<i>THE THING IS... the bulge bracket</i>

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The Independent Online

It is the holy grail of finance, the glass ceiling that, once broken through, guarantees eternal wealth and, possibly, happiness. It is the boundary between the bulge bracket and the also-rans, which Credit Suisse First Boston is trying to storm with its $13bn purchase of Donaldson Lufkin & Jenrette.

It is the holy grail of finance, the glass ceiling that, once broken through, guarantees eternal wealth and, possibly, happiness. It is the boundary between the bulge bracket and the also-rans, which Credit Suisse First Boston is trying to storm with its $13bn purchase of Donaldson Lufkin & Jenrette.

This latest amalgamation of investment banks is a curious, expensive and potentially painful deal. CSFB, a company funded by the Swiss, powered by Americans and built on foundations in the City of London, has a strong history in the bond markets, particularly Eurobonds, and a decent presence on Wall Street.

A couple of years ago it bought Barclays de Zoete Wedd, one of London's top brokers - which was a nice fit, with not too much overlap between the two financial businesses.

DLJ is a different kettle of fish. It is a niche investment bank, strong in financial services, technology and high-yield bonds, which has been growing like Topsy in the last few years. Talk on Wall Street has been that it has been looking for a buyer as its ultimate owner, French insurer AXA, does not want to throw money at investment banking.

But CSFB is quite willing to. It knows that once the DLJ deal goes through it must pay $1bn or so to around 2,500 people it will let go, and spend another $2bn on about 2,500 people it wants to keep. For this money it hopes to become a bulge-bracket player.

The term dates back decades and once referred to the banks that won the lion's share of the business of issuing US government bonds. Now it includes the big Wall Street firms.

There is a debate over who is in the bulge bracket. Goldman Sacks and Morgan Stanley are definitely there, Merrill Lynch might be there. Salomon Smith Barney is knocking at the door. But after that, who else qualifies?

These guys make massive profits from corporate takeovers and flotations in the US but, for the rest, the strain of trying to compete is starting to tell.

The rumour on Wall Street is that despite billions spent, CSFB is still not making money from corporate finance work in the US. Will DLJ give it the edge? The only thing bulging is AXA's bank account.

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