Credit Suisse Creating "One Bank"

ZURICH-Credit Suisse Group, Switzerland’s second largest bank will integrate its investment banking unit, Credit Suisse First Boston, into its private banking business, and float its insurance arm Winterthur on the stock market. The move, expected to take two years and result in 300 job cuts at CSFB, is being made to “better address client needs in a rapidly changing market environment, as well as making more efficient use of its resources,” according to a company announcement. Last year, the biggest Swiss bank, UBS, underwent a similar retooling, absorbing its PaineWebber and Warburg investment banks and dropping the brands in favor of a single brand, UBS. Credit Suisse Group employs 60,000 people worldwide. Other than CSFB, management has said the restructuring is not expected to result in major job cuts. With regard to its insurance arm, Credit Suisse chose the float over a sale to a single buyer because “the market is not prepared to pay an adequate price for what CS believes is the full value of Winterthur.” The bank bought the insurer in 1997 for $10 billion but now considers it a non-core business. Credit Suisse executives say they are aiming for net income of 3 billion Swiss francs ($2.6 billion) at CSFB in in the third year after the merger (2007). The net income goal at its private banking and corporate and retail unit is 4 billion francs in 2007. Winterthur’s profitability goal is net income of at least 1.2 billion francs in 2007.