Credit Suisse First Boston
Encyclopedia
Credit Suisse First Boston was the former name of the banking firm Credit Suisse
.
and First Boston Corporation formed a London-based 50-50 investment banking
joint venture
called the Financière Crédit Suisse-First Boston. This joint venture later became the operating name of Credit Suisse's investment banking operations.
Credit Suisse acquired a 44% stake in First Boston in 1988. The investment bank acquired its shares held by the public and the company was taken private. In 1989, the junk bond market collapsed, leaving First Boston unable to redeem hundreds of millions it had lent for the leveraged buyout of Ohio Mattress Company, maker of Sealy
mattresses, a deal that became known as "the burning bed". Credit Suisse bailed them out and acquired a controlling stake in 1990. Although such an arrangement was arguably illegal under the Glass Steagall Act, the Federal Reserve, the U.S. bank regulator, concluded that the integrity of the financial markets was better served by avoiding the bankruptcy of a significant investment bank like First Boston even though it meant a de facto merger of a commercial bank with an investment bank.
Conflict with Credit Suisse First Boston, or CSFB, in Europe began creating problems for Credit Suisse. First Boston Corporation in New York and CSFB in London had their own management teams, with competing salesmen in each other’s territory and in the Pacific region. In 1996, Credit Suisse purchased the remaining stake of CS First Boston from its management and rebranded the European, U.S., and Asia Pacific investment banks as Credit Suisse First Boston, making one global brand. In the late 1990s, CSFB purchased the equity division of Barclays Bank, Barclays de Zoete Wedd ("BZW"). BZW was considered second-tier and CSFB reportedly bought BZW from Barclays for £1 plus assumption of debt - primarily to obtain BZW's client list.
At the same time, the newly global CSFB became a leading high tech banker, acting as lead (or co-lead) underwriter in the IPOs of Amazon.com
and Cisco
Systems, as well as one time high fliers such as Silicon Graphics
, Intuit
, Netscape
and VA Linux Systems. CSFB also did significant deals for Apple Computer
, Compaq
and Sun Microsystems
among others. In 2000, at the height of the tech boom, technology deals generated $1.4 billion in revenue for CSFB. The head of CSFB’s tech group, Frank Quattrone
, reportedly made $200 million in bonuses between 1998 and 2000.
In 2006, Credit Suisse retired the First Boston name to "allow Credit Suisse to communicate as an integrated organization to clients, employees and shareholders."
Credit Suisse
The Credit Suisse Group AG is a Swiss multinational financial services company headquartered in Zurich, with more than 250 branches in Switzerland and operations in more than 50 countries.-History:...
.
History
In 1978, Credit SuisseCredit Suisse
The Credit Suisse Group AG is a Swiss multinational financial services company headquartered in Zurich, with more than 250 branches in Switzerland and operations in more than 50 countries.-History:...
and First Boston Corporation formed a London-based 50-50 investment banking
Investment banking
An investment bank is a financial institution that assists individuals, corporations and governments in raising capital by underwriting and/or acting as the client's agent in the issuance of securities...
joint venture
Joint venture
A joint venture is a business agreement in which parties agree to develop, for a finite time, a new entity and new assets by contributing equity. They exercise control over the enterprise and consequently share revenues, expenses and assets...
called the Financière Crédit Suisse-First Boston. This joint venture later became the operating name of Credit Suisse's investment banking operations.
Credit Suisse acquired a 44% stake in First Boston in 1988. The investment bank acquired its shares held by the public and the company was taken private. In 1989, the junk bond market collapsed, leaving First Boston unable to redeem hundreds of millions it had lent for the leveraged buyout of Ohio Mattress Company, maker of Sealy
Sealy Corporation
Sealy Corporation is an American owned major manufacturer of mattresses, based in Trinity, North Carolina, in the United States. The company draws its name from the city where it started, Sealy, Texas.- History :...
mattresses, a deal that became known as "the burning bed". Credit Suisse bailed them out and acquired a controlling stake in 1990. Although such an arrangement was arguably illegal under the Glass Steagall Act, the Federal Reserve, the U.S. bank regulator, concluded that the integrity of the financial markets was better served by avoiding the bankruptcy of a significant investment bank like First Boston even though it meant a de facto merger of a commercial bank with an investment bank.
CSFB in the 1990s and 2000s
In the mid 1990s, Credit Suisse renamed itself CS First Boston as Credit Suisse First Boston, or CSFB, worldwide. The terms Credit Suisse First Boston and CSFB are generally used to refer to the global investment bank, and not only the original London franchise.Conflict with Credit Suisse First Boston, or CSFB, in Europe began creating problems for Credit Suisse. First Boston Corporation in New York and CSFB in London had their own management teams, with competing salesmen in each other’s territory and in the Pacific region. In 1996, Credit Suisse purchased the remaining stake of CS First Boston from its management and rebranded the European, U.S., and Asia Pacific investment banks as Credit Suisse First Boston, making one global brand. In the late 1990s, CSFB purchased the equity division of Barclays Bank, Barclays de Zoete Wedd ("BZW"). BZW was considered second-tier and CSFB reportedly bought BZW from Barclays for £1 plus assumption of debt - primarily to obtain BZW's client list.
At the same time, the newly global CSFB became a leading high tech banker, acting as lead (or co-lead) underwriter in the IPOs of Amazon.com
Amazon.com
Amazon.com, Inc. is a multinational electronic commerce company headquartered in Seattle, Washington, United States. It is the world's largest online retailer. Amazon has separate websites for the following countries: United States, Canada, United Kingdom, Germany, France, Italy, Spain, Japan, and...
and Cisco
Cisco
Cisco may refer to:Companies:*Cisco Systems, a computer networking company* Certis CISCO, corporatised entity of the former Commercial and Industrial Security Corporation in Singapore...
Systems, as well as one time high fliers such as Silicon Graphics
Silicon Graphics
Silicon Graphics, Inc. was a manufacturer of high-performance computing solutions, including computer hardware and software, founded in 1981 by Jim Clark...
, Intuit
Intuit Inc.
Intuit Inc. is an American software company that develops financial and tax preparation software and related services for small businesses, accountants and individuals...
, Netscape
Netscape
Netscape Communications is a US computer services company, best known for Netscape Navigator, its web browser. When it was an independent company, its headquarters were in Mountain View, California...
and VA Linux Systems. CSFB also did significant deals for Apple Computer
Apple Computer
Apple Inc. is an American multinational corporation that designs and markets consumer electronics, computer software, and personal computers. The company's best-known hardware products include the Macintosh line of computers, the iPod, the iPhone and the iPad...
, Compaq
Compaq
Compaq Computer Corporation is a personal computer company founded in 1982. Once the largest supplier of personal computing systems in the world, Compaq existed as an independent corporation until 2002, when it was acquired for US$25 billion by Hewlett-Packard....
and Sun Microsystems
Sun Microsystems
Sun Microsystems, Inc. was a company that sold :computers, computer components, :computer software, and :information technology services. Sun was founded on February 24, 1982...
among others. In 2000, at the height of the tech boom, technology deals generated $1.4 billion in revenue for CSFB. The head of CSFB’s tech group, Frank Quattrone
Frank Quattrone
Frank Quattrone is an American technology-focused investment banker who started technology sector franchises at Morgan Stanley, Deutsche Bank, and Credit Suisse First Boston. He helped bring dozens of technology companies public during the 1990s tech boom, including Netscape, Cisco, and Amazon.com...
, reportedly made $200 million in bonuses between 1998 and 2000.
In 2006, Credit Suisse retired the First Boston name to "allow Credit Suisse to communicate as an integrated organization to clients, employees and shareholders."