Although up to 300 jobs will go at CSFB as the firm makes good on its restructurings promises, out of a global workforce of some 19,000, the total number of staff facing the axe is relatively modest.
But Lehman analyst Mark Hoge feels that the firm couldn't, in any case, really risk a savage round of cuts. Hoge is quoted in the Wall Street Journal, saying that 'that would be strategic oblivion. The franchise is in such poor shape right now it is probably better to quietly cut costs and pick and choose areas of opportunity'.
Credit Suisse confirmed Tuesday that CSFB will lose its independence, after 72 years, and will gradually be merged into its parent Group. The First Boston name, it seems, will be dropped in time. Credit Suisse CEO Oswald Gruebel said that the creation of one organisation 'will require substantial changes in our management approach and also in our culture'. It's the bit about 'culture' which will worry many CSFB staff.
Gruebel said that the CSFB business model was too expensive and that the firm would now refocus its efforts on M&A, IPOs and mortgage securitization. CSFB will also concentrate on prime brokerage, create a unified global prop trading group and build a commodities business.
CSFB boss Brady Dougan biffed off any suggestion, however, that the impending changes will leave his firm anything other than 'bulge-bracket'. He said that 'we are absolutely going to be a bulge-bracket player around the round.....It's (the restructure) is not about reducing scale. It's about shifting our resources'.
But the jury remains out on just how effective the CSFB restructure plans are likely to be. Reuters quotes from an HSBC note, which says that 'there are a lot of the right buzzwords (used in the announcements), but not a lot of detail on profit enhancements'.