Credit Suisse First Boston

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This article is primarily about the former investment banking, capital markets and financial services division of Credit Suisse prior to the 2006 re branding exercise. For the newly reorganized investment banking division of Credit Suisse, see here
Credit Suisse First Boston
Type Corporation
Industry Investment services
Fate Merged into
reorganised investment banking division of Credit Suisse
Successors Credit Suisse's investment banking division
Founded 1996
Headquarters Zürich, Switzerland
New York City, New York, United States
Products Financial Services
Investment Banking

Credit Suisse First Boston (informally CSFB) was the investment banking division of Credit Suisse Group, prior to 2006. It was active in investment banking, capital markets and financial services.

In 2006, as part of a major rebranding exercise to communicate as an integrated organization - 'Credit Suisse' to clients, employees and shareholders; the group retired the 'First Boston' name and amalgamated the CSFB operations to the newly reorganized investment banking division of Credit Suisse.

History[edit]

Credit Suisse/First Boston 50/50 JV (1978–1988)[edit]

In 1978, Credit Suisse and First Boston Corporation formed a London-based 50-50 investment banking joint venture called the Financière Crédit Suisse-First Boston.[1] This joint venture later became the operating name of Credit Suisse's investment banking operations.

Transition to CSFB (1988–1997)[edit]

Credit Suisse acquired a 44% stake in First Boston in 1988. The investment bank acquired its shares held by the public and the company was taken private. In 1989, the junk bond market collapsed, leaving First Boston unable to redeem hundreds of millions it had lent for the leveraged buyout of Ohio Mattress Company, maker of Sealy mattresses, a deal that became known as "the burning bed".[2] Credit Suisse bailed them out and acquired a controlling stake in 1990. Although such an arrangement was arguably illegal under the Glass–Steagall Act, the Federal Reserve, the U.S. bank regulator, concluded that the integrity of the financial markets was better served by avoiding the bankruptcy of a significant investment bank like First Boston even though it meant a de facto merger of a commercial bank with an investment bank.

CSFB (1997–2006)[edit]

In the mid-1990s, Credit Suisse renamed itself CS First Boston as Credit Suisse First Boston, or CSFB, worldwide. The terms Credit Suisse First Boston and CSFB are generally used to refer to the global investment bank, and not only the original London franchise.

Conflict with Credit Suisse First Boston, or CSFB, in Europe began creating problems for Credit Suisse. First Boston Corporation in New York and CSFB in London had their own management teams, with competing salesmen in each other’s territory and in the Pacific region. In 1996, Credit Suisse purchased the remaining stake of CS First Boston from its management and rebranded the European, U.S., and Asia Pacific investment banks as Credit Suisse First Boston, making one global brand. In the late 1990s, CSFB purchased the equity division of Barclays Bank, Barclays de Zoete Wedd ("BZW"). BZW was considered second-tier and CSFB reportedly bought BZW from Barclays for £1 plus assumption of debt - primarily to obtain BZW's client list.

At the same time, the newly global CSFB became a leading high tech banker, acting as lead (or co-lead) underwriter in the IPOs of Amazon.com and Cisco Systems, as well as one time high fliers such as Silicon Graphics, Intuit, Netscape and VA Linux Systems. CSFB also did significant deals for Apple Computer, Compaq and Sun Microsystems among others. In 2000, at the height of the tech boom, technology deals generated $1.4 billion in revenue for CSFB. The head of CSFB’s tech group, Frank Quattrone, reportedly made $200 million in bonuses between 1998 and 2000.[3]

In 2006, the newly reorganized investment banking division of Credit Suisse replaces the brand and entity - CSFB. Credit Suisse retired the First Boston name to "allow Credit Suisse to communicate as an integrated organization to clients, employees and shareholders".[4]

The Irish High Court referred to advertisements by the bank in a judgment in February 2013.[5] Mr Justice Michael Moriarty said, that while the volume of material produced by the Revenue Commissioners in an application to investigate tax-evading offshore bank accounts may have been "somewhat excessive", it related to matters which had been discussed in all media, including "the conduct of banking institutions both in Ireland and elsewhere, as exemplified by the Credit Suisse First Boston sequence of advertisements in the Irish Times".

Notes[edit]

  1. ^ "Funding Universe CS Group history". 
  2. ^ Mallory, Maria (May 7, 1990). "The Burning Bed". Business Week (127).  The amount lent, $457 million, was 40 percent of First Boston’s equity capital.
  3. ^ “Inside Frank Quattrone's Money Machine: The rise and fall of the high-tech investment banker who was an architect of Silicon Valley's financial culture,” Business Week October 2003.
  4. ^ "Re-naming of Credit Suisse First Boston Entities and New Brand to Launch in January 2006", Business Wire, November 18, 2005 at bnet
  5. ^ http://www.bailii.org/ie/cases/IEHC/2013/H67.html

See also[edit]

External links[edit]