First Boston faces cuts and shake-up

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The Independent Online
Directors of CS First Boston, the investment bank, will meet in New York on Monday to discuss cutbacks that may include redundancies and department closures at the London office. The planned restructuring follows concerns that CFSB has been hit by a falling bond market, losses in the Russian equity and debt markets, and special charges to its mutual fund management arm following unexpected losses in derivatives. Profits, forecast at just $50m, are so low the company is straining to pay hefty staff bonuses (which were raised to a total of £250m in 1993) without selling assets.

"They have a serious problem on their hands," said one American banking analyst. "The disaffection connected with integrating the various businesses has resulted in bonuses rising by up to 40 per cent and they are going to have to lay off up to 15 per cent of staff and kill bonuses to make ends meet."

A source close to the company said that on Monday the directors would consider leaving several financial areas including municipal bond trading and private client stockbroking. The London subsidiary would not be spared cuts, the source added.