Hundreds face axe at CSFB

CREDIT Suisse today unveiled a radical overhaul of its investment banking operations, threatening the jobs of many of its 6,000-plus London workforce. The Swiss group told investors it wanted to create a 'fully integrated bankî which would result in the securities unit, Credit Suisse First Boston, being much closer aligned to the retail and private banking of parent Credit Suisse.

That immediately put a question mark over the future of hundreds of jobs in equities research and trading at CSFB.

The alignment process will take between 18 months and two years, said Credit Suisse chief executive Oswald Grubel.

Credit Suisse said the strategy would allow it to allocate resources 'to its most valuable clients and pursue excellence in select high-margin services such as leveraged finance, M&As, IPOs, derivatives and mortgage securitisation'.

Speaking to analysts today, Grubel and CSFB chief executive Brady Dougan said they expected up to 300 job cuts worldwide. The bank is to unify its equities and fixed-income proprietary trading into a 'global proprietary trading group under a single management structureî.

Credit Suisse will realign itself into two distinct banking lines of private client services and corporate and investment banking. The CSFB brand will eventually be dropped, Grubel confirmed.

Asset management - most of which is currently sitting in CSFB - will be a separate unit.

The aim is to lift net income from the new corporate and investment banking unit to Swfr3bn (£1.36bn) in 2007. For the first nine months of this year, CSFB's investment banking business made just over Swfr1bn.

Leading the drive will be two new co-heads of corporate and investment banking, Americans Marc Granetz and Eric Varvel.

Analysts were looking for Swfr1.7bn of cost savings from CSFB to match rivals such as Morgan Stanley and Goldman Sachs. CSFB employs 16,519 people globally in its investment banking business, a rise of 7% from the end of 2003, with its European business headquartered at One Cabot Square, Canary Wharf.

Credit Suisse has decided to hold on, for the time being, to its Winterthur insurance arm after several months of exploring sales options. The long-term intention is to float it.