Boston-Less Swiss
As a former CSFB employee I feel sadenned by all this. While I don´t doubt that the strategy might work for the parent giant, I can´t help shedding a tear or two. You see, back when I was a graduate student looking for a derivatives job no other brand seemed more enticing than CSFB. Yes, it looks cool to say that you work for Goldman Sachs or Morgan Stanley. Yes, JP Morgan has a lot of panache. Yes, Deutsche Bank was aggresively up-and-coming. But, honestly, for someone aiming at derivatives glory CSFB had to be the main catch. The place had inherited the legend of CS Financial Products, which in turn had purchased the glory of Bankers Trust. The culture was definitely cowboysh, an essencial attribute of a derivatives fraternity (or so I thought). High-stakes propietary trading and the development of super funky products ruled the trading floor. Bonuses were rumoured to be way higher than at other places, with performers being paid exactly what they deserved. And, by God, the top boss himself was a derivatives guy (a pioneer no less).
CSFB, in short, sounded exciting, entrepreneurial, and cutting-edge. A place where brainiac mavericks could flourish. A den of innovation and inventiveness. The place to be in for those (like me) impatient with stringent bureaucratic practices. Yes, the New York building presented some weird architecture, and the London headquarters were a long ride from the irresistibly attractive historical City domains, but they both projected an unmistakable sensation of grandiose ambitions.
After reading these lines it should come as no surprise that I was quite elated when CSFB offered me a summer internship (first) and then a full time job in their London offices. All the legendary names were still around, though plenty would depart in the next few months (including the top dog, as it is well known). The whole ex-Bankers Trust regiment (among the inventors of OTC derivatives) seemed to be there. Some of the valuation models that I used had been the first of their kind ever developed, with a few dating back to the very early 1990s. I met people who had done the first ever long-dated swap in country A, the first ever barrier option in country B. I also met people who had been directly involved in some of the most famous (infamous?) derivatives episodes, those that are detailed in every book and mentioned in every class.
When I left CSFB (in order to inmerse myself in an unavoidable life-defining experience) the bank had not lost its bulge-bracket status, though it had gone through a lot of problems in a very short period of time. It was very strong in M&A and underwriting and the famed derivatives expertise was certainly not gone.
So, why did the Swiss drop First Boston? Journalists say that this act of brute force shows that things were not going well. M&A (a huge bread-winner) certainly looked awry, with CSFB barely making the top ten in 2005 (having been a consolidated top-five in previous years). But did the slide really tarnished the brand so much that Zurich began to fear being associated with it? Going from CSFB to plain CS evokes a picture of embarrasment at the investment bank´s performance, as if errasing the troubled brand would liquidate a dismal past and bring about a sunnier tomorrow.
This is a pity, particularly from a derivatives perspective. CSFB carried with it one of the most glorious financial engineering traditions. The brand emanated derivatives history and pedigree. Such hallowness did not deserve such a rude end. If for white-shoe bankers in the late 1980s the sight of the aristocratic First Boston franchise being taken over by a bunch of Europeans must have been an emotional shock, for today´s derivatives people the death of CSFB has to make us misty-eyed.
