| Credit Suisse First Boston | 11 Madison Avenue, New York, NY 10010 |
| www.csfb.com | (212) 325-2000 Fax: (212) 325-8249 |
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A bulging bracket
Credit Suisse First Boston (formerly known as "CS First Boston") is one of New York's most renowned investment banks and a member of Wall Street's prestigious "bulge bracket" of top securities firms. Credit Suisse First Boston was established as the wholly-owned investment bank unit of the Credit Suisse Group. Credit Suisse Group, formerly known as CS Holdings, initially invested in First Boston in 1988, renaming the investment bank CS First Boston. Since that infusion of Swiss cash, the firm itself has changed significantly. Credit Suisse First Boston now has a much larger capital base than First Boston ever had. CSFB's trading division is famously aggressive and profitable, and the investment banking division now has a notable global reach.
Divisions
The firm is divided into four divisions. The Investment Banking division (IBD) is a leading player in M&A worldwide. Its Fixed Income and Derivatives division is one of the world's largest, trading more than $100 billion of fixed income securities each day. Other divisions include Equity and Private Equity.
Aggressive moves in I-banking
Credit Suisse First Boston has aggressively built its I-banking business, making several recent high-profile moves. In a deal announced in December 1997, the firm acquired several divisions of Barclay's Bank's investment bank BZW. First, CSFB bought the British and European mergers and acquisitions, corporate finance advisory, and equity capital markets businesses. A couple of months later, the firm acquired BZW's British and European equity sales, trading, and research groups, as well as BZW's Asian businesses. And in September 1998, it bought Garantia S.A., Brazil's top investment bank, for $675 million in cash and stock. (This price didn't seem like such a bargain when Brazil's market began collapsing shortly after the deal was made.)
The firm has also made substantial waves with its hiring of individual talent. In October 1998, CSFB snagged John Nelson, the former deputy chairman of famed investment bank Lazard Houses, to head its European investment banking business. Most notably, the firm hired about 150 technology bankers and analysts, led by superstar investment banker Frank Quattrone, from rival Deutsche Bank in the summer of 1998. Since 1997, in fact, backed by the resources of Credit Suisse Group, the firm has tripled the size of its investment banking division.
Issues, issues
In recent years, Credit Suisse has caught some unwanted publicity for stonewalling the descendants of Holocaust survivors who demand access to dormant accounts. Credit Suisse Group, along with Swiss banking competitor UBS, eventually agreed in August 1998 to pay Holocaust survivors $1.25 billion over 30 years. And in May 1998, CSFB settled with Orange County in its well-publicized bankruptcy lawsuit. The $52.5 million settlement served as partial restitution for the California county's losses, but the bank denied undertaking unsubstantiated risks. (Other Wall Street biggies like Merrill Lynch and Morgan Stanley Dean Witter also made multi-million dollar payments.)
The problem with Russia
CSFB's biggest problems, however, came in Russia. As the most active I-bank, the firm was caught with suddenly devalued positions resulting from the collapse of the country's market. The firm announced major trading losses in fall 1998, and began slashing its staff in Russia. For the year, the firm had to swallow a $1.3 billion write-off in Russia, dragging down the rest of the firm. Overall, Credit Suisse First Boston reported a net loss of $154 million in 1998.
When you fall off a horse...
Unlike those of chief Swiss competitor UBS, Credit Suisse First Boston's woes did not scare the firm from continuing to aggressively pursue its I-banking business. Rather than panicking, the firm has taken a philosophical approach to the losses. As CFO Richard Thornburgh told The New York Times shortly after the Russian market collapsed: "The criticism that everyone can make is that our concentration on Russia was too high. But there was nothing wrong about the activity in itself. This is what banks do." Aside from the 100 layoffs in the Russia business, the firm does not anticipate withdrawing from other areas. Lukas Muhlemann, the CEO of parent Credit Suisse Group told the Financial Times: "We have made substantial amounts of money in Russia in the past. What's happening now is we're giving some of it back." In fact, the firm sees the global market instability more as an opportunity than a danger. Thornburgh told the Times: "Some European banks will decide this is a business that they do not want to be in. It appears to us that there is an opportunity here to capitalize on the reduction in capacity."
Recent highlights
CFSB retains the prestigious reputation of CS First Boston, which had been particularly successful in the international mergers and acquisitions market. According to Securities Data Corp., the firm ranked 4th (in terms of value of deals) among worldwide advisors of announced M&A transactions in 1999 with 333 deals valued at a combined $529 billion. In the first half of 1999, the firm was retained by AT&T for its $64 billion acquisition of the No. 3 cable provider in the U.S., MediaOne Group. During that year, CSFB also advised AMP Incorporated on its $12 billion acquisition by Tyco, and Wang Laboratories on its $2 billion sale to Getronics. And in May 1999, the firm was hired by Texaco to help examine merger possibilities. The firm had already enjoyed a banner year in M&As in 1998. That year, it was tapped by longtime client Chrysler to advise it in its $39.5 billion merger with German firm Daimler-Benz. Also in 1998, the firm was selected to advise Wells Fargo in its $34 billion merger with Norwest. Finally, CSFB was tapped by AT&T for its $70 billion acquisition of Telecommunications, Inc. (TCI).
While it has kept First Boston's traditional strength in M&A, the new firm also has much more in its favor than the old CS First Boston did. The merger of CS First Boston and the European banking branch of CS Holding has endowed CSFB with a much larger capital resource base. CFSB now boasts several prestigious business lines that are near the top of their respective fields. For example, the firm ranked No. 4 in IPO underwriting in the U.S. in 1999, and No. 5 in all equity and equity-related issues overall. Not all of its businesses crack the top five in league tables, though - The firm ranked No. 7 in the lucrative U.S. high-yield debt business in 1999.
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Credit Suisse First Boston posts a list of current job openings on its web site, located at www.csfb.com. The firm's on-campus recruiting program is managed on a firm-wide basis, and organized by each of the bank's target schools. Each school is assigned an "ambassador" (who is a member of the firm's operating committee) a "team captain" (who is a managing director). Also, each division has a team leader for a school, who reports to the ambassador and team captain.
At all of the bank's target schools, there is a campus presentation (which provides an overview of the firm and a Q&A session), and in some cases, a dinner. The firm also participates in other get-to-know-you events such as golf tournaments and charity functions. Applicants with bachelor's degrees are hired as analysts. MBAs are hired as associates. At the associate level, the firm also hires JDs into its Investment Banking division, and PhDs into its Fixed Income and Derivatives division (because of the math-heavy derivatives and risk management products).
CSFB conducts a summer associate program that gives students finishing their first year of business school a chance to learn about the investment banking industry; the program runs for 10 weeks. Summer associates participate in new business presentations, financial advisory assignments, and the completion of transactions. CSFB also has a sales and trading summer associate program, which allows summer associates to be exposed to as many functional areas as possible within the Fixed Income and Derivatives division and the Equity Division. In their final week, summer associates in the sales and trading rotational program can remain in the product area of their choice.
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Friendly folks
Credit Suisse First Boston fosters a "collegial" environment in which new employees enjoy a large degree of "interaction with senior management." One former associate reports: "We would go out at least once a week. Anytime there was someone new in our group visiting from one of the other CSFB offices, it was basically their duty to take you to a bar." CSFB emphasizes "teamwork" and says its employees must possess "quantitative and modeling skills." Support staff are "well qualified" and often "cover up for some analysts' weaknesses with using computers and high-tech equipment."
CSFB employees "regularly" receive free tickets to sporting and cultural events, and also the opportunity "to go out for nice dinners in nice restaurants like Lutece, Dawat, River Cafe', Remi, and Four Seasons." The only problem is that CSFB people spend so much time in the office that "who really has time for anything else?"
Healthy options
Working at CSFB has more mundane benefits. "They have lots of health care options, including one in which you can save money for healthcare expenses tax-free," says one insider. "So say you know that later in the year you'll have $2,000 in medical expenses that won't be covered by insurance. You can save for that in a pre-tax account. So if you didn't have that account, you might have to earn $2,800 to pay for the $2,000 in expenses."
Dinner's on us
Professionals who stay past 7 p.m. -- which is just about everyone -- can have their dinners picked up by the firm. Many go to the firm's cafeteria, where "all you have to do is show your I.D." Tired bankers can also call for car service after 9 p.m. For those looking to re-energize, there's the firm's health club. The monthly fee for the club depends on one's position -- "for people below VP it's $30 a month." Perhaps the biggest perk, say New York employees, is that "you get to live in Manhattan -- and earn enough money to enjoy it."
Don't see anyone over 30
And like most on Wall Street, CSFB's employees contend with "long," "intense" workdays and "excruciatingly tight deadlines." According to one associate, "Trading is like warfare. It can get very frantic, and then very quiet, and flare again without warning. There are long periods of silence punctuated by fear and terror. That's what makes it stressful." I-bankers are no more relaxed; one analyst says "You burn out by the time you're 30. Most people only last until they're about 35, then go off and do something else." Many employees comment that their jobs "require a high level of energy and dedication." Since CSFB lacks the marquee name and underwriting franchise that some of its competitors enjoy, the bank maintains an "entrepreneurial" culture in which employees are "encouraged to go out and win business for the firm."
Breakdown in discipline
CSFB is creeping toward an ever more casual environment when it comes to dress. For example, in one division, reports an insider, "Fridays are dress-downs all year, and lately, in late summer, we get one week of dress down, like the last week of August." Also: "dress-down is for the last day of any week, so if it's a three-day weekend you can dress down on Thursday." (The firm reports that almost all of its divisions have dress-down Fridays.)
And on those occasions when employees are free from the scrutiny of top management and clients, "discipline kind of breaks down. Shirts without ties, that sort of thing -- you can take it a bit easier." The moment the boss or a client comes back, though, "the ties come right back on." One New York trader recalls, "For some time we used to wear jeans even during the week, but we got remarks like, 'you really should wear something smarter.'" Employees at CSFB's foreign offices have to conform to "stricter dress codes." This is especially true in London, which is "a button-up kind of town. Everyone is formal here."
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David O'Leary
Human Resources
11 Madison Avenue1
New York
NY
10010
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Bear Stearns;Deutsche Bank;Donaldson, Lufkin & Jenrette;Goldman Sachs;Lehman Brothers;Merrill Lynch;Morgan Stanley Dean Witter;Salomon Smith Barney;J.P. Morgan;Warburg Dillon Read
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