Credit Suisse Group History

Company Perspectives:

Our group strategy is aimed at maintaining and strengthening our position among the global leaders in two key segments of the world's financial services market: Asset gathering and asset management; and Financial intermediation. Through each of our businesses, we aim to build expertise and presence in these areas while at the same time leveraging our financial services resources across all our businesses. Our overall objectives are to achieve high customer satisfaction, maximize shareholder value and be an employer of choice for talented individuals.

Key Dates:

1856:

Alfred Escher founds an independent bank in Zurich, Schweizerische Kreditanstalt, known internationally as Credit Suisse.

1905:

The first branch opens in Basel.

1940:

The first foreign branch opens in New York.

1962:

Cooperation begins with White, Weld & Co., Inc., a leading American investment bank.

1977:

Credit Suisse is rocked by the Chiasso affair, a major scandal involving fraudulent banking and foreign exchange trading at the bank's Chiasso branch.

1978:

Following White, Weld's takeover by Merrill Lynch, Credit Suisse begins cooperating with U.S. investment bank First Boston Inc., particularly through the joint venture Financière Crédit Suisse-First Boston (CSFB).

1988:

Credit Suisse and First Boston restructure their joint venture under a new company called CS First Boston, Inc.

1989:

CS Holding becomes the publicly traded umbrella holding company for Credit Suisse, the group's stake in CS First Boston, and other group interests.

1990:

Credit Suisse bails out troubled First Boston, pumping in $300 million in equity and gaining majority control of the firm.

1993:

Swiss Volksbank, the nation's fourth largest bank, is acquired.

1994:

The group enters into a strategic alliance with Swiss Re.

1995:

The group enters into a strategic alliance with Winterthur Insurance, the number two Swiss-based insurance company.

1997:

Major restructuring takes effect and includes the renaming of CS Holding as Credit Suisse Group and the merger of global investment banking operations under Credit Suisse First Boston; Winterthur is acquired and becomes a Credit Suisse Group operating unit.

2000:

Donaldson, Lufkin & Jenrette, Inc., U.S.-based investment bank and asset management firm, is acquired.

2002:

Travails at Winterthur and the scandal-plagued CSFB lead to a record net loss of SFr 3.31 billion ($2.12 billion).

2003:

CSFB's Pershing unit and Winterthur's Churchill and Italian insurance operations are all divested.

Company History:

Credit Suisse Group, which began as a commercial bank in 1856, at a time when Switzerland was first embracing the industrial revolution, is Switzerland's second largest bank (behind UBS AG) and one of the top dozen or so financial services companies in the world. The group is organized into two business units: Credit Suisse Financial Services and Credit Suisse First Boston. The former, which serves individuals and small to medium-sized companies, provides banking, financial advisory, and asset management services, as well as life and non-life insurance and pension products from the Winterthur unit. The group's institutional, corporate, government, and very rich individual customers are served through the internationally active Credit Suisse First Boston, which provides a broad range of products and services, including investment banking, securities underwriting, financial advisory services, private equity investments, full-service brokerage, investment research, and asset management services. Summarizing its own history, the group claims to have "evolved from a Swiss bank with an international franchise into a global financial institution with a strong Swiss home market."

Quickly Becoming Switzerland's Largest Bank After 1856 Founding

In 1856 Switzerland's federal constitution was only eight years old and there was little industry in the country as the shift from an agricultural to an industrial economy had just begun. Alfred Escher, a young Zurich politician from a prominent local family, was making slow progress in his talks with foreign banks about ways to finance a proposed northeastern railway, so he decided to set up an independent bank in Zurich, putting SFr 3 million worth of shares on public offer. The response was overwhelming: he received SFr 218 million in subscriptions within three days, and Schweizerische Kreditanstalt opened for business on July 16. (The bank's German name translated literally as "Swiss Credit Institution," but it became known instead internationally as Credit Suisse.)

The American Civil War had a great impact on the emerging textile industry in Switzerland, which suffered when cotton prices collapsed after the war ended. Credit Suisse posted its first loss ever in 1867 and its last loss until the mid-1990s.

The growth of other industries in Switzerland and the continued expansion of the railroads provided ample opportunities for Credit Suisse to grow, however. The bank helped develop the Swiss monetary system and, by the end of the Franco-Prussian War in 1871, Credit Suisse was the largest bank in Switzerland.

Switzerland: Evolving into the Banking Capital of the World by World War I

The next 40 years, to the beginning of World War I, came to be known as the belle epoque for both the continent and for Credit Suisse. A number of significant changes occurred during this period, including the revision of the federal constitution in 1874 and the resulting political changes that eventually led to proportional representation in local and federal government; an increase in savings, which enabled the country to become an exporter of capital by the mid-1880s and reduce its reliance on foreign capital; and the introduction of electricity, the telephone, and the telegraph, all of which required large infusions of capital for construction of factories, power plants, and phone systems.

The founding of the Swiss National Bank in 1907 and the growth in foreign investment by Swiss banks sowed the seeds for Switzerland's eventual role as the banking capital of the world. Credit Suisse also branched out from Zurich during this period and had 13 different locations in Switzerland by the beginning of World War I; the bank's head count increased to more than 1,000. Credit Suisse had gained its first branch in 1905 when it took over the Basel branch of Oberrheinische Bank.

With the outbreak of World War I, foreign investment stopped completely. As investors in hostile countries returned Swiss securities, Credit Suisse played a crucial role in placing them on the Swiss market. Credit Suisse also had to defend the interests of Swiss investors abroad, a delicate matter during such a chaotic period.

After World War I, Credit Suisse continued financing the electrification of the country and, in response to a coal shortage, helped finance the national railroad's conversion to electricity in 1924. Foreign investment expanded rapidly during the 1920s, a period that came to a devastating end with the stock market crash in 1929.

The Great Depression led to cataclysmic changes in Europe, including the rise of nationalist thinking, the imposition of a range of trade barriers, including protective tariffs and import quotas, and other developments that resulted in lower production levels, less investment, and economic decline.

Increasing tensions in Europe led to Credit Suisse's emphasis on English-speaking companies, which resulted in the establishment of the Swiss-American Corporation in 1939 to focus on the securities business and the opening of Credit Suisse's first foreign branch in New York in 1940.

During World War II Credit Suisse extended large amounts of credit to Swiss authorities, who were owed more than SFr 1.7 billion by Germany by the end of the war. Despite the loss of almost half of the company's employees to war-related service, Credit Suisse emerged from the conflagration financially sound and poised to capitalize on the impending economic upturn. Nevertheless, as the conduct of Credit Suisse and the other big Swiss banks during the Nazi era began to emerge in detail starting in the mid-1990s, it became clear that the bank was involved in a number of improper activities, including trading gold with Nazi Germany. The big banks also came under heavy criticism for the way they dealt with accounts that had been opened before 1945 by victims of the Holocaust--the so-called dormant accounts issue.

After the end of World War II, as normal banking activities resumed, reconstruction of the war-torn continent got underway and Credit Suisse again took up issuing paper for foreign debtors. At the same time, Credit Suisse expanded its services to its regular customers by developing new and different types of savings accounts and broadening into activities that were formerly handled by subsidiaries, such as issuing credit cards and providing consumer credit.

During the 1960s the bank also set up a farsighted business arrangement with White, Weld & Co., Inc., a leading American investment bank, that would eventually establish Credit Suisse's leading role in the Eurobond-issuing market and would ultimately lead to its relationship with the American investment bank First Boston. Cooperation with White Weld began in 1962 when Credit Suisse purchased the investment bank's Zurich subsidiary, White, Weld & Co. AG, which was subsequently renamed Clariden Finanz AG (and later still Clariden Bank). In 1970 Credit Suisse and White, Weld set up a holding company for Clariden called WW Trust. Four years later Credit Suisse became the largest shareholder in WW Trust, which was renamed Société anonyme financière du Crédit Suisse et de White Weld (CS&WW).

Foreign exchange dealings assumed greater importance during the 1960s, along with the precious metals markets. With the emergence of a free gold market in 1968, Credit Suisse became a major gold trading house and, through its acquisition of the precious metals refinery Valcambi S.A., in Ticino, a manufacturer of ingots and coins. By the turn of the decade, Credit Suisse had offices on every continent except Antarctica.

The 1970s brought the introduction of floating exchange rates and the subsequent devaluation of the dollar, a loss of investor confidence in the American market, and the oil crisis of 1973. The bank also experienced a major scandal in 1977 when authorities began investigating a fraudulent banking and foreign exchange trading scheme at the company's Chiasso branch involving more than $1.2 billion. The losses resulted in the resignation of several top executives and left Rainer Gut second in line; Gut became chairman in 1983 following the retirement of Otto Aeppli.

Major Changes Instilled by Rainer Gut During the 1980s

Gut, who was Swiss-born but trained in the United States, brought a measure of stateside savvy and aggressiveness to Credit Suisse. A former partner in New York's Lazard Freres, Gut shifted the company's focus from traditional Swiss banking practices, which emphasized security and caution, to world investment banking and money management.

By 1986 the bank's assets were $46 billion, and somewhere between $75 billion and $150 billion more were under active management by the bank--well ahead of the estimated $50 billion under the management of the leading American bank in the field, Citicorp. Under Gut, Credit Suisse was the first Swiss bank to acquire a bank in West Germany, Effectenbank, and it became one of only a handful of foreign operations doing trust banking in Japan.

In 1978 White, Weld was purchased by Merrill Lynch & Co. After Credit Suisse and Merrill Lynch failed to reach an agreement on a continued cooperation arrangement, Credit Suisse purchased Merrill Lynch's stake in CS&WW, increasing its interest to 76 percent. Still seeking to work with an established U.S. investment bank, Credit Suisse reached an agreement with New York-based First Boston Inc. whereby CS&WW was transformed into Financière Crédit Suisse - First Boston (CSFB), 46 percent owned by Credit Suisse, 31 percent by First Boston, and 23 percent by management and other shareholders. CSFB, in turn, took over a 25 percent interest in First Boston.

The terms under which CSFB was established caused the defection of CSFB Chairman and Chief Executive John Craven, who was replaced by Michael von Clemm. Although he was consistently pilloried as a bad manager and was eventually replaced as chief executive by Hans Ulrich Doerig from Credit Suisse, von Clemm was widely credited with helping the company achieve its undisputed dominance of the Eurobond market with innovative financing deals. He also oversaw, however, one of the greatest financial disasters in the company's history, a $150 million issue bought by the company in 1980. The deal eventually cost CSFB between $20 and $40 million, and the three years during which von Clemm managed the company were its least successful.

Four years later six executives, including three executive directors, left CSFB. The exodus coincided with the appointment of Jack Hennessey, formerly of First Boston, as chief executive to replace Doerig, who returned to Credit Suisse. A former assistant secretary of the treasury, Hennessey was brought in to reduce the friction and to assume management duties. Von Clemm remained as chairman. The problems were not over, however.

At the beginning of 1984, three CSFB executives defected to Merrill Lynch, taking seven others with them. Published accounts of the brouhaha suggested that the expansion of Deputy Chairman Hans-Joerg Rudloff's power base within the company offended a number of the executives, many of whom were accustomed to operating in a wide-open entrepreneurial environment. But the company was growing too large, and as senior executives tried to figure out how to manage CSFB, the infighting grew nastier; Rudloff was considered the consummate corporate infighter.

The final defection came in 1986 when von Clemm resigned quietly after 16 years with the company to devote more time to outside interests. Hennessey took over as chairman and chief executive.

At about the same time, full-service investment banking companies such as Salomon Brothers and Goldman Sachs, as well as Japanese and German concerns, started pushing their way into the Eurobond market. That forced CSFB to diversify into mergers and acquisitions, equity sales, and other specialties, as CSFB's share of the Eurobond market dropped from more than 16 percent to just more than 11 percent.

In addition, CSFB was encountering competition from, of all places, its own two parent companies, Credit Suisse and First Boston. As the need for better cooperation between family members became apparent, CSFB moved one of its New York executives to London to establish better relations. For a while things seemed to be working. One of the first joint ventures among the three companies involved a $4 billion bond floated by General Motors Acceptance Corporation. While First Boston was lead manager, Credit Suisse provided a letter of credit to back the notes and CSFB placed $400 million of the bonds in Europe.

The true survivor of CSFB remained Rudloff, who took the company into Amsterdam with a bank acquisition there in 1986, and then became a director and officer of Credit Suisse itself in early 1987. Rudloff's return to Switzerland was viewed by the staid Swiss banking establishment as a harbinger that the cozy days of gentlemanly Swiss banking had come to a close.

One result of the newly deregulated and ever-fluctuating markets of the 1980s was that the relationship among Switzerland's three major banks (which included Credit Suisse, Union Bank of Switzerland, and Swiss Bank Corporation), collectively known as "the syndicate," could no longer be so friendly. Once a fairly tightly knit trio, they adopted new guidelines giving each other flexibility to withdraw from deals with which the others were involved if they had doubts about the borrower and even to return up to 60 percent of their allocation of bonds after a deal was done.

Credit Suisse was characterized in the financial press as a lone wolf rather than a pack hunter sharing the spoils of its deals with other members of the syndicate, conduct that further indicated the end of an era in the Swiss banking industry. Some of the first signs of the new conditions came when restrictions on gray market trading (trading before the valuation date) were relaxed. Credit Suisse moved aggressively into this area of finance, one it had previously shunned. The other two major Swiss banks sat back and waited and watched. In any event, by the early 1990s the syndicate was history as Switzerland, like many other countries worldwide, continued to deregulate.

Meanwhile, the company was tainted by mid-1980s charges of laundering drug money from Turkey and Bulgaria. Although the company denied the charges and, technically, money laundering was not illegal unless the money was used to buy drugs, the stain remained.

Acquisitions, Restructurings, and Diversification Highlighting the 1990s

The stock market crash of 1987 hit CSFB and First Boston particularly hard. During the year that followed, CSFB's problems included an estimated $15 million loss on a 1987 debt swap with Italy. First Boston, meanwhile, suffered large losses from bad bridge loans for mergers and acquisitions. In 1988 Credit Suisse and First Boston restructured their troublesome marriage under a new company, CS First Boston, Inc. Two years later, Credit Suisse bailed out the still troubled First Boston by agreeing to pump $300 million in equity into the firm, increasing Credit Suisse's stake in First Boston to 64.2 percent and making the Swiss bank the first foreigner to own a Wall Street investment bank. Relations between Credit Suisse and First Boston managers remained strained during the early 1990s, as it was difficult to reconcile the more freewheeling style of First Boston with the more conservative (if aggressive for Switzerland) style of Credit Suisse.

Meanwhile, Credit Suisse had been reorganized in early 1989. CS Holding had been created as a sister company seven years earlier, mainly to hold the bank's interests in CSFB. In 1989 CS Holding was transformed into an umbrella holding company, under which were placed Credit Suisse, the group's full-service bank in Switzerland; CS First Boston; Fides Holding, which specialized in trust business and management consulting in Switzerland; and the company's controlling stake in Electrowatt AG, the Swiss power utility. This simplification of what had been an extremely complex web of cross-holdings and sister firms cost the company about $80 million. The publicly traded shares in Credit Suisse were exchanged into shares in CS Holding.

Acquisitions and new growth areas were major themes of the 1990s for Credit Suisse. In April 1990 Bank Leu, Switzerland's sixth largest bank, was acquired in the first hostile takeover in Swiss banking. Bank Leu, which catered to the wealthy in Switzerland, became the centerpiece for Credit Suisse's private banking business, which also included Clariden Bank serving customers in North and South America, and the northern European activities of Bank Hofmann (which had been acquired in 1972).

In addition to private banking, Credit Suisse added another operating unit to its organization chart when it entered the insurance business, the first Swiss bank to do so, by establishing CS Life in October 1990. The group's involvement in insurance broadened in December 1994 when it entered into an alliance with Swiss Re, and in December 1995 when another alliance was formed, this one with Winterthur Insurance, the second largest Swiss-based insurance company.

In early 1993 Credit Suisse outbid Union Bank of Switzerland for the country's fourth largest bank, the troubled Swiss Volksbank, in a SFr 1.6 billion ($1.1 billion) deal. Over the next few years, Credit Suisse and Swiss Volksbank's network of domestic branches were reconciled. Meantime, in 1994, Credit Suisse acquired Neue Aargauer Bank, the largest regional bank in Switzerland. This acquisition gave Credit Suisse the largest branch network in the country and made it Switzerland's number one bank by market share--positions it would hold until the 1998 merger of Swiss Bank and Union Bank that formed UBS AG.

In 1994 the Fides trust business was placed within the Credit Suisse banking operation. A much more significant restructuring and a refocusing of the overall group began in 1996. Early in the year Credit Suisse discussed a merger with Union Bank, which would have created a Swiss banking giant. Instead, Credit Suisse decided to turn its attention away from Switzerland; rather than being a Swiss bank with significant international interests, the group decided to become a truly international banking and financial services power that happened to be based in Switzerland and had some core businesses there. Under the resulting reorganization, which took effect at the beginning of 1997 and was led by the newly appointed chief executive Lukas Mühlemann (who had been head of Swiss Re), CS Holding was renamed Credit Suisse Group. The company's operations were reorganized into a domestic banking unit called Credit Suisse, which represented a full merger of the operations of the old Credit Suisse and Swiss Volksbank; a private banking unit called Credit Suisse Private Banking, which included Bank Leu, Clariden Bank, Bank Hofmann, and other CS Holding private banks; Credit Suisse First Boston, which included a full merging of CS First Boston and CS Holding's other corporate banking operations; and Credit Suisse Asset Management. All units except for Credit Suisse were to operate on a worldwide basis. The restructuring also involved a workforce reduction of 15 percent, or 5,000 employees. Simultaneously, Credit Suisse made its first moves toward divesting its controlling stake in Electrowatt, which promised to focus the group further on its core financial services businesses. By 1998 the group had, in large part, completed this divestment, having retained only a 20 percent stake in Watt AG, the former energy division of Electrowatt.

About the same time that the company was being restructured for the 21st century, its activities--and those of the other "Big Three" Swiss banks--during World War II were being reexamined, with resulting negative publicity. Reports of the banks' financial dealings with Nazi Germany were published, and Jewish groups pushed for reclamation of money that had been placed into Swiss bank accounts before World War II by victims of the Holocaust. The Swiss banks were initially reluctant to cooperate with these efforts--in part because of their traditional secrecy--but the resulting worldwide outcry forced the banks to publish lists of people who owned dormant accounts that had been opened before 1945, accounts that contained a total of SFr 61.2 million ($41.3 million) in them. In early 1997, the Big Three banks agreed to set up a SFr 100 million ($70 million) humanitarian fund for the victims of the Holocaust. Then in August 1998, with state and local governments in the United States threatening sanctions against Credit Suisse Group and UBS, the two Swiss banking giants agreed to pay $1.25 billion to settle all the Holocaust-related class-action lawsuits that had been brought in the United States. Credit Suisse agreed to pay one-third of the total. Many Swiss criticized the deal as the result of the blackmailing of a smaller country by the United States.

In December 1997 Credit Suisse Group made a great leap forward in the insurance sector when it acquired Winterthur Insurance for about $9.51 billion. This move immediately vaulted Credit Suisse into the top ten financial services companies in the world, with total assets of about SFr 700 billion ($466 billion), which brought it close to the size of Europe's largest bank, Deutsche Bank AG. It also increased the group's assets under management to about SFr 700 billion ($466 billion), which ranked it third in the world, trailing only Fidelity Investments and AXA/UAP/Equitable. Winterthur was set up within the group umbrella as a fifth operating unit, and Credit Suisse's CS Life was integrated into Winterthur Life.

Credit Suisse First Boston also was bolstered through two late 1990s acquisitions. In 1997 the mergers and acquisitions, equity underwriting, equity trading, and equity research departments of Barclays de Zoete Wedd, the investment banking arm of the U.K.-based Barclays PLC, were acquired. The following year saw the purchase of the leading Brazilian investment bank, Banco de Investimentos Garantia S.A. In 1999 Credit Suisse Group acquired Warburg Pincus Asset Management, a unit of Warburg, Pincus & Co., for $650 million. The acquired unit became part of Credit Suisse Asset Management, which gained $22 billion in assets under management, including $10 billion in Warburg Pincus mutual funds.

The 1990s ended on a sour note for the group, and particularly for Credit Suisse First Boston. That unit had heavily involved itself in Russia in the postcommunist era, becoming the dominant dealer in Russian government bonds as well as a major lender to Russian companies and municipalities. When the Russian economic crisis erupted in 1998, CSFB had a huge exposure and ended up with a $1.3 billion loss from its activities in Russia, leading to a loss for the year of $154 million. In 1999 Japan's banking watchdog, the Financial Supervisory Agency, launched an investigation into Credit Suisse First Boston's sale of derivatives to Japanese banks and companies so that these firms could hide huge losses. Although technically legal, such practices were considered inappropriate under newly issued regulations. Credit Suisse admitted that some of its staff had obstructed the agency's investigation by shredding documents and hiding files. Japanese regulators subsequently revoked the license of the Japanese derivatives arm of CSFB.

Troubles in the New Millennium

In May 2000 Gut handed over the chairmanship to Mühlemann, who remained chief executive as well. Mühlemann engineered the second huge acquisition of his leadership reign in November of that year, acquiring Donaldson, Lufkin & Jenrette, Inc. (DLJ) for $12.36 billion. U.S.-based DLJ had both investment banking and asset management operations, and these were merged into CSFB and Credit Suisse Asset Management, respectively. The newly enlarged Credit Suisse First Boston ranked third globally in mergers and acquisitions advisory, fourth in equity underwriting, third in debt underwriting, and first in high-yield debt underwriting.

The acquisition of DLJ was poorly timed as it came right at the beginning of a major bear market. In addition to having to deal with the adverse market conditions, Credit Suisse First Boston was also at the very center of the Wall Street scandals that became regular headline-makers in the early 2000s. CSFB and other investment banks were accused of demanding kickbacks from their customers in exchange for shares in highly sought-after late 1990s technology IPOs. In January 2002 CSFB reached an agreement with U.S. regulators whereby it would pay $100 million in fines to settle these allegations. Frank Quattrone, the head of CSFB's technology underwriting group, was forced to resign from the company in March 2003, and one month later was charged with obstruction of justice for allegedly encouraging staffers to destroy e-mails at a time when he was aware that CSFB was under investigation. Then in April 2003 CSFB was part of a landmark $1.4 billion settlement between ten Wall Street firms and the New York Attorney General, the Securities and Exchange Commission, and other regulatory agencies. This deal settled a number of related allegations that had been raised against these financial firms, including that investment bankers had pressured research analysts to issue positive reports and that the analysts subsequently issued "worthless" stock recommendations even though they knew they were fraudulent. Credit Suisse First Boston's share of the settlement was $200 million in fines and penalties--an amount topped only by Citigroup Inc. Credit Suisse Group, meantime, took a pretax charge of SFr 700 million ($500 million) late in 2002 to cover damages from private lawsuits that were expected to be filed in connection with the CSFB scandals.

In mid-2001, as these scandals began unfolding and the red ink began to flow, the head of Credit Suisse First Boston, Allen D. Wheat, was relieved of his position and replaced by John J. Mack. Within two years of his appointment, Mack thoroughly overhauled what had become a bloated operation following the ill-advised acquisition of DLJ, cutting 10,000 jobs from the 27,500-person workforce and slashing costs by more than $3 billion. Part of the cost reductions came from a series of divestments that also helped to focus CSFB more on its core operations. Late in 2001 the unit's precious metals trading business and its Australian and New Zealand retail brokerages were sold off. In 2002 its U.K.-based online trading operation, DLJdirect Ltd., was sold to TD Waterhouse, and the sister operation in the United States, CSFBdirect, Inc., was sold to the Bank of Montreal. Then in May 2003 CSFB's Pershing unit, which provided financial services outsourcing solutions to broker-dealers and independent investment managers, was sold to the Bank of New York Company, Inc. for about $2.5 billion.

Meanwhile, the Credit Suisse Group was once again restructured in 2002. The structure was streamlined into two business units: Credit Suisse First Boston and Credit Suisse Financial Services. The latter encompassed private banking, corporate and retail banking, life insurance and pensions, and non-life insurance. In July 2002 Oswald J. Grübel, the former head of the group's successful private banking operation, was placed in charge of the financial services unit. Grübel was immediately faced with the challenge of dealing with Winterthur. The insurance unit had begun to lose money thanks to a steep decline in its investment income stemming from the collapsing stock markets. During 2002 Credit Suisse was forced to inject SFr 3.7 billion ($2.7 billion) into Winterthur to bolster its reserves. To effect a longer term repair to Winterthur's--and Credit Suisse's--capital base, several divestitures of insurance operations were completed. Two of the larger divestments occurred in later months of 2003: Winterthur's U.K. non-life insurer, Churchill Insurance Group plc, was sold to the Royal Bank of Scotland Group plc for about £1.2 billion; and Winterthur's Italian insurance operations were sold to Unipol, an Italian insurer, for EUR 1.46 billion ($1.7 billion).

The crises at both Credit Suisse First Boston and Winterthur resulted in a stunning net loss of SFr 3.31 billion ($2.12 billion)--making 2002 the worst year in company history. The stock of Credit Suisse Group fell sharply through most of 2002, with the company losing more than half of its market value over the course of the year. A recovery in the stock began late in the year following the announcement that Mühlemann--the person most closely associated with the ill-fated purchases of Winterthur and DLJ--would leave at the end of the year. Taking over as chairman at that time was Walter B. Kielholz, vice-chairman of Credit Suisse and also CEO of Swiss Re. The heads of the two operating units, Mack and Grübel, were named co-CEOs of the Credit Suisse Group.

Early results from 2003 pointed to a possible turnaround. Credit Suisse Group posted net profits of SFr 2 billion ($1.48 billion) for the first half of the year, compared with a net loss of SFr 211 million ($129 million) for the same period one year earlier. It was too early to tell, however, whether the scandals and acquisition headaches that had been dogging the group had been fully overcome.

Principal Subsidiaries: Bank Hofmann AG; Bank Leu AG; BGP Banca di Gestione Patrimoniale S.A.; Clariden Holding AG; Credit Suisse; Credit Suisse Fides; Credit Suisse First Boston; Credit Suisse First Boston (International) Holding AG; Credit Suisse Trust AG; Neue Aargauer Bank (98.6%); "Winterthur" Swiss Insurance Company; Winterthur Life; Credit Suisse Asset Management (Australia) Limited; DBV-Winterthur Versicherung AG (Germany); Winterthur Assicurazioni S.p.A. (Italy); Credit Suisse Trust and Banking Co. Ltd. (Japan); Credit Suisse Asset Management, Limited (U.K.); Credit Suisse First Boston (Europe) Limited (U.K.); JO Hambro Investment Management Limited (U.K.); Credit Suisse Asset Management LLC (U.S.A.); Credit Suisse First Boston LLC (U.S.A.); Credit Suisse First Boston (USA), Inc.; Frye-Louis Capital Management Holding Co., Inc. (U.S.A.).

Principal Operating Units: Credit Suisse Financial Services; Credit Suisse First Boston.

Principal Competitors: UBS AG; Citigroup Inc.; Deutsche Bank AG; The Royal Bank of Scotland Group plc; HSBC Holdings plc; Barclays PLC; Merrill Lynch & Co., Inc.; Goldman Sachs Group Inc; Morgan Stanley; Zurich Financial Services; Swiss Life Insurance and Pension Company.

Further Reading:

• Andrews, Edmund L., "When the Sure-Footed Stumble: Swiss Banks Stagger After Several Investing Missteps," New York Times, October 23, 1998, p. C1.
• Beckett, Paul, "Credit Suisse and UBS Agree to Open 2.1 Million Holocaust-Era Accounts," Wall Street Journal, May 4, 2000, p. A12.
• Cooper, Ron, "Gut Instincts," Forbes, October 14, 1991, pp. 169-70.
• ------, "Gut's Gang of Four," Euromoney, November 1990, p. 24.
• Crabbe, Matthew, "Gut's Secret Plan," Euromoney, January 1989, p. 38.
• "Credit Suisse Restructures," Banker, August 1996, p. 5.
• Fairlamb, David, "On the Edge: Will a Radical New Strategy Save the Day for Credit Suisse's CEO?," Business Week, July 15, 2002, pp. 54-55.
• Fairlamb, David, John Rossant, and Emily Thornton, "This Bank Keeps Growing and Growing and ...," Business Week, September 11, 2000, p. 134.
• Gasparino, Charles, "Credit Suisse Agrees to Purchase Unit of Warburg Pincus for $650 Million," Wall Street Journal, February 16, 1999, p. B14.
• "Gnomes at Play," Economist, July 6, 1996, pp. 61-62.
• Grant, Linda, "Will CS First Boston Ever Win?," Fortune, August 19, 1996, pp. 30, 34.
• Greenhouse, Steven, "Swiss Bank Turns Aggressive," New York Times, April 10, 1989, pp. D1, D2.
• Hall, William, "Swiss Business Star Stumbles at the Top," Financial Times, January 30, 2002, p. 13.
• "In the Land of Milk and Honey," Economist, August 16, 1997, pp. 54+.
• James, Jennie, "How to Stop Sinking," Time International, November 25, 2002, p. 60.
• Jung, Joseph, From Schweizerische Kreditanstalt to Credit Suisse Group: The History of a Bank, translated by James Knight, Zurich: Neue Zürcher Zeitung, 2000.
• Jung, Joseph, ed., Credit Suisse Group Banks in the Second World War: A Critical Review, 2nd ed., translated by James Knight, Zurich: Neue Zürcher Zeitung, 2002.
• "Knock, Knock," Economist, August 7, 1999, p. 63.
• Langley, Alison, "Credit Suisse Reports Loss of $2 Billion," New York Times, February 26, 2003, p. W1.
• ------, "Credit Suisse Sets a Record with Its Loss of $1.4 Billion," New York Times, November 15, 2002, p. W1.
• McGeary, Johanna, "Echoes of the Holocaust," Time, February 24, 1997, pp. 37-40.
• McGeehan, Patrick, "Credit Suisse Shakes Up First Boston," New York Times, July 13, 2001, p. C1.
• Muehring, Kevin, and Beth Selby, "Rainer Gut's Wall Street Headache," Institutional Investor, January 1991.
• 125th Anniversary of Credit Suisse: An Historical Survey, Zurich: Credit Suisse, 1981.
• Rhoads, Christopher, and Margaret Studer, "Credit Suisse Plans to Buy Winterthur in Transaction Valued at $9.51 Billion," Wall Street Journal, August 12, 1997, pp. A3, A8.
• Rodger, Ian, "The Enfant Terrible of Swiss Banking," Financial Times, January 9, 1993, p. 12.
• Sellers, Patricia, "The Trials of Mack," Fortune, September 1, 2003, pp. 98+.
• Shearlock, Peter, "Merger Will Create Powerful Force," Banker, October 2000, pp. 113-14.
• Smith, Alison, "Rebranded Credit Suisse Thinks Global," Financial Times, January 20, 1997, p. 17.
• Spiro, Leah Nathans, and John Templeman, "A Short Leash for First Boston," Business Week, November 26, 1990, p. 156.
• Strom, Stephanie, "Japan Revokes Credit Suisse Unit's Banking License," New York Times, July 30, 1999, p. C6.
• Studer, Margaret, "Credit Suisse Looks Ahead to Solving Antitrust Problems of Winterthur Deal," Wall Street Journal, August 18, 1997, p. A9.
• "Swiss Banks Spat Over Mergers," Banker, May 1996, p. 4.
• "Swiss Cure," Economist, January 9, 1993, p. 66.
• "A Swiss Giant Limbers Up," Economist, September 22, 1990, pp. 88, 93-94.
• "A Swiss Role," Economist, November 17, 1990, pp. 100, 106.
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• ------, "Founding Father," swissBusiness, July/August 1991, p. 4.

Source: International Directory of Company Histories, Vol.59. St. James Press, 2004.