Credit Suisse First Boston is considering shedding up to 800 jobs – one-fifth of its investment banking personnel around the globe – in an attempt to cut costs following the downturn in the stock market and associated lower corporate activity.
The likely moves follow the appointment of John Mack as chief executive of Zurich-based Credit Suisse's investment banking unit in July. If the bank presses on with its plans, it risks legal action should it include staff on guaranteed contracts among the cuts.
CSFB employs 3,800 people in investment banking. It was unclear last night to what extent CSFB staff in London would be affected. Earlier this week, it emerged that Morgan Stanley was considering lay-offs totalling 600 in investment banking.
A spokesman for CSFB said yesterday: "We have made no announcement – internally or externally – about job losses."
According to one person familiar with the situation, CSFB executives were likely to make a decision on the possible moves by the end of this week.
Dubbed Mack the Knife – a reference to his penchant for cutting costs at his previous employer, Morgan Stanley – Mr Mack had previously invited staff to reconsider their relationship with the bank. The request was taken as a hint that employees who did not agree to take a pay cut may find their career prospects limited upon expiry of their guarantees.
The company's expense problems stem largely from last year's acquisition of the rival Wall Street firm Donaldson, Lufkin & Jenrette. CSFB offered lucrative packages to DLJ's brightest talent to retain their services, and many of its staff are in line to receive guaranteed payments up until March next year.
CSFB's salary and bonus costs were 58 per cent of revenues during the second-quarter. At most investment banks, they typically amount to half of revenues, a ratio last seen at CSFB in 1997.
Like many of its rivals on Wall Street, CSFB has seen its investment banking revenues dive as IPO and merger activity slumped alongside stock prices. No US companies went public last month, while the number of mergers completed was down 95 per cent on a year ago.Reuse content