Credit Suisse Group AG and Michael Klein ended a plan to fold the ex-Citigroup Inc. banker’s investment advisory boutique into the bank’s plan to resurrect the First Boston brand under his leadership.
The Swiss bank and M. Klein & Co. LLC “have mutually agreed to terminate the acquisition” as a result of the emergency takeover of Credit Suisse by UBS Group AG announced last month, the bank said in a statement.
The brief notice in Credit Suisse’s first-quarter results represents the end of a saga for the veteran dealmaker, who had stood to enjoy a personal payout of potentially more than $200 million and a shot at running his own investment bank.
Those plans quickly unraveled last month as UBS showed little interest in following through on the agreements, Bloomberg has reported. Starting CSFB would have entangled UBS in a competing firm at odds with its own investment bank’s strategy. At the same time, UBS executives have said they want to retain some staff and business lines.
“UBS intends to downsize Credit Suisse’s investment banking business and align it with our conservative risk culture,” UBS chairman Colm Kelleher said last month at a press conference announcing the deal.
Credit Suisse had said it agreed to buy Klein’s boutique in a $210 million deal that would give him an eventual stake in CS First Boston. The firm had planned a carve-out of its dealmaking unit with a public offering by 2025.
Any attempt to salvage the plan would likely have faced significant hurdles. Saudi officials had been weighing an investment in CS First Boston, Bloomberg previously reported, but the country’s Saudi National Bank lost more than $1 billion in a matter of months on its stake in Credit Suisse that Klein helped arrange. And moves to legally and operationally separate the business had only just started.
Klein could yet walk away with more than a $20 million break-up fee, Bloomberg reported last month. That’s on top of a $10 million fee that the Swiss bank paid his boutique to bring him in while they awaited regulatory approval to make him an executive.
Klein has shifted his focus back to doing what he knows best, deal advisory, and has landed a new mandate to advise Glencore Plc on its bid to buy Canadian rival Teck Resources Ltd. alongside Citigroup.
