million a year and hundreds of millions in bonuses over three years.
The same risk mentality had caused losses of billions of CS in bank investments in recent years with the hedge fund Archegos and the Greensill funds. With the revival of CS First Boston – in which CS will continue to hold the majority – things should improve. According to CS, even a “respectable” investor will participate with 500 million. The bank still keeps the name secret.
