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Credit Suisse paid Michael Klein $10m just for advising on the CS First Boston deal

Credit Suisse paid Michael Klein a $10m fee to advise the Swiss bank on his plan to carve out its corporate finance business into a CS First Boston, which he will run.

Credit Suisse and Klein made the agreement in October 2022 and details including the fee are disclosed in the bank’s annual report, published today.

Under the terms of an engagement letter, Klein’s eponymous boutique was hired to “provide strategic advice and assistance to the Group in connection with the proposed carveout of CS First Boston, whereby it was agreed that Michael Klein would devote significant time and attention to the services to be provided by The Klein Group LLC to the Group.”

Credit Suisse said that “The purpose of this engagement was to secure Michael Klein’s services in relation to the establishment of CS First Boston in the time gap between October 27, 2022 and the effective date of his employment contract as a member of the Executive Board (which is contingent on regulatory approval) and to obtain the support of The Klein Group LLC until closing of the acquisition. The advisory fee under such engagement was USD 10 million.”

Klein led the strategic review into the investment bank before making the recommendation that the corporate finance business be spun out.  As part of this, on February 9, Credit Suisse announced the acquisition of the Klein Group for $175m.

At the same time it Credit Suisse announced the Klein as CEO of Banking and regional CEO of Americas, as well as designated CEO of CS First Boston and a member of the Executive Board, subject to regulatory approval.

The acquisition of Klein’s boutique is deal is expected to close during the frst half of 2023 after which Klein will become CEO of CS First Boston.

Klein was also paid CHF204k ($224k) in his capacity as a board member until he stepped down on October 27.

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AUTHORDavid Rothnie Insider Comment
  • La
    Laidback
    16 March 2023

    This seems like a remarkable conflict. He is a board member right up until the transaction kicks off so clearly involved in the decision to buy his own boutique. He then advises on a deal in which his own boutique is one of the parties, picking up a hefty advisory fee, paid by the entity of which he is about to become CEO. Did he value his own boutique too? Having done all of that, he installs himself as CEO of the combined entity. It’s all very Swiss….

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