First reactions of the community to CS First Boston? Both from juniors and ideally some seniors.Set aside the brand, I actually think a partnership will attract some good ambitious bankers from BBs. MIP normally makes more money than stock in a conglomerate. Issue is you cannot advise sponsors without offering financing and the name is still tainted.
Forgot to mention: focus is clearly NA. If you are in CS EMEA start recruiting asap.
From CS:- Rooted in strong positions in North America, largest and most attractive capital market• Independent proposition and partnership model to be competitive in attracting and retaining the best talent and shaping a strong culture• More global and broader than boutiques, more focused than bulge bracket players• Well-established First Boston heritage in Capital Markets andAdvisory, leader in Financial Sponsors and Leveraged Finance for 20 years
The Investment Banking part of CS seemed far less threatened in Europe while there were rumours that CS would exit the NA market.
But indeed, although First Boston revival sounds like a good thing, I have no idea what will be the impact on the EMEA business at all
To quote a comment from another thread:
"CS has never had a strong franchise in Europe and there are very few bankers worth keeping around. My understanding is that CS has never once earned a profit in Europe in IB. Europe is also a far less profitable lev fin market given the oversaturation of banking."
YTD, CS is ranked bottom of all the BBs in EMEA (and even below Santander, BNP Paribas, UniCredit, Mediobanca).
What league tables are you following? Bellow Santander and BNP? Not even close. In M&A they have consistently ranked among top 6-8 beating on every non BB like Jefferies YoY
The Swiss bank will reshape its investment bank in Europe, the Middle East and Africa around M&A work, and pull back from capital markets activity after consistently underperforming, its chief executive, Ulrich Körner, told journalists during a 27 October call announcing its new strategy.
"We will resize our capital markets business in Emea to be a real advisory only business," he said. "We have not achieved results over many years and we do not have the right standing in Emea."
what about apac esp equities trading?
Likely the best possible outcome for the investment banking business. The CS brand has been tarnished amidst recent scandals - reviving the CSFB namesake as a standalone entity enshrines the legacy of the Leveraged Finance and Sponsors franchise dating back to DLJ/First Boston which has dominated the space for decades, and on its own is an incredibly profitable business. A lot of the old private equity guys even still call it CSFB. Despite a talent exodus from other areas, the leveraged finance franchise is still home to some real heavy hitters and kingpin types (think Jeff Cohen and Malcolm Price) who bring in a ton of business. Many of the old-guard Sponsor MDs are single handedly responsible for raking in hundreds of millions of dollars in fees annually, and despite what you hear in the press virtually none of these guys have left.
Assuming the new unit is able to successfully obtain external capital, the theoretical upside of the spinoff is much less bureaucracy and more meritocratic compensation for seniors which are both massive positives. The bureaucracy point cannot be overstated enough. Having to jump through a million bureaucratic hoops with Swiss management in Zurich just to underwrite an LBO makes you want to bash your head in. A new CSFB entity would theoretically be much more streamlined and would foster a much more entrepreneurial culture - the same kind that made DLJ and First Boston (and subsequently CS to a lesser extent) so great. Michael Klein absolutely fits this mold, which is probably what drove him to spearhead the idea in the first place. On the flip side, this type of culture will pretty easily weed out the lower-margin areas of the investment bank that previously were able to survive under the cloud of the Swiss bureaucratic backdrop.
Of course, this whole thing hinges on whether or not CSFB is able to raise outside capital. You can't have a competitive leveraged finance practice without a balance sheet. Given the caliber of guys running the show (Miller, Klein, etc.) I would probably wager that they're able to pull it off, but only time will tell.
Fantastic write-up. Lfg CSFB
Thanks for the thoughtful write-up and agree. They confirmed $500m of capital, not sure if it’s enough. Europe business will be decimated which is actually a good thing.
Yes... it was a joke having to take the smallest deals for 'Executive Board' approval in 2021.
How will CSFB serve Apollo/KKR etc. in other markets (Europe and APAC)? Just let others do those deals... or always loop in the US teams for fees + capital.
Have to say - I am very impressed by this move and agree completely. Very excited what we are seeing in banking right now between CSFB and the BDT/MSD combination.
While not exactly the same thing, the alignment under Michael Klein (and potential combination with his boutique) does feel incredibly similar to Paul Taubman merging his small advisory boutique with Blackstone's investment bank. Shortly after the spin merge in 2015, some of the top Media & Comms bankers on the street left to join the newly created PJT Partners and the rest is history.
Michael Klein is the real f-ing deal, and when combined with the info put here already, where you still have top senior bankers I think is a great recipe for success. If I were a CS shareholder, I would hope MKlein uses this restructuring to cut loose all the dead weight that has stuck around because of politicking and connections. Further, I wouldn't be at all surprised if CSFB starts recruiting like crazy, paying very high guarantees, once the spin is complete.
Thought the same
Off topic, but there is something uniquely annoying about people who make a point of refering to investment banks by names that those firms haven't used for a decade or more. No, you don't work at Merrill, you aren't going to the H&Q conference in January, and you didn't get debt financing from First Boston. So far I haven't heard anyone refer to Jefferies as Drexel but that guy is probably out there somewhere.
Half of the stuff at Credit Suisse still has “CSFB”, including folder paths and reimbursement of expenses shows up as deposit from CSFB.
It may be weird to you, but not for everyone. To me it’s not BofA, it’s BAML. Same applies to other things in life (some still refer to the country Yugoslavia…)
Apparently they already have outside capital lined up but also seemed to emphasize that they wouldn't be balance sheet dependent but rather rely on just "unconflicted" advisory as many already do. I think this could be valuable but it'll come with crazy comp guarantees for rainmakers they want to poach and EB-level econs on transaction fees to incentivize joiners. So outside investors could be dealing with subpar returns for quite some time as the firm acquires talent, pays them, and then builds the brand back up with regular dealflow. And which a capital-light model, once the business is up and running, it should be a pretty high margin idea but also highly susceptible to M&A revenue trends which could make it super choppy. Can't wait to see what they end up doing
I accepted an offer for S&T with CS for next summer - how seriously should I start recruiting?
Edit: Offer was for a 2023 SA
Why?
You're never gonna land a half decent 2023 SA offer... just do the internship and recruit elsewhere for FT if you are worried
all of these "should I renege" posts are so silly. unless you have another offer in hand you don't have options. it's not likely they will cut interns, that's horrendous PR. low FT offers are more likely
Do you think FT offers are more likely to be rescinded
It wasn't meant to be a "should I renege" post, it was meant to be "will my offer be rescinded"
Cue the infamous DLJ memo about what “busy” means….
Worst interview I’ve ever had was with the firm that guy is at now.
I can only imagine - this was probably peak most horrible culture
What happens to their Asia business though, which is one of their stronger IB segments.
Yea wondering as well.
I’m of the opinion that it’s a bizarre move. A lot of senior people remember First Boston, but my guess is that a lot of people in the junior ranks (asked about a dozen juniors and nobody knew what it was) and associates + VP’s were not around when First Boston was in business so don’t really know much about their success.
The incentive comp piece that another poster spoke about is promising but at the end of the day it seems like it’s a move to boost morale at the senior ranks by engendering feelings of nostalgia at the firm while allowing CS to rebrand.
It’s certainly not nothing but I’m skeptical of the success the move will have longer term and think it will ultimately amount to menial changes if anything.
No offence but those juniors must be ridiculously unknowledgeable. That's like saying you don't know who Michael Klein is how out of it are you ??? First Boston alums went on to found PWP, BlackRock, Jefferies, Apollo the list goes on. I think a lot of it hinges on their ability to raise outside capital and how seniors feel about everything but there's tremendous upside
How are they gonna keep LevFin and sponsors if they're only committing $500mn into CSFB?
Platform will be cash flow positive as separate entity especially after the cuts. The capital is for the underwriting losses (syndicated only absorbs so much and is released once done). Not saying $500m is enough, that’s just the cornerstone investor. Expect more to come.
The $500mm is a commitment amount from an undisclosed third party, not CS itself. CS is providing more extensive capital for this. Further, the Saudi bank that participated in the cap raise has stated its willingness to provide capital for CSFB as well.
I know CS will remain shareholder but I’m really not sure they will provide capital (unless I missed it in which case sorry!)
What's going to happen to M Klein & Co?
Let’s check the crystal ball…
Sounds like they will roll into CSFB, no way is Klein leaving his firm out to dry. They are tiny anyway it's not many people
M. Klein merging into CSFB according to FT
I'm an incoming IB analyst for the LevFin team in NYC. What does this mean? Is my offer going to get retracted? Or am I going to be joining the First Boston brand? Thoughts?
The carve-out will take time but I’d say by next summer yes you will join CSFB.
It’s already called CSFB. Check some people on LinkedIn already changed their titles.
I spoke to a CS MD today and there’s no carve out, it will take months. People haven’t even been fired yet (round will start in the next 2 weeks). Maybe those are just jumping the gun / find the name fancy.
Lol at the amount of people who already changed their LinkedIn to CS First Boston. The screaming insecurity. Still the same firm smh
Employees were told by HR to start using “CS First Boston” in email signatures yesterday.
Source: current IBCM employee
Rebrand doesn’t mean the entity exists. Just technically will take a while, it’s not a trivial carve-out especially with the new capital and the merge of MK&Co.
I’m actually quite positive on it, though the message from top management that CSFB will continue doing ECM and LevFin really worries me: either they don’t know what they are saying or more likely they find it hard to forget old habits. It should be a semi-EB with the ability to issue CSFB shares to attract talent, not another wannabe BB…
Does this mean that the entire Credit Suisse Investment Banking division in NA will become CSFB?
CSFB is Cap Markets, Financing and Advisory
I view this as a stepping stone for selling CSFB to a player with Balance Sheet, but lacking in any advisory footprint. CSFB can’t compete with JPM and others who can and do throw their BS around on deals. Not exactly going to be lead left on some mega deals when you have to jump through all sorts of hoops to get to a $35m RC hold lol
Prob not what they are going for. Why would they put klein in that position if they were just gonna sell it to a wells/us bank.
Because no one would buy it if they can't generate advisory fee revenue. They need people like that to clean house and restore the name. CS can sell it at a good price in a few years when dealflow picks up, only if CS FB has a stable management team with a track record (new high-profile "tombstones").
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