CSFB Fires 20% of Bankers; Bear Stearns Cuts Equity Sales Staff
By Tom Cahill
New York, Oct. 29 (Bloomberg) -- Credit Suisse First Boston fired about 400 investment bankers while Bear Stearns Cos. fired as many as 50 equity salespeople and traders, according to people familiar with the situation.
Credit Suisse's cuts come after Chief Executive John Mack warned earlier this month he would eliminate as many as 1,750 jobs, or cut 7 percent of its workforce of 25,000. Bear Stearns, the No. 6 U.S. firm by capital and the only firm to report quarterly earnings gains every quarter this year, hasn't cut as deeply as rivals because it hadn't grown as much during the telecommunications and underwriting boom in the 1990s.
``Every firm on Wall Street is cutting into muscle, not fat, at this point,'' said Jeff Bell, co-head of the investment banking practice at Spencer Stuart, a recruiting firm in New York.
The firings, three months before bonuses are to be paid, are the latest wave of job cuts that have totaled more than 54,000 since May 2001. Securities firms face their biggest drop in revenue in five years, as a 30 percent decline in the Standard & Poor's 500 Index has depressed demand for stock and bond underwriting and advice on mergers. While Credit Suisse ranks second in mergers advising this year, the total value of transactions worldwide is $144 billion compared with $331 billion in the same period last year.
U.S. initial public offerings have fallen 32 percent to $19 billion so far this year from $28 billion by this time in 2001 and less than a third of the $63 billion in all of 2000, according to Bloomberg data.
Fifth Round
The job cuts this year total 7.8 percent of the industry, or the largest cuts in that short a period since 1974. Securities firms cut a total of 8.5 percent of jobs in 1987 through 1990.
Credit Suisse's cuts total about 20 percent of its bankers, and are the fifth round of firings since the firm paid $13.4 billion for Donaldson, Lufkin & Jenrette Inc. in November 2000, the people said.
The firm's investment banking department now numbers about 1,800, down from about 4,500 after the purchase. Some of those losing jobs in this round aren't getting pro-rated bonuses, the people said. Bonuses can account for as much as three-quarters of annual compensation in good years.
Credit Suisse last week fired about 100 people in its research department, including chief market strategist Tom Galvin. The cuts are deepest among the Palo Alto-based technology team headed by Frank Quattrone, the people said.
Oswald Gruebel, who later this year will become co-chief executive officer of Credit Suisse Group with Mack, sent a message to managers to pay for their own flowers and keep the cost of Christmas dinner down to 100 Swiss francs ($67) per person.
Victoria Harmon, a Credit Suisse spokeswoman, and Russell Sherman, a spokesman for Bear Stearns, didn't return calls. |
