On July 11, Credit Suisse Group chairman and chief executive Lukas M?hlemann named John Mack to replace Allen D. Wheat as CEO of the Swiss bank's investment banking subsidiary, Credit Suisse First Boston. A Wall Street icon, Mack was president of Morgan Stanley Dean Witter until he left after losing a bruising political battle with CEO Philip J. Purcell.
"Mack the Knife," as he's known on Wall Street, is said by friend and foe to be the best hope M?hlemann has to rein in one of the world's most restless and decentralized -- some bankers would say dysfunctional -- investment banks and integrate it more effectively into the Credit Suisse Group. Just after he appointed Mack, M?hlemann explained to BusinessWeek European Economics Correspondent David Fairlamb why he made the move. Here are edited excerpts of their conversation:
Q: Why did you replace Allen Wheat with John Mack as CEO of CSFB?
A: I felt what was needed after the acquisition of DLJ and all the growth we'd had over the past five years was to bring the parts together in a cohesive whole. Doing that requires different skills from those needed when you're building up a group. We need to build a cohesive team to get the pieces to work together better.
Q: Why choose Mack?
A: He embodies the things that we are looking for -- team building, a one-firm approach. A realization that the businesses is not just about making money but about creating a working, efficient, cohesive organization.
Q: How long were you talking with Mack?
A: When John left Morgan Stanley [at the end of March], I approached him and
discussed various things -- including him taking a position on the board. As our conversations progressed, we focused more on him taking over CSFB as CEO.
Q: Did he come to Zurich for the talks?
A: I flew out to New York first. Then he came to Zurich. Then we met in
Q: There are reports that the shareholders pressed you to change top
management. Is that true?
A: No. No one put pressure on us to make the changes.
Q: You're also restructuring the group into two divisions -- CSFB, which will handle investment banking and institutional management, and Credit Suisse Financial Products, which will bring together private banking, insurance, and financial services. Is that so you can compete more effectively with Citigroup and Chase?
A: The structural changes we've put in place are less about taking on the likes of Citigroup and Chase than they are about differentiating ourselves from the more conventional type of investment bank.