CSFB's 'Internal Processes' Must Be Improved, Says Credit Suisse Chairman

by Ulrika Lomas, Tax-news.com, Brussels

05 June 2001

Last week we reported on the ailing state of the Credit Suisse Group's investment banking arm - Credit Suisse First Boston - with the news that CSFB is suffering revenue losses this year as a result of weak stock market conditions. Further reports circulating in the media this week indicate that Credit Suisse have admitted that CSFB is increasingly becoming a burden to the financial services giant.

According to the Financial Times, Lukas Mühlemann, chariman and chief executive of Credit Suisse, has claimed that examining ways of improving CFSB's operations was a 'top priority.' Recent acquisitions including BZW's European and Asian operations, Schroder's Japan-based equities business and Donaldson, Lufkin & Jenrette have swelled CSFB's workforce from 5,000 in 1997 to 28,000 in 2001, which has played a big part in CFSB's problems, said Mr Muhlemann.

CSFB has become entangled in a series of embarrassing mishaps. Last year an US investigation took place into dealings over allocations of intial public offerings; the company has also been prohibited from conducting any stockbroking activities in India while the local authorities investigate an alleged share dealing scandal, in which CSFB is vigorously claiming its innocence; and in 1999, CSFB's Japan-based derivatives unit was shut down by the local authorities after the revelation that the bank had employed 'accounting loopholes' to improve their clients' balance sheets.

Mr Mühlemann explained: 'Credit Suisse First Boston is now very well placed amongst global investment banks and, depending on the sector, ranks among the top three to four banks worldwide. However, this growth and the merging of different cultures into a single organisation also posed major challenges, including those relating to the control and monitoring systems. That is why consolidation and the continued improvement of internal processes and controls are now top priorities at Credit Suisse First Boston.'

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