Credit Suisse quits retail broking

Credit Suisse First Boston (CSFB) will quit retail broking in New Zealand in February as part of a retrenchment that will halve staff numbers to around 60.

The company will follow other brokerages in all but quitting Wellington for Auckland, leaving only a small operation in the capital to service institutional clients.

The New Zealand CSFB operation is feeling the edge of the company's new global chief executive, John Mack, nicknamed in some quarters "Mack the Knife".

In September, CSFB said it had cut about 3000 staff since last year's acquisition of brokerage Donaldson, Lufkin & Jenrette (DLJ) and planned more cost cuts after posting a 23 per cent drop in quarterly profit.

CSFB, the investment banking arm of Zurich-based Credit Suisse Group, said it was realigning its operations to focus on its core services of investment banking, wholesale broking and research as part of a worldwide move.

"CSFB's decision regarding its retail business in New Zealand, which comprises investment advice and related services to private clients, will result in up to two dozen private client adviser positions being lost," New Zealand chief executive Bill Trotter said.

A similar number of support positions, along with a small number of investment banking, broking, research and other staff, would also be affected, Mr Trotter said.

The move is part of a general trend of brokerages to move from Wellington to Auckland or Sydney.

Early this year, Merrill Lynch relocated its corporate operations to Australia and sold its retail brokerage to ABN Amro, which has also taken a half stake in retail broker Craig and Co.

Deutsche Securities has also moved its broking operations to Australia, and in August JP Morgan sold its retail broking operations to Macquarie Equities and moved its remaining operations to Auckland from Wellington.

Mr Trotter said there were hopes that those laid off by CSFB would establish a retail firm that might develop a relationship with CSFB.

"We're in discussions with them to evaluate it."

He said CSFB had not quit retail broking because it was a dying business.

"It's a terrific business. It doesn't suit CSFB's international strategy. I don't think it's declined but it probably suits different sorts of ownership structures than a global investment bank."

Mr Trotter said the growing integration of the New Zealand and Australian economies and resultant cross-border flows meant there would continue to be wide-ranging opportunities for investment banking in New Zealand.

This week, the Bank of Montreal agreed to buy CSFB's online trading unit, CSFBdirect, for $US520 million ($1.27 billion) and in a separate deal, CSFB agreed to sell UK DLJdirect to rival retail brokerage TD Waterhouse Group, owned by Toronto-Dominion Bank, Canada's No 2 bank.

- NZPA