Breakingviews
September 21, 2022

Breakingviews: First Boston deserves a selective revival

by Breakingviews.

On Wall Street, second chances happen – maybe for brands as well as people. Credit Suisse is considering reviving the defunct First Boston name to rebadge its investment bank, one of several ideas that could feature in Chief Executive Ulrich Koerner’s strategic review next month. It might restore some luster to the Swiss lender’s second-rate dealmaking operations. Or at least, it may be a step closer to setting the division free.

First Boston stands for financial pedigree, but also for failure. Credit Suisse absorbed the investment bank in 1990 after it buckled under ill-advised loans to clients. There was discord aplenty. Among the prominent rainmakers who quit or were ousted was BlackRock founder Larry Fink, whose trading desk lost $100 million in the late 1980s. Frank Quattrone led the firm to dotcom-boom glory before being prosecuted for obstruction of justice, winning on appeal and ultimately settling the case. By 2006, Credit Suisse First Boston was once again just Credit Suisse.

For those who care about financial history, however, there’s genuine cachet. First Boston helped lead the 1980s takeover boom under dealmaking buccaneers Joe Perella and Bruce Wasserstein. It invented feverishly, driving the adoption of junk bonds, mortgage-backed securities and derivatives. CSFB was also one of the first foreign banks to capitalize on Russia’s emergence from the ruins of the Soviet Union, even if it led to heavy losses later.

For today’s Credit Suisse, anything that conveys renewed ambition is worth a try. It was the seventh biggest merger adviser in the first half of 2022 measured by deal size, according to Refinitiv, a dismal result for a bank once at the cutting edge of M&A advice. The association with collapsed Archegos Capital Management stung; senior dealmakers have left. A more American-sounding name is probably an asset going up against rivals such as Goldman Sachs and JPMorgan.

A new moniker could have a more tangible benefit too: It would create a dotted line Koerner can snip along later if he decides to cleave dealmaking from Credit Suisse’s commercial bank and wealth management. It would be a departure from American competitors and European peers UBS  and Deutsche Bank, which cling to the so-called universal banking model. In that sense, it would be a fitting tribute to the swashbuckling First Boston spirit.

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