Thread by @KemmererHistory

@adam_tooze @LusManuelCalvo1 @AnjaCzer @_nflry @CasparShaller @christa_wirth @HansSuter @ch_esch @mullansp Perhaps some #econhist #bizhis context, also on Tobias Straumann's @eth_en insightful interview @NZZ on why & how #CreditSuisse turned towards investment banking in the 1970s/1980s: In contrast to Germany's #DeutscheBank, (1/24)

@adam_tooze @LusManuelCalvo1 @AnjaCzer @_nflry @CasparShaller @christa_wirth @HansSuter @ch_esch @mullansp @ETH_en @NZZ Credit Suisse decided in the 1970s to build strategic partnerships with US investment banks including cross-shareholdings to ensure mutual commitment in Zurich, London, and New York. Before the 1970s, Credit Suisse was in many respects similar to Deutsche. (2/24)

@adam_tooze @LusManuelCalvo1 @AnjaCzer @_nflry @CasparShaller @christa_wirth @HansSuter @ch_esch @mullansp @ETH_en @NZZ It shied away from setting up foreign branches because it feared losing control over non-domestic entities. In addition, the domestic business was deemed far more important. Yet by the late 1960s, internationalisation and an overseas presence looked inevitable, (3/24)

@adam_tooze @LusManuelCalvo1 @AnjaCzer @_nflry @CasparShaller @christa_wirth @HansSuter @ch_esch @mullansp @ETH_en @NZZ CS shied away from setting up foreign branches because it feared losing control over non-domestic entities. In addition, the domestic business was deemed far more important. Yet by the late 1960s, internationalisation and an overseas presence looked inevitable, (3/24)

@adam_tooze @LusManuelCalvo1 @AnjaCzer @_nflry @CasparShaller @christa_wirth @HansSuter @ch_esch @mullansp @ETH_en @NZZ and CS opened representative offices across the Middle East, East Asia, and North America. In total, 16 such offices were established between 1968 and 1976, indicating a parallel to German banks and their pivot to foreign business from the late 1960s. (4/24)

@adam_tooze @LusManuelCalvo1 @AnjaCzer @_nflry @CasparShaller @christa_wirth @HansSuter @ch_esch @mullansp @ETH_en @NZZ In addition to representative offices, CS decided to open four branches in London, Los Angeles, Singapore, and Nassau (Bahamas). Between 1963 and 1973, the foreign assets and liabilities of Swiss banks grew eightfold and sixfold, respectively. (5/24)

@adam_tooze @LusManuelCalvo1 @AnjaCzer @_nflry @CasparShaller @christa_wirth @HansSuter @ch_esch @mullansp @ETH_en @NZZ In contrast to Deutsche Bank, CS was smaller than its two domestic rivals Swiss Bank Corporation (SBC, Schweizerischer Bankverein) and Union Bank of Switzerland (UBS, Schweizerische Bankgesellschaft). The CS management believed that SBC and UBS, given their larger size, (6/24)

@adam_tooze @LusManuelCalvo1 @AnjaCzer @_nflry @CasparShaller @christa_wirth @HansSuter @ch_esch @mullansp @ETH_en @NZZ looked more attractive to foreign partners in the long run. CS thus launched an internal review of its international position in 1971, concluding that a continuation of correspondent banking would eventually downgrade CS to a ‘regional bank’. (7/24)

@adam_tooze @LusManuelCalvo1 @AnjaCzer @_nflry @CasparShaller @christa_wirth @HansSuter @ch_esch @mullansp @ETH_en @NZZ A second option was joining a European banking club, following the model pursued by Deutsche in EBIC. But, again, SBC and UBS were thought to be in a better bargaining position because of their size, and CS would not be in the driving seat. After all, (8/24)

@adam_tooze @LusManuelCalvo1 @AnjaCzer @_nflry @CasparShaller @christa_wirth @HansSuter @ch_esch @mullansp @ETH_en @NZZ the most flexible solution was to build a business from scratch. Rainer E. Gut was hired from Lazard Frères, boasting excellent knowledge of international investment banking and the US market. (9/24)

@adam_tooze @LusManuelCalvo1 @AnjaCzer @_nflry @CasparShaller @christa_wirth @HansSuter @ch_esch @mullansp @ETH_en @NZZ He proposed building a wholesale banking franchise to compete in the booming Euromarkets. In consequence, Credit Suisse expanded its existing Swiss-based trust business WW Trust, which it was operating along with White Weld, a US financial services company. (10/24)

@adam_tooze @LusManuelCalvo1 @AnjaCzer @_nflry @CasparShaller @christa_wirth @HansSuter @ch_esch @mullansp @ETH_en @NZZ CS injected fresh capital in 1974, becoming the single largest stakeholder (40.9 per cent) in WW Trust, which, after acquiring bank status, was renamed Société anonyme financière du Crédit Suisse et de White Weld (CS & WW). White Weld Ltd in London, (11/24)

@adam_tooze @LusManuelCalvo1 @AnjaCzer @_nflry @CasparShaller @christa_wirth @HansSuter @ch_esch @mullansp @ETH_en @NZZ hitherto the most important subsidiary, was renamed Credit Suisse White Weld Ltd (CSWW). The new name suggested the dominant role of Credit Suisse in the business and its ambitions in the London Eurobond market. From 1974, (12/24)

@adam_tooze @LusManuelCalvo1 @AnjaCzer @_nflry @CasparShaller @christa_wirth @HansSuter @ch_esch @mullansp @ETH_en @NZZ CSWW in London soon became the most successful Eurobond house after Deutsche Bank, engaging in underwriting and placing but also innovations such as floating rate notes and convertibles that Deutsche Bank was too conservative to embrace. (13/24)

@adam_tooze @LusManuelCalvo1 @AnjaCzer @_nflry @CasparShaller @christa_wirth @HansSuter @ch_esch @mullansp @ETH_en @NZZ CSWW was thus able to leapfrog Eurobond veterans SG Warburg and Morgan Stanley, ranking second behind Deutsche throughout the 1970s. In short, the exceptional strength of CSWW resulted from its combination of Swiss universal banking capabilities (balance sheet, (14/24)

@adam_tooze @LusManuelCalvo1 @AnjaCzer @_nflry @CasparShaller @christa_wirth @HansSuter @ch_esch @mullansp @ETH_en @NZZ distribution power) — similar to Deutsche — and its additional US investment banking expertise, proclivity to innovation, and easier access to US dollar funding. The latter characteristics would be defining in the long run. In 1978, however, (15/24)

@adam_tooze @LusManuelCalvo1 @AnjaCzer @_nflry @CasparShaller @christa_wirth @HansSuter @ch_esch @mullansp @ETH_en @NZZ Merrill Lynch bought the US parent company of White Weld, forcing Credit Suisse to look for new partners as White Weld pulled out of the joint business. Essentially, the decision for CSFB was to further build the business on its own or buy another company. (16/24)

@adam_tooze @LusManuelCalvo1 @AnjaCzer @_nflry @CasparShaller @christa_wirth @HansSuter @ch_esch @mullansp @ETH_en @NZZ First Boston Inc., a US bulge bracket investment bank, finally emerged as the new partner and proved an excellent fit. (First Boston owned 35 per cent of the joint venture.) CS's investment banking success was predicated on its capabilities in two eminent currencies, (17/24)

@adam_tooze @LusManuelCalvo1 @AnjaCzer @_nflry @CasparShaller @christa_wirth @HansSuter @ch_esch @mullansp @ETH_en @NZZ the US dollar and the Swiss franc: CSFB had exclusive access to assets managed in Swiss fiduciary accounts, in conjunction with Credit Suisse’s exclusive right to book Swiss franc transactions through its Swiss parent company. (18/24)

@adam_tooze @LusManuelCalvo1 @AnjaCzer @_nflry @CasparShaller @christa_wirth @HansSuter @ch_esch @mullansp @ETH_en @NZZ The latter advantage was a result of a cartel between Swiss banks. And, compared with Deutsche, CSFB recognised the demand for dollar-products much earlier. Following the 1979 Volcker shock, (19/24)

@adam_tooze @LusManuelCalvo1 @AnjaCzer @_nflry @CasparShaller @christa_wirth @HansSuter @ch_esch @mullansp @ETH_en @NZZ the strength of the dollar became a ‘major factor’ in CSFB’s success (nytimes.com/1985/01/15/bus…). In the early to mid-1980s, (20/24)

@adam_tooze @LusManuelCalvo1 @AnjaCzer @_nflry @CasparShaller @christa_wirth @HansSuter @ch_esch @mullansp @ETH_en @NZZ CSFB’s ‘leading position spanned all the major currencies then represented in the Euromarkets.’ (quote in amazon.de/-/en/Samuel-L-… p. 58). CSFB thus became a market leader in Eurodollar bond issues in the 1980s, (21/24)

@adam_tooze @LusManuelCalvo1 @AnjaCzer @_nflry @CasparShaller @christa_wirth @HansSuter @ch_esch @mullansp @ETH_en @NZZ creating path dependencies in the securities business for years to come. The strengths in both the USD and Sfr allowed CS to take top spots in the league tables, (22/24)

@adam_tooze @LusManuelCalvo1 @AnjaCzer @_nflry @CasparShaller @christa_wirth @HansSuter @ch_esch @mullansp @ETH_en @NZZ making it the only franchise with European roots to rival US and Japanese houses in investment banking in the 1980s. (23/24)

@adam_tooze @LusManuelCalvo1 @AnjaCzer @_nflry @CasparShaller @christa_wirth @HansSuter @ch_esch @mullansp @ETH_en @NZZ That's also reflected here

@adam_tooze @LusManuelCalvo1 @AnjaCzer @_nflry @CasparShaller @christa_wirth @HansSuter @ch_esch @mullansp @ETH_en @NZZ CSFB was widely regarded as a pace-setter in innovation and pricing, surpassing almost all major US investment banking franchises by the mid-1980s (24/24)