CSFB latest to weigh anchor

By ELLEN READ and agencies

Credit Suisse First Boston is the latest international broker to pack its bags and leave New Zealand.

The investment banking arm of Switzerland's Credit Suisse Group is selling its remaining New Zealand business to local senior management led by chief executive Bill Trotter.

CSFB will form an alliance with the as-yet un-named local operation and use its financial clout to underwrite deals.

Since 1999, several major global brokers, including Merrill Lynch and J.P. Morgan, have left New Zealand.

"CSFB are withdrawing their physical presence, but they are not pulling out from their New Zealand customer base," Trotter said.

"Our clients will continue to be serviced by essentially the same team as before, albeit under local ownership.

"We're very pleased that CSFB, with its global reach, is to continue its long and association with us."

He expected the new company to look "substantially like the existing one" which has around 50 staff in Wellington and - mainly - Auckland.

In November, CSFB said it was quitting retail broking to concentrate on institutional work and moved its New Zealand headquarters from Wellington to Auckland.

The retail employees subsequently set up First NZ Securities as an independent broking operation.

Trotter said he would consider establishing a closer link with First NZ Securities.

"We already have a strong linkage with them and if we can make it better then we certainly will," he said.

The firms share office space in Auckland and Wellington and, while not indicating it was on the cards, Trotter did not rule out an amalgamation.

CSFB, like many others, has been hit by a world slowdown in mergers and acquisitions activity and has been slashing jobs worldwide.

Mergers and acquisitions are a big income source for investment banks, and dramatic declines in the volume of transactions over the past year has put huge pressure on banks and led to widespread job cuts and global retrenchment. New Zealand merger and acquisition activity has also slumped dramatically this year.

CSFB was ranked number one in global merger and acquisition advisory tables in the first quarter this year, up from sixth last year.

But that performance masks upheaval at the bank internationally.

Chief executive John Mack, who took over from Allen Wheat last July, instigated harsh cost-cutting.

The company cut 2500 jobs at the end of last year to bring the headcount down to 25,100.

Last week it revealed plans to cut a further 300 investment banking jobs as it seeks US$1 billion ($2.3 billion) in savings.

Brokers here said that the New Zealand operation was a victim of Mack's drive to increase revenue per employee.

Because New Zealand staff were working in a small country with a weak currency, it was virtually impossible for them to make enough of a contribution, no matter how successful they were.

Trotter acknowledged that the international environment was difficult, but said the fact that CSFB was forming an alliance with his new company showed its commitment to New Zealand.

ABN Amro chief executive Simon Allen said investment banks were consolidating globally, but were still serving NZ customers and those overseas wanting to invest here.

Overseas investors had no trouble getting into New Zealand markets, he said, and the local stockbroking and investment banking scene remained vibrant despite several of the big names jumping ship.

CSFB's New Zealand roots can be traced back to Jarden & Co, established in 1961 by All Black winger and yachtsman, Ron Jarden.

In the 1980s, as publicly listed company Jarden Morgan, the firm expanded into fixed income sales and trading, corporate finance and research activities.

In 1990, CS First Boston bought these activities.

In mid-1995, local management bought 75 per cent of the firm (CS First Boston retaining a 25 per cent stake) and the name was changed to First NZ Capital.

Then as part of a global repositioning of the CSFB Group, Credit Suisse First Boston moved back to full ownership at the beginning of 1998.

During last year's drawn-out takeover battle for Montana Group, CSFB acted for suitor Lion Nathan and was reprimanded by the NZSE Market Surveillance Panel's standing committee for breaching listing rules.