Updated from 5:13 p.m. EDT
John Mack will step down as co-chief executive of
Credit Suisse Group
next month, ending his stormy tenure at the top of its CSFB investment bank.
Oswald Grubel, who had shared the CEO position with Mack, will become the sole leader of the Swiss-based banking concern that is the parent company of
Credit Suisse First Boston
Mack, 59, joined CSFB in July 2001. He previously had been the president of
Mack is leaving in an apparent management shake-up and restructuring of the firm. The bank, in a press release, said Credit Suisse's board of directors decided not to renew his contract, which expires July 12.
The management shake-up may have something to do with Mack's support for seeking a merger partner for the bank. In a press release announcing Mack's departure and the corporate restructuring, Credit Suisse Chairman Walter Kieholz said, "At this point in time, we have no interest in pursuing a merger with another financial institution."
The company says it will reorganize itself into three divisions, with CSFB being responsible for institutional securities and wealth management.
Mack's been credited with helping to clean up CSFB, which saw its reputation tarnished by several investigations into the firm's initial public offering practices. That episode culminated with the recent conviction of former CSFB technology investment banker Frank Quattrone on federal obstruction of justice charges.
New York-based CSFB also was one of the major bankers for
and had a hand in selling bonds for some of its notorious off balance sheet entities.
During his tenure at Morgan Stanley, Mack earned the nickname "Mack the Knife" because of his reputation for cost-cutting. He lived up to that name when he stepped into CSFB and began eliminating jobs. In his first two years at CSFB, as the economy slipped into recession, he axed nearly 6,000 jobs at the investment bank.
Mack's low point may have come two years ago. In 2002, CSFB lost $1.2 billion, as it paid a number of hefty fines and lawsuit settlements and took restructuring charges. But beginning last year, things began to turn around at the investment bank, which is now profitable, although it has slipped in the rankings compared to other U.S. investment banks.
This year, according to Thomson Financial, CSFB ranks 11th in advising on U.S. corporate mergers, down from sixth place last year. The slip in the rankings is worse than it sounds, because there's been a strong revival in corporate deal-making this year. That means CSFB is missing out on a fresh source of investment banking revenue that's going to its rivals.
While CSFB ranks third this year in underwriting initial public offerings, it stands in sixth place overall in serving as the lead underwriter on U.S. stock offerings. A year ago, the firm was the fifth-most-active player in equity underwriting.
He left Morgan Stanley in January 2000, after losing out in a power struggle with Morgan Stanley CEO Phil Purcell. Mack, who ran Morgan Stanley, helped negotiate the $10 billion merger between that old-line investment bank with Purcell's big retail brokerage Dean Witter.