Investors on Friday welcomed Credit Suisse Group's determination not to pursue a merger in Europe's fragmented bank sector and clean up its complex structure after the ousting of co-chief executive John Mack.
The departure of Mack, who headed investment bank Credit Suisse First Boston for the past three years, was announced in a statement late on Thursday after a board meeting in New York.
The financial group did not detail the reasons for Mack's exit but used the opportunity to underline its determination to stay independent, prompting talk that veteran Wall Street deal maker Mack and his Swiss employer had clashed over strategy and potential big mergers.
The move leaves Oswald "Ossie" Gruebel, who headed the bank's flagship Swiss private bank, in charge of the entire conglomerate. Gruebel has said he wants to expand abroad, particularly in his native Germany, but has insisted that cross-border European banking mergers are still years away.
"At this point in time, we have no interest in pursuing a merger with another financial institution," said CS Chairman Walter Kielholz in Thursday's statement.
Analysts said CS's bid to quash speculation about its German ambitions will help dispel uncertainty over its future.
"Investors had got a bit unhappy with the (structure) and with the fact that Credit Suisse was talking about buying into German retail banking," said Pictet & Cie analyst Peter Thorne.
CS shares, flat so far this year, rose 1.7 percent to 44.75 Swiss francs by 0935 GMT in an otherwise flat Swiss market. It outperformed the European banking sector.
A source close to the bank said Mack's departure had been almost inevitable after CS's board resisted his attempts to push the group into a tie-up with a rival, such as Germany's Deutsche Bank, headed by former CS manager Josef Ackermann.
"There had been some contact between them (Deutsche and CSFB) but I am not sure how good it would have been for Deutsche," another source familiar with the situation said.
The new management strategy focuses on "organic growth" - excluding big acquisitions - in the three fields of investment banking, asset management, and private banking now that the group has restored profits after 2002's disastrous 3.3 billion Swiss franc ($2.65 billion) loss.
The plan removes one of the key potential players in the eagerly anticipated consolidation of Europe's banking sector, and is a blow to hopes for big cross-border mergers in Europe - already dented by evidence of rising profitability among major banks that has reduced the pressure to cut costs by merging.
Mack's abrupt departure should also dispel doubts about the group's commitment to investment banking after years of rumours that it may sell CSFB - the source of much of its troubles in 2002, CS's worst year in its more than 125-year history.
"That's like the US selling the Statue of Liberty," said Pictet's Thorne. "It's inconceivable. They would never do that."
But CS signalled it was getting closer to selling its troublesome Winterthur insurance unit, which returned to profit last year after suffering badly from a market rout that wiped out the value of its investments and prompted it to seek some $2.5 billion in emergency cash from its parent.
CS said it was considering all options for Winterthur, Switzerland's largest non-life insurer, even though a sale was not imminent. "That doesn't mean that a decision to sell it has been made or will be made very soon," a spokeswoman said.
Mack joined Credit Suisse three years ago with a mandate to cut CSFB back to size after the Wall Street boom of the late 1990s ended, leaving CSFB bloated and badly exposed to the technology sector just as the market crashed.
His contract at CS was set to end in July. He had said he wanted to stay on despite talk that Mack, a staunch Republican, might join US President George Bush's re-election campaign.
But in the end, the man nicknamed "Mack the Knife" for his cost cutting fervour came under the knife himself.
"This was a strategic decision by the board for a certain structure," said one bank insider. "They said we need one CEO now and the board decided that that would be Ossie, not Mack."
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