Probe as CSFB chief goes

By THIS IS MONEY
Updated:

 

CREDIT Suisse First Boston chief executive Allen Wheat, dubbed one of the 20 most powerful men on Wall Street, has been replaced by former Morgan Stanley executive John Mack as the mighty investment bank goes through a US government probe into alleged malpractices over initial public offerings.

Mack, 56, takes over immediately at CSFB. Until March this year he was president and chief operating officer of rival Morgan Stanley where for the last two years his annual remuneration has averaged $13m (£9.23m).

Wheat, 53, who joined CSFB in 1990 and became chief executive in 1997, is likely to receive a multi-million dollar pay-off from CSFB, though the group refused to reveal how much. CSFB has denied any wrongdoing in the IPO market where it has faced questions over the allocation of shares in popular issues.

Mack was president and chief operating officer of rival investment bank Morgan Stanley Dean Witter until his unexpected departure in March.

Credit Suisse, the parent bank, is to reorganise into two separate units. CSFB, headed by Mack, will include all investment banking and asset management aimed at corporate and institutional clients. Credit Suisse Financial Services, headed by Thomas Wellauer, will take over private banking alongside financial services.

Lukas Muhlemann, chairman and chief executive of Credit Suisse, said: 'John Mack is ideally suited to lead our combined investment banking and asset management business. He is well known and highly regarded worldwide as an executive with integrity, strategic vision and an intense focus on client needs. As a decisive, fair-minded leader, he knows how to succcessfully build cohesive, diverse teams with a common vision amid rapid growth.'

Mack said: 'My priorities will include building an organisation based on teamwork, ensuring that we are delivering the best possible products and services to our customers and treating all our people with respect and dignity.'

In May 1999 CSFB was fined by the Swedish financial regulator over the activities of four London traders, including Lord Archer's son James, who called themselves the 'Flaming Ferraris'. It has also had run-ins with the Japanese and Indian regulatory authorities in the past.

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