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CSFB to cut 1750 more jobs
ZURICH, Switzerland (Reuters) -- Credit Suisse First Boston, the loss-making investment bank of Switzerland's Credit Suisse Group, will cut around 1,750 more jobs to save an extra $500 million this year, the firm said on Tuesday. CSFB Chief Executive John Mack told his 25,000 employees in an email late on Monday that tough market conditions had worsened in recent weeks. That left him no choice but to cut an extra 5-7 percent of the workforce, he said. "Unfortunately, in this environment, to be competitive, we simply have no alternative," he said. "And we owe it to our shareholders." Reuters obtained a copy of the email on Tuesday. Mack said the job cuts would affect various regions and functions in the Wall Street investment bank. He was also seeking unspecified savings in non-personnel costs. Investors welcomed the new cuts, which should help keep a lid on expected losses at CSFB, one of two key divisions of Switzerland's second-largest banking conglomerate. CS shares, which have shed as much as a third of their value over the past week alone, opened two percent higher in a slightly firmer Swiss market and last traded up 3.4 percent at 21.45 francs. Mack, widely known on Wall Street as "Mack the Knife," has already slashed more than 4,500 jobs since he took over as CEO in July 2001, cutting around $1.8 billion in costs in what has become the worst industry downturn in a generation. Feeling the heatTens of thousands of Wall Street bankers have lost their jobs as declining equity markets cut into trading revenues and reduced merger deals and stock offerings to a trickle. In his email, Mack said CSFB revenues had declined in the third quarter as underwriting fees for the industry slumped by 45 percent. There were only seven initial public offerings by U.S. issuers, the lowest number since 1980, and the value of global merger deals had fallen by 37 percent over the last year, he said. CS Group warned last week that CSFB would post an operating loss in the quarter just ended after Mack managed to wring out a slim profit in the second quarter on the back of tough cost cuts across the board. CS finance chief Phil Ryan told Reuters on Monday the group did not expect CSFB to get back to profit before next year. The group as a whole is expected to report a net loss of at least one billion Swiss francs ($671 million) when it releases third-quarter figures on November 14 after a 579 million franc loss in the second quarter of the year. The job cuts come as CSFB faces the heat of U.S. regulators amid allegations it improperly allocated plum stock offerings in the late 1990s. CSFB earlier this year agreed to pay a $100 million settlement without admitting or denying guilt. On Monday, documents emerged that suggest CSFB might have used research coverage of companies to win and keep lucrative investment banking business. The documents included a presentation to potential clients. CSFB's Mack and Oswald Gruebel, who heads the financial services division, last month were named co-CEOs of CS Group. They will succeed Lukas Muehlemann, who will step down from his dual posts of CEO and chairman by the end of the year after a six-year tenure marked by an ambitious expansion programme that has left the bank painfully exposed to the market downturn. CS shares have shed more than two-thirds of their value so far this year, hurt most recently by persistent talk the group may have to raise fresh capital to bolster its reserves and prop up its ailing Winterthur insurance arm. CS has repeatedly denied that it will need fresh capital.
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