Credit Suisse First Boston expects to report a third quarter loss of about $400 million (SFr653 million), blaming stock market falls and general investment banking conditions.This content was published on November 1, 2001 - 09:24
The loss contrasts sharply with results at rival investment firms, which are still making money despite seeing steep profit declines.
CSFB, which hired John Mack as chief executive in July, has one of the highest pay scales in the industry and has seen revenues shrink with fewer initial public offerings taking place this year.
CSFB's parent company, the Credit Suisse Group, has entrusted Mack to sort out its investment banking arm.
Mack, known as "Mack the Knife" in industry circles, has already announced plans to cut 7,000 jobs or 7 per cent of CSFB's payroll. Severance packages are expected to eat into fourth quarter earnings.
Other bankers have been granted guaranteed contracts in return for pay cuts to bring the bank's compensation ratio more in line with industry norms.
Many of CSFB's employees came to it last year with the acquisition of the American investment bank, Donaldson, Lufkin and Jenrette. CSFB offered big incentives to stop the DLJ team jumping ship.
The policy drove CSFB's compensation to net revenue ratio well above the 50 per cent level targeted by rivals.
swissinfo with agencies
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