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Capital Markets

Breakingviews: Mack's knife cuts too deep

John Mack was brought
in as CEO three years
ago to cut costs.

When John Mack (pictured right) was brought in as CEO to turn around Credit Suisse First Boston more than three years ago, he offered a simple diagnosis. "We don't have a revenue problem, we have a cost problem," he said. That might have been so then. But in trying to cut costs, has the former Morgan Stanley CEO created a revenue problem that wasn't there before?

A rising tide lifts all boats. And in common with the rest of the investment banking industry, CSFB's profits are expected to have risen in 2003. But it has dropped behind its peers. The bank has lost market share in several of its key franchises, and its position relative to other heavyweight investment banks has slipped. This applies in European, US and Asian M&A, as well as in convertible and equity issuance. Only in bond issuance and foreign exchange has it maintained its rankings. True, CSFB's profits are up on 2002. But total income is forecast to have fallen by about 13% last year.

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