Credit Suisse Group plans to merge its Credit Suisse First Boston securities unit with the rest of the company's banking operations, ending 72 years of independence for an investment bank whose profit trails competing Wall Street firms.
"It's the end of a separate entity called Credit Suisse First Boston," said Simon Adamson, an analyst at CreditSights Inc. in London, an independent credit research firm. "It's not going to be the all-encompassing investment bank it used to be."
Chief Executive Oswald Gruebel and Brady Dougan, who runs CSFB, told investors at a meeting in Zurich, Switzerland, on Tuesday that as many as 300 jobs would be cut at CSFB as part of an effort to boost net income at the investment bank to at least 3 billion Swiss francs ($2.6 billion) in 2007 from about 1.1 billion francs last year.
Credit Suisse, Switzerland's second-biggest bank, also may drop the name First Boston, an investment bank founded in 1932.
Gruebel, 61, and Dougan, 45, are cutting at CSFB where costs are about 20% higher than at Goldman Sachs Group Inc. and Lehman Bros. Holdings Inc. Credit Suisse is reorganizing five months after it ousted John Mack as head of New York-based CSFB. Shares of Credit Suisse rose 4.3%, the biggest one-day gain in almost a year and a half.