latest-news-headlines Market Intelligence /marketintelligence/en/news-insights/latest-news-headlines/credit-suisse-s-cs-first-boston-spinoff-may-be-3b-annual-revenue-business-72807496 content esgSubNav
In This List

Credit Suisse's CS First Boston spinoff may be $3B annual revenue business

Blog

Banking Essentials Newsletter: September 18th Edition

Loan Platforms: Securing settlement instructions and prioritising the user experience

Blog

Navigating the New Canadian Derivatives Landscape: Key Changes and Compliance Steps for 2025

Blog

Getting an Edge with Services: Driving optimization by embracing technological innovation


Credit Suisse's CS First Boston spinoff may be $3B annual revenue business

SNL Image

Credit Suisse will carve out its capital markets and advisory activities into a new entity called CS First Boston.
Source: Scott Barbour /Getty Images News via Getty Images

Investors in Credit Suisse Group AG's new advisory spinoff CS First Boston are poised to take a share of business activities that can generate annual revenues north of $3 billion, data suggests.

Credit Suisse will carve out its capital markets and advisory activities from its investment bank, which it intends to turn into a "capital-light" business under a radical restructuring. New York-based CS First Boston, or CSFB, will be opened to third-party capital, and Group CEO Ulrich Körner has said a "highly respected" investor gave a "hard commitment" to invest $500 million.

The Swiss bank's capital markets and advisory have generated combined net revenues of at least $3 billion over the last four years, according to data compiled by S&P Global Market Intelligence. In 2019, the activities yielded $3.25 billion in revenues, and climbed to $4 billion the year after. In 2021, a record year for dealmaking, revenues hit $5.03 billion.

SNL Image

The Credit Suisse group will initially allocate some $20 billion of risk-weighted assets, or RWAs, to CSFB, Körner said during a presentation on the restructuring. At this RWA level, CSFB can generate more than $2.5 billion of net revenues under normalized market conditions, he said.

Activity slowdown

The immediate future, however, is likely to be bleak for the advisory and capital markets activities of CSFB and its peers.

Ralph Hamers, CEO of Credit Suisse rival UBS Group AG, has warned that global banking businesses are unlikely to recover through the remainder of 2022 and into early 2023. Germany's Deutsche Bank AG has reportedly cut jobs in its advisory group in the U.S. amid a slump in dealmaking.

In the nine months to Sept. 30, Credit Suisse's capital markets and advisory revenues hit $1.24 billion, barely a quarter of annual revenues in 2021.

Credit Suisse's investment bank will be comprised of its remaining markets business — sales and trading activities — and CSFB. The scale-down will significantly cut the division's contribution to group revenues. By 2025, the markets business will account for only 15% of group revenues, while CSFB will contribute below that level, said CFO Dixit Joshi.

Credit Suisse will also move its securities products group, or SPG, business out of its investment bank into a new capital release unit. It has launched a framework agreement with Apollo Global Management Inc. and Pacific Investment Management Co. LLC, or PIMCO, for the transfer of the SPG business.

SNL Image

Upcoming merger?

The group appointed former Citigroup Inc. executive Michael Klein as CSFB's CEO-designate. Klein controls advisory boutique M. Klein & Co. LLC, which Credit Suisse plans to merge with CSFB, the Financial Times reported, citing people familiar with the matter. M. Klein & Co. was was an adviser in the final quarter of 2021 due to its work on T. Rowe Price's $4.22 billion acquisition of Oak Hill Advisors, according to Market Intelligence data.

Korner has said Credit Suisse may launch an IPO of CSFB down the line. Saudi National Bank, a key participant in the group's CHF4 billion capital raising, has said it may invest in the spinoff.

S&P Global Ratings downgraded Credit Suisse's credit rating on Nov. 1, citing risks associated with the bank's restructuring.

SNL Image* Access financial highlights for Credit Suisse on the CapIQPro platform.
* Access indexes including regional bank indexes on the CapIQPro platform.