CSFB to save over $100m after top bankers take pay cut

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Credit Suisse First Boston expects to save more than $100m (€110m) a year after cutting the pay of investment bankers by removing their guaranteed bonuses.

John Mack, chief executive of CSFB, has succeeded in cutting the pay of bankers in Frank Quattrone's technology investment banking group and Jack Dimaio's North American fixed income group, which includes that of John Walsh, global head of debt capital markets.

Quattrone's team has already signed the agreement while Dimaio and his colleagues are expected to sign later on Tuesday. Quattrone will join the executive board in return for his pay cut.

A CSFB spokeswoman said that the bank expects to renegotiate only a few more contracts. She said: &quotJohn Mack is essentially done with the process.&quot

The CSFB spokeswoman said that the renegotiated pay packages will save CSFB between $200m and $300m over the next three years.

In addition, the firm last month renegotiated the pay of 95 members of the investment banking team to save a further $75m over the next three years.

The deals affect 350 bankers who are effectively giving up an average of about $1m each in guaranteed pay. However, Dimaio and Quattone's pay cuts alone are expected to contribute to a large chunk of the savings.

The pay cuts are the second strand of CSFB's bid to cut back its big wages bill. Mack has been under heavy pressure to cut the bill since joining the bank in the summer. In the second quarter CSFB's compensation ratio (salaries and bonuses as a proportion of operating income) was 57.6%, compared with an average of 51.1% at its main rivals.

Mack reportedly failed to renogotiate the fixed income team's pay at the first attempt in September.

Last month, analysts told eFinancialNews that CSFB needs to cut around $1bn a year to bring its compensation ratio down to the levels at other Wall Street firms.

Dimaio's team negotiated their inflated pay packages with Allen Wheat, Mack's predecessor, earlier this year after they threatened to move to Barclays Capital. These packages caused a pay imbalance.

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