Is there a solution of Suisse cost problem?

Posted June 16, 2012 by martinasmith11

Things can even go wrong in fast-paced industries that are as fast as the industry of investment banking.

Things can even go wrong in fast-paced industries that are as fast as the industry of investment banking. In the month of March of the year 2002, the chief executive of that time of Credit Suisse First Boston, John Mack had made an announcement that they are facing a cost related problem. He had become a part in the summer season of the year 2001, so that he can set straight the blunders that had been committed in the rein of his predecessor, Allen Wheat. One of the main aftermaths of his time was the expense of around 13 billion dollars on making purchase of Donaldson, Lufkin & Jenrette after they were already facing a problem and had seen a loss of 1 billion dollars.
Mack had to put straight a lot of things such as he was heading a bank that was although situated on Wall Street but had the cost-income ratio which was the highest, as well as the compensation ratio also that was the highest along with a basic costing which was fixed through bonus which were guaranteed where this amounted around 80 per cent of it.
It would not be wrong to say that Credit Suisse was that kind of an investment bank that was laden with cost-related problems.
Now the history is repeating itself, as the investment bank, Credit Suisse had again lost more than 400 million dollars again in the year 2011. As per a research, their cost-income ratio was 103 percent which was at the second highest level in the filed of investment banking. The sample average of 15 banks in the investment banking has been 78 percent even after they had witnessed a year which was full of challenges. If the condition of Credit Suisse is seen from the past 10 years then it would be clear that was been struggling as far as its costs are concerned.
Between the years, 2002 and 2011, the sum total of the costs had taken up the 95 per cent of the revenue, in comparison to the 78 per cent of the six banks which were investment banks. Even if one sets aside the recession that had come in the year 2007-2008 in relation to the figures, the cost-income ratio’s average was 82 per cent in the last 10 years in comparison to the 70 per cent of the other banks. This has been proved by analysis. Apply now with text a loan @ and get amount you need.
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Last Updated June 16, 2012