Quietly ballistic

8 January 2003

This is just the latest move by the Swiss bank to repair its tattered balance sheet. Whether it makes any real difference to Credit Suisse s capital position is another matter, however.

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Bank of New York said it would buy Credit Suisse First Boston's Pershing unit for $2.5bn in cash and assumed debt to become a leader in the securities clearance business.

Credit Suisse will take an aftertax loss of about $250m on the sale of Pershing, which processes about 10% of New York Stock Exchange trades. Bank of New York, which said it had paid $1.4bn more than the book value of Pershing, agreed to pay $2bn in cash.

Pershing will also pay back a $480m intercompany loan from CSFB, and Bank of New York will lend Pershing the same amount. Bank of New York will pay another $50m if Pershing reaches undisclosed growth targets.

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