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).
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
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.
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…)
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.
How are they gonna keep LevFin and sponsors if they're only committing $500mn into CSFB?
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.
M. Klein merging into CSFB according to FT