Credit Suisse First Boston USA (CSFB), the investment banking arm of Switzerland's Credit Suisse Group, has reported a large third quarter loss.This content was published on November 16, 2001 - 11:27
The loss was in line with forecasts, as it paid out large retention bonuses and grappled with the economic slowdown and a disruption following the terror attacks on the United States on September 11.
It added in a statement released Thursday that the outlook for underwriting shares offerings, one of its main businesses, was bleak, while the full impact of September 11 "remains unknown".
CSFB, in the process of chopping 2,000 jobs, or 7 per cent of its staff, reported a loss of $398 million (SFr660 million) for the third quarter, compared with a profit of $50 million in the same quarter a year ago.
The loss was caused by a jump in compensation costs, as it paid out millions in bonuses to employees of Donaldson, Lufkin and Jenrette, which it bought a year ago, to keep bankers at the firm.
A drastic drop in trading and investment banking profits also dragged down its quarterly figures, aggravated by market disruptions and investors fleeing the market after September 11.
The CSFB loss was no surprise - it warned it would make a $400 million loss for the quarter at the end of last month - but the grim outlook is a cause for worry for parent Credit Suisse, which reports its own third quarter results next Tuesday.
"The full impact of these events on the economy and our business remains unknown," CSFB said in its quarterly filing with the US Securities and Exchange Commission.
Merger and acquisition activity was down by half in the first nine months of the year, CSFB said, while stock offerings were down by more than a third from last year.
"The outlook for the new issues market continues to be bleak in virtually all sectors," CSFB warned.
Total revenues for the third quarter fell 0.5 per cent to $1.3 billion.
swissinfo with agencies
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