: ''For the company after its acquisition by
Credit Suisse, see
Credit Suisse First Boston
Credit Suisse First Boston (also known as CSFB and CS First Boston) is the investment banking affiliate of Credit Suisse headquartered in New York.
The company was created by the merger of First Boston Corporation and Credit Suisse Group in 1988 ...
(known as CSFB and CS First Boston)''
The First Boston Corporation was a New York-based
bulge bracket investment bank
Investment is the dedication of money to purchase of an asset to attain an increase in value over a period of time. Investment requires a sacrifice of some present asset, such as time, money, or effort.
In finance, the purpose of investing i ...
, founded in 1932 and acquired by
Credit Suisse in 1988. After the acquisition, it operated as an independent investment bank known as
CS First Boston
Credit Suisse First Boston (also known as CSFB and CS First Boston) is the investment banking affiliate of Credit Suisse headquartered in New York.
The company was created by the merger of First Boston Corporation and Credit Suisse Group in 198 ...
until 2006, when the company was fully integrated into
Credit Suisse. In 2022, Credit Suisse revived the "First Boston" brand as part of an effort to spin out the business.
History
Founding
The First Boston Corporation was created in 1932 as the
investment banking arm of the
First National Bank of Boston
BankBoston was a bank based in Boston, Massachusetts, which was created by the 1996 merger of Bank of Boston and BayBank. One of its predecessor banks started in 1784, but the merged BankBoston was short-lived, being acquired by Fleet Bank in 199 ...
. It became an independent firm after passage of the
Glass–Steagall Act, which required commercial banks to divest securities businesses in the wake of the
1929 stock market crash
The Wall Street Crash of 1929, also known as the Great Crash, was a major American stock market crash that occurred in the autumn of 1929. It started in September and ended late in October, when share prices on the New York Stock Exchange colla ...
. First National Bank of Boston continued as a commercial bank, ultimately becoming part of
Bank of America
The Bank of America Corporation (often abbreviated BofA or BoA) is an American multinational investment bank and financial services holding company headquartered at the Bank of America Corporate Center in Charlotte, North Carolina. The bank ...
. The young First Boston investment bank was cobbled together from the investment banking arms of major commercial banks. For example, several key members of
Chase Harris Forbes Corporation, the securities affiliate of
Chase National Bank
JPMorgan Chase Bank, N.A., doing business as Chase Bank or often as Chase, is an American national bank headquartered in New York City, that constitutes the consumer and commercial banking subsidiary of the U.S. multinational banking and fina ...
, joined the new investment bank in 1934.
1940s
In 1946, Mellon Securities Corporation, the former investment banking arm of
Mellon Bank
Mellon Financial Corporation was an investment firm which was once one of the world's largest money management firms. Based in Pittsburgh, Pennsylvania, it was in the business of institutional and high-net-worth individual asset management, incl ...
, merged into the First Boston. Mellon's franchise with industrial and governmental clients led to some major deals: initial public debt offerings for the
World Bank
The World Bank is an international financial institution that provides loans and grants to the governments of low- and middle-income countries for the purpose of pursuing capital projects. The World Bank is the collective name for the Inte ...
and
Hydro-Québec, and a share offering for
Gulf Oil Corporation
Gulf Oil was a major global oil company in operation from 1901 to 1985. The eighth-largest American manufacturing company in 1941 and the ninth-largest in 1979, Gulf Oil was one of the so-called Seven Sisters oil companies. Prior to its merger ...
in 1948 (the largest IPO to date).
By 1947, the First Boston surpassed $1 billion in new capital issues, and in 1959 it reintroduced the credit of Japan to the American markets with the first offerings by its government since 1930.
1970s
As of 1970, First Boston was considered to be part of the
bulge bracket along with
Morgan Stanley
Morgan Stanley is an American multinational investment management and financial services company headquartered at 1585 Broadway in Midtown Manhattan, New York City. With offices in more than 41 countries and more than 75,000 employees, the fir ...
,
Dillon Read
Dillon, Read & Co. was an investment bank based in New York City. In 1991, it was acquired by Barings Bank and, in 1997, it was acquired by Swiss Bank Corporation, which was in turn acquired by UBS in 1998.
History Carpenter & Vermilye
Dillon Rea ...
and
Kuhn Loeb
Kuhn, Loeb & Co. was an American multinational investment bank founded in 1867 by Abraham Kuhn and his brother-in-law Solomon Loeb. Under the leadership of Jacob H. Schiff, Loeb's son-in-law, it grew to be one of the most influential investment ...
.
By 1970, the Firm was raising more than $10 billion in new capital annually for underwriting clients. In 1971, The First Boston Corporation listed on the New York Stock Exchange developed its equity, sales, research, and trading operations. In 1978, First Boston began its highly successful London operations in partnership with
Credit Suisse (see “Relationship with Credit Suisse” below) and became a leading
Eurobond trader and underwriter.
1980s - Relationship with Credit Suisse
Credit Suisse's relationship with First Boston began in 1978, when
White Weld & Co. was bought by
Merrill Lynch. As a result, White Weld dropped out of its London-based investment banking partnership with Credit Suisse. First Boston stepped in, creating ''Financière Crédit Suisse-First Boston'', a 50-50 joint venture widely known as
Credit Suisse First Boston
Credit Suisse First Boston (also known as CSFB and CS First Boston) is the investment banking affiliate of Credit Suisse headquartered in New York.
The company was created by the merger of First Boston Corporation and Credit Suisse Group in 1988 ...
. First Boston was not Credit Suisse's first choice for the partnership. When White Weld stepped out, Credit Suisse had unsuccessfully approached
Dillon Read
Dillon, Read & Co. was an investment bank based in New York City. In 1991, it was acquired by Barings Bank and, in 1997, it was acquired by Swiss Bank Corporation, which was in turn acquired by UBS in 1998.
History Carpenter & Vermilye
Dillon Rea ...
,
[The Spectacular rise and fall of CSFB]
by Ian Kerr (Financial News Online - 11 July 2005) (registration required)
which a couple decades later was acquired by
Swiss Bank Corporation
Swiss Bank Corporation was a Swiss investment bank and financial services company located in Switzerland. Prior to its merger, the bank was the third largest in Switzerland with over CHF300 billion of assets and CHF11.7 billion of equ ...
, to form the core of that firm's U.S. investment banking business. Swiss Bank Corporation itself subsequently merged with Credit Suisse archrival
Union Bank of Switzerland
Union Bank of Switzerland (UBS) was a Swiss investment bank and financial services company located in Switzerland. The bank, which at the time was the second largest bank in Switzerland, merged with Swiss Bank Corporation in 1998, to become ...
to form
UBS AG
UBS Group AG is a multinational investment bank and financial services company founded and based in Switzerland. Co-headquartered in the cities of Zürich and Basel, it maintains a presence in all major financial centres as the largest Swis ...
.
First Boston sat at the top of merger and acquisition league tables in the 1980s, thanks to the team led by
Bruce Wasserstein
Bruce Jay Wasserstein (December 25, 1947 – October 14, 2009) was an American investment banker, businessman, and writer. He was a graduate of the McBurney School, University of Michigan, Harvard Business School, and Harvard Law School, and ...
and
Joe Perella, which orchestrated such transactions as the leveraged buyout of
Federated Stores
Macy's, Inc. (originally Federated Department Stores, Inc.) is an American conglomerate holding company. Upon its establishment, Federated held ownership of the regional department store chains Abraham & Straus, Lazarus, Filene's, and Shillit ...
, which earned First Boston $200 million in fees,
[ A review of ''Going for Broke: How Robert Campeau Bankrupted the Retail Industry, Jolted the Junk Bond Market, and Brought the Booming Eighties to a Crashing Halt''. John Rothchild. New York: Simon & Schuster] and
Texaco
Texaco, Inc. ("The Texas Company") is an American oil brand owned and operated by Chevron Corporation. Its flagship product is its fuel "Texaco with Techron". It also owned the Havoline motor oil brand. Texaco was an independent company unt ...
’s hostile takeover of
Getty Oil
Getty Oil was an American oil marketing company with its origins as part of the large integrated oil company founded by J. Paul Getty.
History
J. Paul Getty incorporated Getty Oil in 1942. He had previously worked in the oil fields of Oklaho ...
. A 1985 Fortune Magazine article called First Boston “the archetypal deal factory”, a year in which it did $60 billion in M&A deals placing it second after
Goldman Sachs. By 1987, M&A advisory work contributed half of First Boston's profit and Wasserstein asked the management committee to divert resources to his unit from bond trading. After being rebuffed, Wasserstein and Perella quit and set up their own firm,
Wasserstein Perella & Co.
Credit Suisse acquired a 44% stake in First Boston in 1988. The investment bank acquired its shares held by the public and the company was taken private. In 1989, the
junk bond
In finance, a high-yield bond (non-investment-grade bond, speculative-grade bond, or junk bond) is a bond that is rated below investment grade by credit rating agencies. These bonds have a higher risk of default or other adverse credit events ...
market collapsed, leaving First Boston unable to redeem hundreds of millions it had lent for the leveraged buyout of Ohio Mattress Company, maker of
Sealy mattresses, a deal that became known as "the burning bed". Credit Suisse bailed them out and acquired a controlling stake in 1990. Although such an arrangement was arguably illegal under the
Glass Steagall Act
Glass is a non-crystalline, often transparent, amorphous solid that has widespread practical, technological, and decorative use in, for example, window panes, tableware, and optics. Glass is most often formed by rapid cooling (quenching) of ...
, the
Federal Reserve
The Federal Reserve System (often shortened to the Federal Reserve, or simply the Fed) is the central banking system of the United States of America. It was created on December 23, 1913, with the enactment of the Federal Reserve Act, after a ...
, the U.S. bank regulator, concluded that the integrity of the financial markets was better served by avoiding the bankruptcy of a significant investment bank like First Boston even though it meant a de facto merger of a commercial bank with an investment bank.
1990s - Credit Suisse First Boston
''Main Article
Credit Suisse First Boston
Credit Suisse First Boston (also known as CSFB and CS First Boston) is the investment banking affiliate of Credit Suisse headquartered in New York.
The company was created by the merger of First Boston Corporation and Credit Suisse Group in 1988 ...
''After Credit Suisse acquired the remaining stake in First Boston in 1996, the newly formed combined entity was known as "CS First Boston" and over the years also referred to as "Credit Suisse First Boston" and "CSFB." During this period, problems occurred within CS First Boston as teams in New York and London were managed separately and in some cases had competing salespeople covering each other's territory.
In the late 1990s, CSFB purchased the equity division of
Barclays Bank
Barclays () is a British multinational universal bank, headquartered in London, England. Barclays operates as two divisions, Barclays UK and Barclays International, supported by a service company, Barclays Execution Services.
Barclays traces ...
, Barclays de Zoete Wedd ("BZW"). BZW was considered second-tier and CSFB reportedly bought BZW from Barclays for £1 plus assumption of debt - primarily to obtain BZW's client list. A permanent injunction prevented First Boston from offering shares in Gulf Oil company, due to lack of interest in share offering, and the Iraq Desert Storm campaign. A Nevada judge issued a cease and desist order to stop Barclays from taking American owned assets and offering them to international buyers from Iran, Iraq, Syria, Egypt, and North Korea.
The newly-global CSFB became a leading high tech banker, acting as lead (or co-lead) underwriter in the IPOs of
Amazon.com
Amazon.com, Inc. ( ) is an American multinational technology company focusing on e-commerce, cloud computing, online advertising, digital streaming, and artificial intelligence. It has been referred to as "one of the most influential econo ...
and
Cisco Systems
Cisco Systems, Inc., commonly known as Cisco, is an American-based multinational digital communications technology conglomerate corporation headquartered in San Jose, California. Cisco develops, manufactures, and sells networking hardware, ...
, as well as one time high fliers such as
Silicon Graphics
Silicon Graphics, Inc. (stylized as SiliconGraphics before 1999, later rebranded SGI, historically known as Silicon Graphics Computer Systems or SGCS) was an American high-performance computing manufacturer, producing computer hardware and sof ...
,
Intuit
Intuit Inc. is an American business software company that specializes in financial software. The company is headquartered in Mountain View, California, and the CEO is Sasan Goodarzi. Intuit's products include the tax preparation application ...
,
Netscape and
VA Linux Systems
Geeknet, Inc. is a Fairfax County, Virginia–based company that is a subsidiary of GameStop. The company was formerly known as VA Research, VA Linux Systems, VA Software, and SourceForge, Inc.
History VA Research
VA Research was founded in No ...
. CSFB also did significant deals for
Apple
An apple is an edible fruit produced by an apple tree (''Malus domestica''). Apple trees are cultivated worldwide and are the most widely grown species in the genus ''Malus''. The tree originated in Central Asia, where its wild ancestor, ' ...
,
Compaq
Compaq Computer Corporation (sometimes abbreviated to CQ prior to a 2007 rebranding) was an American information technology company founded in 1982 that developed, sold, and supported computers and related products and services. Compaq produced ...
and
Sun Microsystems among others. In 2000, at the height of the tech boom, technology deals generated $1.4 billion in revenue for CSFB. The head of CSFB's tech group,
Frank Quattrone
Frank Quattrone (born 1955) is an American technology investment banker who started technology sector franchises at Morgan Stanley, Deutsche Bank, and Credit Suisse First Boston. He helped bring dozens of technology companies public during the 19 ...
, reportedly made $200 million in bonuses between 1998 and 2000 and the company along with its parent was headed by
John Mack.
On June 30, 2005, Credit Suisse announced that it would rebrand its investment bank from "Credit Suisse First Boston" to "Credit Suisse," retiring the brand from the once-powerhouse banks.
2022s - Revival of the "First Boston" Brand
''Main Article
CS First Boston
Credit Suisse First Boston (also known as CSFB and CS First Boston) is the investment banking affiliate of Credit Suisse headquartered in New York.
The company was created by the merger of First Boston Corporation and Credit Suisse Group in 198 ...
''
On October 27, 2022, Credit Suisse announced a "radical" restructuring of its investment bank taking "extensive measures" which will see it return to the "First Boston" brand as an independent Capital Markets and Advisory bank.
Notable alumni
*
Bruce Wasserstein
Bruce Jay Wasserstein (December 25, 1947 – October 14, 2009) was an American investment banker, businessman, and writer. He was a graduate of the McBurney School, University of Michigan, Harvard Business School, and Harvard Law School, and ...
, co-founder of
Wasserstein Perella & Co.
*
Joe Perella, co-founder of
Wasserstein Perella & Co Wasserstein is a surname and can refer to:
* Bernard Wasserstein, British historian
* Bruce Wasserstein, a former investment banker and former CEO of Lazard
* Wendy Wasserstein, American Playwright
* Wasserstein Perella & Co., an investment bank b ...
and
Perella Weinberg Partners
Perella Weinberg Partners L.P. is a global financial services firm focused on investment banking advisory services.
The firm was founded in 2006 by Joseph R. Perella, Peter Weinberg, Peter A. Weinberg and Terry Meguid, and went public in 2021. I ...
*
Richard Handler
Richard B. "Rich" Handler (born May 23, 1961) is an American businessman, and chief executive officer (CEO) of Jefferies Group since 2001; one of the longest-serving CEOs on Wall Street. Handler is also the CEO of Jefferies Financial Group, Inc, ...
, CEO of
Jefferies Jefferies is a surname. Notable people with the surname include:
* Alan Jefferies (born 1957), Australian writer
* Annalee Jefferies (born 1954), American actress
* Chris Jefferies (born 1980), American basketball player
* Cindy Jefferies, Englis ...
*
Larry Fink
Laurence Douglas Fink (born November 2, 1952) is an American billionaire businessman. He is the chairman and CEO of BlackRock, an American multinational investment management corporation. BlackRock is the largest money-management firm in the w ...
, CEO of
BlackRock
BlackRock, Inc. is an American multi-national investment company based in New York City. Founded in 1988, initially as a risk management and fixed income institutional asset manager, BlackRock is the world's largest asset manager, with trill ...
*
Scott Mead, Artist
See also
*
Credit Suisse
*
Credit Suisse First Boston
Credit Suisse First Boston (also known as CSFB and CS First Boston) is the investment banking affiliate of Credit Suisse headquartered in New York.
The company was created by the merger of First Boston Corporation and Credit Suisse Group in 1988 ...
(known as "CS First Boston" or "CSFB")
*
Donaldson, Lufkin & Jenrette
Donaldson, Lufkin & Jenrette (DLJ) was a U.S. investment bank founded by William H. Donaldson, Richard Jenrette, and Dan Lufkin in 1959. Its businesses included securities underwriting; sales and trading; investment and merchant banking; fina ...
(known as "DLJ")
References
{{Credit Suisse
Credit Suisse
Defunct financial services companies of the United States
Defunct companies based in New York City
Former investment banks of the United States
Financial services companies established in 1932
Banks established in 1932
Financial services companies disestablished in 2006
Banks disestablished in 2006
1932 establishments in Massachusetts
2006 disestablishments in New York (state)