Shake-up at Credit Suisse sees John Mack departure

Oswald Gruebel is to take sole charge at Credit Suisse after John Mack, the joint chief executive and head of its New York-based investment bank, unexpectedly quit as the Swiss banking giant unveiled a major reorganisation last night.

Oswald Gruebel is to take sole charge at Credit Suisse after John Mack, the joint chief executive and head of its New York-based investment bank, unexpectedly quit as the Swiss banking giant unveiled a major reorganisation last night.

Credit Suisse said Mr Mack and the board of directors had agreed that his contract should not be renewed when it expires on 12 July.

Brady Dougan, who joined the bank in 1990, will take over Mr Mack's role as head of the Wall Street-based investment banking business, Credit Suisse First Boston.

The banking group will also be restructured into three units from 13 July in a move that sees power shift from New York to Zurich. CSFB will cover investment banking and wealth and asset management, while global private banking and corporate and retail banking will be managed under the Credit Suisse name from Switzerland. The group's Winterthur unit will manage its insurance interests.

Walter Kielholz, the chairman of Credit Suisse, insisted the parent bank was committed to the Wall Street business. "Credit Suisse First Boston remains a major pillar of Credit's Suisse's strategy in the future." he said. He also ruled out a merger with other European rivals, amid recent speculation that Credit Suisse could join together with Germany's Deutsche Bank.

However, Mr Kielholz said that all options were open with Winterthur, although they were not currently in talks with anyone. "We are considering options and we are observing with great interest possible future consolidation of the European insurance industry," he said.

Mr Mack, known as "Mack the Knife" on Wall Street after his cost-cutting drives that slashed a third of CSFB's workforce, joined the bank less than three years ago after losing out on the top position at Morgan Stanley to Philip Purcell. CSFB, which had embarked on a costly acquisition spree under its previous head, Allen Wheat, returned to the black under his tenure, posting a $1.4bn profit last year.

However, the bulge bracket bank has also slipped down the Wall Street league tables, being overtaken by Credit Suisse's Swiss rival UBS last year in terms of fees earned.

"Mack's an extremely talented executive, but as a co-CEO and a subordinate CEO, he wasn't the real thing," Roy Smith, a professor of finance at New York University told Bloomberg News last night. "CSFB is now in a diminished position."

Credit Suisse recorded a record Sfr3.3bn loss in 2002, including a Sfr1.2bn loss from CSFB. In September 2002, Mr Mack, 59, a former bond trader from New York, and Mr Gruebel, who had first joined Credit Suisse in 1970 and was brought back from retirement, replaced Lukas Muhlemann as chief executive.

Mr Dougan, 44, who takes over at the head of CSFB, joined alongside Mr Wheat in 1990. He was posted to London earlier this year to supervise the investment bank's European operations.