Credit Suisse First Boston (CSFB) has announced a broad cost-cutting initiative that will result in the loss of 2000 jobs and the elimination of $1 billion in operating costs by the end of 2002.
The plan calls for reducing staff levels as well as achieving savings from other non-staff costs. These include greater efficiencies in the procurement of goods and services across the firm in such areas as communications, consulting services, market data, IT contracting and corporate events, among others.
The integration of Donaldson, Lufkin & Jenrette, which CSFB acquired last year, will also be accelerated through data center rationalisation, procurement changes and office closures. Attempts may also be made to merge CSFB back office operations with those of Pershing, the securities clearing arm of DLJ.
Chief executive John Mack, who was brought in to oversee the cutbacks, says: "Given the lower cost structure of our competitors and the rapidly changing market conditions, we simply have no alternative but to lower our costs."
He has appointed Phil Vasan, the former head of CSFB's institutional e-commerce group, CSFBNext, to wield the axe. He will be supported by Judy Heicklen, most recently COO of CSFBNext.
CSFB's staff reductions, totalling 7 per cent of the global workforce, will come from every division in the organization. While the investment banking division has been hard hit by the economic downturn and 11 September attacks on the US, as reflected in a third quarter losses of $120 million, the parent company Credit Suisse Group has also been exposed due to its stakes in stricken airliner SwissAir and insurance groups Swiss Life and Winterthur.