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Credit Suisse drops co-CEO Mack

Credit Suisse Group, Switzerland's No. 2 bank, on Thursday stunned Wall Street by saying co-chief executive officer John Mack would leave the company next month and naming Oswald Gruebel its sole CEO.

This marks Mack's second abrupt departure from a major Wall Street house. The 59-year-old executive, who earned the nickname "Mack the Knife" for his cost-cutting ways, was pushed out as president of Morgan Stanley in 2001.

The news caught even top executives in CSFB's US offices by surprise. One company source said the firm's managing directors met with senior US executives on Thursday morning, and were given no indication a change was in the works.

The bank was still discussing the shake-up on a conference call late on Thursday afternoon, a source familiar with the situation said.

Brady Dougan, who was recently transferred to London to run CSFB's international businesses, will become the new global head of CSFB, which is Credit Suisse Group's New York-based investment banking arm. He will report to Gruebel.

Mack's contract will not be renewed when it expires next month, Credit Suisse Group said in a statement. The statement said Mack "agreed with the board of directors not to renew his contract."

Efforts to reach Mack were unsuccessful, and CSFB officials declined to comment.

"When I saw the news come across the wire I was surprised," said Jim Lyon, who helps invest US$400 million at Oakwood Capital Management in Los Angeles.

"I thought Mack did a really good job of leading CSFB through a very difficult environment, particularly with the Quattrone situation and the collapse of the tech bubble," Lyon said.

Mack took over a bloated firm in July 2001 when he replaced Allen Wheat as CEO. He proceeded to cut thousands of jobs and slash some US$3 billion in costs during his tenure.

Reflecting his turnaround efforts, CSFB reversed a US$1.2 billion loss in 2002 and notched a profit of US$870 million last year. Earlier this year, he launched an ambitious plan to double the firm's profit by 2006. Still, CSFB lags competitors in key areas of the investment banking business.

In a move to head off talk that Mack's departure meant the group could put CSFB up for sale, chairman Walter Kielholz said no such move was in the cards.

"We see no value in a cross-border merger," he said, citing cultural, institutional and regulatory differences.

"Credit Suisse First Boston remains a major pillar of Credit Suisse's strategy in the future ... That is a very firm statement," he said.

Credit Suisse has frequently said it would eventually revert to a sole-CEO structure, but Mack's departure still comes as a surprise after he went out of his way earlier this year to dispel rumors that he would leave.
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