Credit Suisse-DLJ Deal Won't Be the Last

  • Share
  • Read Later
In business, when the going gets tough, the tough merge.

Just as languishing oil prices spurred a flurry of mergers in that industry a few years back, the languishing stock markets have reminded financial-services firms that the down times are the best times to get bigger.

The $11.5 billion purchase of U.S. investment bank Donaldson, Lufkin & Jenrette by Credit Suisse Group bumps the Swiss bank up to the broker-dealer heavyweight division that includes industry leaders Goldman Sachs, Merrill Lynch and Morgan Stanley. It also keeps CS in step with its main Swiss rival, United Bank of Switzerland, who announced two months ago it was buying PaineWebber.

The next deal may be coming soon. Goldman Sachs, Merrill Lynch and Morgan Stanley managed to build international investment banking operations on their own; others may have to get out their checkbook, like Credit Suisse and UBS, if they want to catch up. Most likely to get swallowed: independent securities firms such as Bear Stearns, Lehman Brothers and J.P. Morgan. And at today's prices — Credit Suisse paid $90 for DLF shares that were going for $65 on Monday — that makes them must-swallows for investors too.