'Mack the Knife' takes over as chief executive at CSFB

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Fears of sweeping job losses gripped Credit Suisse First Boston yesterday after one of investment banking's arch cost-cutters, known as Mack the Knife, was suddenly installed as chief executive.

John Mack, 56, replaces 53-year old Allen Wheat, who had run the investment bank since 1997. The move coincides with a wider re-organisation of Credit Suisse, the parent group, but also comes amid a continuing US Securities and Exchange Commission investigation to CSFB over alleged favouritism in allocating shares in new issues.

CSFB's fortunes have risen and fallen with the tech market. It expanded aggressively in 1999 and 2000, poaching teams of bankers specialising in technology companies, usually on huge salaries with guaranteed bonuses. That has saddled the bank with a hefty cost base at a time when revenues are following the equity markets downwards.

Mr Mack resigned as president and chief operating officer of Morgan Stanley, CSFB's Wall Street rival, in January, apparently after it became clear that he was unlikely to succeed Philip Purcell, the chairman and chief executive. He joined the firm in 1972 as a bond salesman, obtaining his merciless reputation in the early 1990s as head of the fixed income unit, where he made sweeping job cuts. He also was known for bringing in basketball coaches and naval officers to motive staff.

Credit Suisse said Mr Mack's first task would be to manage the integration of its asset management unit into the investment bank. The asset management arm is presently tied to Credit Suisse's private banking operations, in line with European "universal banking" models. Mr Mack said he saw scope to reduce CSFB's costbase, adding: "My priorities will include ... treating all our people with respect and dignity."

Mr Wheat is credited with reducing CSFB's dependence on currency trading and expanding its investment banking operation. Last year's acquisition of Donaldson, Lufkin & Jenrette, another US rival, prompted an exodus of top talent, while six regulatory investigations in five countries over three years have created an impression of a firm too friendly with risk.