I am writing you to comment on your recent article re your annual Primebrokerage Survey. I must tell you that when I read the piece re CSFB and the language used it made me laugh. The lack of due diligence on your part is a little less journalistic and more sensational. The facts contradict themselves. You say the effort was at “quixotic” but then cite the very strengths that were built over the years that I was there. I headed the business for 1/2 of 2002, yet no one from your organization bothered to call me or even check the facts. I have no banner to carry, other than my own, and would have been a willing participant to any query.
Let us get the record straight:
1) I think it is time to clear the air re the Calpers securities lending auctions and their 15 minutes of fame. The relationships created: trading, banking, primebrokerage, derivative, agency lending and sales, more than offset any cost that we might have incurred to win the Calpers portfolios. The impact of those bids was huge. In fact, it put CSFB on the map to compete in the primebrokerage business, and, in what is a more commoditized product, created the one thing needed: differentiation of offering. If we were to take a short-term approach, something that the Street is usually vilified for, with every tick, up or down, then the Calpers deal would not make sense to anyone managing their particular book, department or silo. The original bid was an investment; the subsequent wins the returns. Given what the rest of the Street’s primebrokerage efforts waste in undeliverable technology builds, why is it so hard to understand that we chose to impact our business in a different fashion, one with real and lasting impact with the customers? As I know it, CSFB is one of the few firms that substantially increased its revenue in yrs 2000-2002. Hardly the “wallop” that you cite. It has been almost four years since the original bid and we are still talking about the ramifications. Sounds to me like many people would have liked to have done the same thing.
2) You say that the effort effectively was a vision with no results. This is just pure lack of due diligence on your part. During my tenure, the business grew from 0 to 300mm dollars and generated well over $1bln in revenue for the Firm.
3) The Firm started and integrated swaps, agency lending, and the hedge fund benchmark and investment products into its offering. Who else did that?
4) It is the only effort that started from zero, did not assume another offering through merger or acquisition, and became a global player.
Quixotic? Hardly? The facts speak for themselves.
Sincerely yours,
Bob Sloan