First Boston Hits the Road

Can an old brand spun out from Credit Suisse find a place on the new Wall Street?

- Pat Regnier and Paula Dwyer

Credit Suisse Group AG is turning back the clock. In a bid to save itself from a series of scandals and financial troubles, the Zurich-based bank is dismantling the financial behemoth it assembled at great cost over five decades and returning to its origins as banker to the world’s ultrawealthy. But the decision to spin off First Boston, the American investment bank it acquired in 1990, is giving off an even stronger what’s-old-is-new vibe.

It’s also attracting a fair amount of skepticism around Wall Street for being more nostalgic than strategic. Investment banks today tend to be either trillion-dollar giants that are attached to more stable businesses and have access to Federal Reserve funding in scary times, or boutiques with tiny balance sheets and a roster of gray-haired sages capable of dazzling boardrooms.

The new CS First Boston will look to live in the lonely middle. The venture is expected to have a $10 billion balance sheet, according to people familiar with the matter who didn’t want to publicly reveal confidential details. That will make it larger than rivals Lazard Ltd. or Evercore Inc. but a pipsqueak compared with JPMorgan Chase, Goldman Sachs, Morgan Stanley and other giants in the so-called bulge bracket of investment banks. CS First Boston will compete with them while trying to revive a brand that hasn’t been used for 17 years. “It’s a bit of ‘back to the future’—and I mean way back,” says Peter Hahn, an emeritus professor at the London Institute of Banking & Finance. “Ultimately the move comes across as desperation.”