Credit Suisse announced this morning that it will be cutting 500 jobs in investment banking and “administrative support” divisions. Spokesman Bruce Corwin claimed the layoffs are due to shrinking client demand, though one might note the “coincidence” between the start of the tortuously long summer lines at the Shake Shack and a sudden reduction in headcount. Luckily, for any interns tasked with spending three quarters of his/her June/July/August waiting to order someone else’s Shroom Burger, we’re told that the cuts are worse than what’s being reported. Supposedly over half the real estate finance group “will be gone before the end of the day,” and there will be “severe carnage” across the entire firm. Severance packages are said to include two months pay, period.

On the bright side, let’s give it up for whoever’s idea it was to break the layoffs news (and the inevitability forthcoming news of blown earnings) on the same day rival Swiss bank UBS came out with a fifty page report detailing in easy bullet-proof form* how it went about systematically destroying value over the last year or so. That was smart. Very smart.

Credit Suisse Says It's Cutting 500 Jobs as Client Demand Wanes [Bloomberg]

*Helpful for anyone interested in following suit but unsure where to start.

A bunch of first years in Credit Suisse’s financial sponsors group—who supposedly haven't yet received their bonuses—were told today it’d be in everyone’s best interest if they stopped showing up to the office, circa now. Not technically laid off (that actually would’ve been more humane, cause at least it would mean a few well-deserved weeks of sleeping late and self-pity), the options offered to the Little Dougans were a. Get a job somewhere else b. Work back office for Credit Suisse outside the U.S. Either way, they can kiss their ridiculously short walk to the Shake Shack good bye, unless of course they’re planning on going with option A, and putting resumes in at the new, year-round Shack on the Upper West Side, which is now hiring.

It looks like Credit Suisse is getting ready to front-run the financing syndicate for the pending $20 billion buyout of Clear Channel Communications. Reuters reporters Jonathan “Keen Eye” Keehner and Brit beauty Megan Davies are reporting that a source tells them the Swiss bank has called potential investors regarding a chunk of the loans and asked what price they would be interested in paying.

Lenders typically attempt to make a coordinated effort to bring loans to market but Credit Suisse has already shown that it is willing to break with this practice. It previously sold off its commitments to the acquisition funding of Harrah's Entertainment Inc.

DealBreaker has been told by sources that Credit Suisse is eager to move its backlog of loan commitments so that it can participate in the financing of new deals at a time when the balance sheets of competitors may still be weighted down by unsold leveraged loans.

CS looks to sell Clear Channel loans - source [Reuters]

A lot of people are acting all shocked and dismayed over the little slip-up that happened at Credit Suisse. Saying they can believe something like this would happen over at Bear, where Jimmy Cayne spends all the money on chips and forgets to leave an IOU, and UBS, where God retroactively punishes, and Citi, where you've got eight people sharing one chair and nobody can even hear themselves think, but not at CS. Bad things don't happen to good people and bad things like multi-billion dollar mistakes certainly don't happen to good people who live within 200 feet of the Shake Shack. I've got news for those of you failing to "get" how Credit Suisse could suddenly come up with this gigantic fuck-up, worthy of even Citigroup's praise, when just last week Brady Dougan told reporters everything was cool-- there never was any "error." Well, never any error that D-gan didn't orchestrate himself.

And no, I'm not talking about fraud. Let's leave that up to Goldman, the professionals. Listen to D-gan's wording from yesterday's call: he defends the bank's controls, saying it was a "very good sign" the "errors" were caught "rapidly, and...by our internal processes.'' You can almost see him cocking his eyebrow slightly, just ever so slightly, too, can't you? That's because he's got a secret-- this whole thing was a drill. Not a joke, a drill. Dougan wanted to test the controls in real-time; make sure everything was up to code. Two something billion dollars was sacrificed now so that twenty something billion dollars doesn't have to be sacrificed later. Don't believe us? That's fine, you're entitled to your own (woefully misguided) opinion, and we know you'll come around eventually. Get into my head and it'll make sense. In the meantime, I challenge you all to come up with a more plausible explanation for what happened. It's an impossible task but nonetheless, the best answer wins lunch at the SS, on Carney.

Credit Suisse Suspends Traders After Mispricings [DealBook]

Dougan's Assurance of Shareholder `Comfort' Proves Immaterial [Bloomberg]

Credit Suisse is totally not going steady with Bear Stearns. Ruddy Brady Dougan—the Irishman who is somehow chief executive of the Swiss bank—told Credit Suisse bankers at the meeting of the Committee To Run The World in Davos, Switzerland that a deal to acquire Bear Stearns is a “non-starter,” according to Mark DeCambre at TheStreet.com.

But now everyone is awkward about it. Bear spokespeople decline to comment, look away embarrassed. The Swiss aren’t talking either, just staring down at their shoes mumbling about already having plans and such.

Credit Suisse CEO Squashes Bear Stearns Takeout Talk [TheStreet.Com]

Last week the Prime Minister of Qatar told CNBC's Maria Bartiromo that the Qatar Investment Authority was "doing something" with one of the Swiss banks, prompting many conclude that the rumors of a large capital injection were true. But the Prime Minister insisted that he wasn't taking a passive "capital injecting" role but had been out in the market buying stocks.

So which Swiss bank was the QIA "doing something" with and what were they doing? That coy little primte minister wasn't saying last week but this morning the Sunday Telegraph reports that the QIA is considering buying as much as a 5% stake in Credit Suisse. The rules of the Swiss stock exchange require disclosure if an investment his 3 per cent of the company, and so far no disclosure has been forthcoming.

The Telegraph puts this in context:

Sovereign wealth funds from Abu Dhabi, China, Dubai and Singapore have snapped up large stakes in banks such as Citigroup, Merrill Lynch, Morgan Stanley and UBS as they wilted under the weight of huge losses related to the implosion of the American sub-prime mortgage industry.

Any investment in Credit Suisse by the QIA or another sovereign investor would, however, be seen differently. Other than a $1.9bn writedown related to the sub-prime crisis announced in November, the bank has so far emerged comparatively unscathed from the credit crunch and has avoided the need to seek recourse to cash-rich foreign governments in order to recapitalise its balance sheet.

Qataris poised to snap up $3bn stake in Credit Suisse [Sunday Telegraph]

A (very) recently fired Credit Suisse employee tells us that “Every conference room on the CMBS floor has an HR representative working through people as they show up for work. Analysts and Associates seem to be the first out the door.” We understand that for the victims, this might seem like bad news, and yeah, you’ll probably feel weird about going to Shake Shack for a while, but the flipside is that you won’t have to deal with the embarrassment of being employed by Bear Stearns, when the two banks merge. In related news, Morgan Stanley has announced plans for its own population restructuring, as modeled after the redistribution project in the Sudan. If you have any other info, feel free to share, or not share, otherwise, enjoy this one on me:

Former Credit Suisse investment banker Hafiz Naseem pleaded not guilty yesterday to allegations that he was "the mastermind" behind a $7 million insider-trading ring in which he leaked details about nine deals that Credit Suisse was an adviser on, including the $45 billion leveraged buyout of TXU. The prosecution's foolproof rebuttal? Naseem had a gambling problem, and was up to his toes in $5,000 of debt, which is totally a plausible reason for committing a $7 million felony. Geniuses. (A lawyer for Naseem has denied these accusations as well, saying that while the $5,000 debt part of the story is true, the gambling part is not. It was a heroin thing, and was taken care of in a completely legal fashion.)

Credit Suisse Case Shocker [NYP]

So last week we broke the story of layoffs at Credit Suisse. At the time we were hearing that as many as 400 people were going to be laid off. When Credit Suisse finally formally announced the job cuts the next day, they claimed they were only cutting 150 positions.

So it seemed like the initial information we had from insiders at Credit Suisse overstated the depth of the cuts. Until today.

Today the gnomes of Madison Park said that they are cutting an additional 170 fixed income positions.

Total job losses at Credit Suisse so far: 320. Just 80 more and our first report will be proven correct!

The story of job cuts at Credit Suisse are all over the wires today. The official body count is 150. The most serious carnage came in an unsurprising area of originating and processing residential mortgages. The same areas that Lehman and Bear Stearns cut back.

These aren't considered "Wall Street" jobs by most folks in finance, and cuts those positions have been met with shrugs. If you've spent at least a couple of hours sober in the last two months, you probably knew mortgage origination was taking a haircut.

But at least some of those losing their jobs were New York based mortgage bond traders and sales staff, according to a Credit Suisse executive who spoke to the New York Post's Roddy Boyd. This is the first time we've heard the credit crunch monster chewed up some actual traders.

Good news is that the actual number of job cuts seems to be far smaller than the rumored four hundred. The better news is that lines might be a bit shorter at the Shake Shack. Those bond trader boys can eat.

Credit Suisse's A Bond Victim [New York Post]

Update 11:45 PM: DealBook is reporting that the investment bank is laying off about 150 workers from its mortgage-backed securities unit. Sourced to "a person with knowledge of the matter."

Earlier reports: Credit Suisse is rumored to have laid off a massive amount of New York employees today. The whisper number for the layoffs was 400 people in New York. Two people familiar with the situation say that within the bank that's the number people are talking about. DealBreaker has been given strong reason to believe that the actual number number is far lower. We're also told that no investment bankers have been laid off.

The layoffs are said to be a continuation of similar layoffs in mortgage related units at other investment banks, according to a knowledgeable source. The gossip had been that the structured products group took the hit. But we spoke to someone at the structured products desk at Credit Suisse who says that his group is still hiring.

This summer’s credit crunch and subsequent drying up of the leveraged buyout market, have sparked persistent rumors and predictions of job losses on Wall Street. It's clear that there are lots of jitters all across Wall Street.

Credit Suisse could not immediately be reached for comment. We'll update this space as we get more information.

Update 6:30: We're sending a reporter over there to see what's up. Will scout nearby bars for CSers drowning their sorrows.

Update 7:00 We're out of here. Check comments below for additional rumor-mongering. We'll check back in later tonight when we've had a chance to check our email again.

The banks have won the first big show down with private equity.

Last night several news outlets, including the Wall Street Journal, reported that private equity giant Kohlberg Kravis Roberts has signaled a willingness to include a financial covenant for the bank loan portion of the $24 billion of debt needed to finance its purchase of First Data.

First Data was largely viewed as a test case for some of the biggest, and riskiest, of the highly leveraged buyout deals that are scheduled to close in the next few weeks and months. The banks had been asking the private equity sponsors of the deals for concessions on the terms of the financing, saying it was having trouble syndicating the debt due to recent concerns about debt levels by many investors.

Finally, the National Pension Service (NPS) of South Korea is letting some of the bulge bracket banks into its $220 billion coffers. Morgan Stanley and Credit Suisse are the first to get a piece of the pie, although we hope they aren't that hungry. South Korea is condescending to let Morgan Stanley and Credit Suisse manage $500 million and $450 million respectively, for a whopping(ly disappointing) three years.

"Oh. Um...great. Well, thanks, I guess," said Morgan Stanley Investment Management's Asia Head, Blair Pickerell, while David Blumer, Credit Suisse's chief executive officer for asset management, reenacted the title track from Oliver! the musical ("Please, Sir, I want some more.").

Taking a note from its batty Northern neighbor, the NPS deals exclusively in five-year plans, from MarketWatch:

NPS plans to double the proportion of its offshore investment to 20% by 2012, when it expects to have assets worth KRW400 trillion, it said recently when it unveiled its 2007-2012 investment strategy. Global asset managers will manage all of its offshore investments during the period, but NPS plans to gradually increase its direct offshore investment after that. It also targets to further increase its international investment allocation to 50% sometime around 2040, when NPS's assets are forecast to reach KRW2,600 trillion.

NPS does plan on throwing scraps to some other major banks to manage funds in the future, although it's several five-year plans away.

Morgan Stanley, Credit Suisse to manage Korean national pension assets [MarketWatch via DealBook]

Lehman may have dominated day one of the JPMorgan Chase Corporate Challenge, but day 2 was more bearish for bankers, and bullish for GlaxoSmithKline. Day 2 also featured faster times overall.

GlaxoSmithKline was responsible for two explosive runs on the women’s side, courtesy of over the counter diet drug Alli, and the fact that the top two finishers, both from GSK, did not bring a pair of dark running shorts. Jessie Webb ran a 20:03 and Christa Meyer ran a 20:24, losing an impressive 7 pounds.

The only banker in the women’s top five was Sumitomo’s Katarina Melville who finished in third with a 20:27. Only a financial services employee, accustomed to much longer periods of getting shat on, was able to draft the GSK girls so closely.

Andy Bishop from GSK finished in fifth for the men with an 18:40.

The top two male finishers from last year squared off in the same race this time, and finished in the same order. Karl Dusen from AIG ran a 17:25 and John Traugott of Credit Suisse ran a 17:48. Dusen finished with the top overall time (too early to start “Dynasty” talk?), while Traugott’s time was 6 seconds off yesterday’s top finisher, placing him in third overall.

Click here to take a photographic journey of the race.

2007 New York results [JPMorgan Chase Corporate Challenge]

DealBook reports that Credit Suisse has added two new managing directors to its investment banking group. Tom Delbrook joins the firm’s general industrial and services group from UPS. Markus Pressdee is in as head of new infrastructure, having worked as a banker at UBS.

Credit Suisse Adds to Investment Banking Team [DealBook]

A Citigroup associate and a JP Morgan analyst put it best: there is no food in midtown that compares to the Shake Shack. It is worth the 20-plus block trek.

Senior Burger/Fries (And Milkshake, If You're Feeling Naughty) Correspondent Scott Bressler and I spent some QT up there today to check out a tip about Credit Suisse associates and analysts sending interns to wait on the arduously long but totally worth it S-Shack line.

One guy who's apparently not above waiting 45 minutes for his 'Shroom burger is newly crowned Credit Suisse chief executive Brady Dougan. We're assuming Brady bought his Diet Dr. Pepper--his noted drink of choice--at the Walgreens across the street. The S-Shack only sells regular DP. (Completely unacceptable. Come on, Danny Meyer, know your c-suite customers!).

We'll be back all next week between the hours of 12-2ish. Join us, and we'll all get lunch on Carney.

Federal prosecutors yesterday brought criminal charges against Pakistani banker Ajaz Rahim, who they allege traded on inside information leaked to him by a junior Credit Suisse banker. Rahim is a prominent figure in Pakistani investment banking, and until quite recently worked as the country head of investment banking of the Faysal Bank in Karachi.

The picture to the left appears to be of Rahim and Farook Bengali, the chief executive of Faysal. It was prominently placed on the bank's website until recently but has been removed. DealBreaker was not able to confirm that the picture is Rahim.

Earlier this month, federal prosecutors arrested Hafiz Mohammed Zubair Naseem, a junior associate in the energy group at Credit Suisse, on charges that he had leaked information on nine deals which his employer was involved with, including the buyout of Texas energy giant TXU. At the time of the arrest, prosecutors said that Naseem had leaked the information to a banker in Pakistan but did not name him. A little more than a week later, the SEC amended its civil complaint against Naseem and named Rahim as a defendant. The complaint alleges that in at least twenty-five instance, Rahim made trades several minutes after concluding phone calls with Naseem.

An arrest warrant has been issued for Rahim but his whereabouts are currently unknown. After the SEC named him as a defendant, Rahim’s lawyer , Spencer Barasch, had said that his client would not come the US for a deposition in the suit unless he received guarantees that he would not be arrested. Naseem had also said he planned to call Rahim as a witness for the defense in his own trial.

Through his lawyer, Rahim is denying any wrong doing. “Mr. Rahim looks forward to vigorously defending himself against the charges,” Barasch told DealBook yesterday.

U.S. Attorney Charges Pakistani Banker with Insider Trading [DealBook]
Banker faces insider trade charge [BBC]

Yesterday federal prosecutors charged Hafiz Muhammad Zubair Naseem, a Credit Suisse investment banker, with insider trading. He is accused of tipping off a banker in Pakistan with information about nine corporate acquisitions, including the TXU buyout.

It appears that Naseem was more or less a full-time insider trading professional, using his position—as well as his office phone—at Credit Suisse to obtain information about deals and leak them to his foreign contact from the very start. The SEC says he began his lawbreaking “[i]immediately upon obtaining employment at Credit Suisse in March 2006.”

But he doesn’t seem to have been especially clever about it. This wasn’t an elaborate system of dead-drops, or tips passed along through cut-outs. Naseem was simply calling his banker-buddy in Pakistan with the information. Did he really think he’d get away with that for very long? Apparently the answer is yes.

The good news is that Credit Suisse seems to have played a role in catching him. “We immediately brought the activities of this employee to the attention of the relevant authorities,” the Swiss bank said in a statement. Since this type of insider trading is basically theft from his employers and clients, it is good to see that Credit Suisse apparently helped uncover his alleged activities.

Naseem is 37 years old, and a Pakistani national. He worked for the Global Energy Group at Credit Suisse. In addition to TXU, Naseem is accused of passing along tips involving Hydril Co., Trammell Crow Co., John H. Harland Co., Energy Partners Ltd., Veritas DGC Inc., Jacuzzi Brands Inc., Caremark Rx Inc. and NorthWestern Corp. He is charged with one count of conspiracy and 25 counts of securities fraud.

Credit Suisse Employee Arrested, Charged With Insider Trading [Bloomberg]

The results of yesterday’s “Which bank has the dirtiest working conditions” poll are in. Some of the results may surprise you, some may not. If you actually read what we wrote about Bear Stearns’s in-house cafeteria and its 42 health-code points violations, for instance, you won’t (or shouldn’t) be surprised to learn that it landed in the top three (and if you read the part about contaminated food and inadequate levels of personal cleanliness and are still stunned, don’t invite us over to your home any time soon). If you didn’t know, though, that the 85 Broad is basically one step away from a gas station restroom on the Garden State Parkway (going South), you might be a bit caught off guard to learn that the Kingdom also landed at the top of the list of shame (all that glitters is not gold, indeed). Let’s examine the cold hard (dirty, disgusting, scatological) facts now.

We haven’t heard this anywhere else—which could conceivably mean it’s old news—but what the hey, it’s a short week and we’re feeling kind of frisky and peppier than usual thanks to three extra espresso shots in our standard iced coffee, etc., so here it is: is Jim Healy, head of fixed income at Credit Suisse about to resign from the bank out of resentment over his new place in the CS hierarchy, following the promotion of Diet Dr. Pepper-swilling Brady Dougan to chief executive and the hire of Michael Ryan from Goldman Sachs as head of securities? According to Dan Freed at Investment Dealers’ Digest, Healy’s hurt feelings may be more deep-seated than just the recent shake-up, more along the lines of Britney-pulling-a-Sinead-O’Connor-over-the-weekend-was-the-straw-that-broke-the-K-Fedian-camel’s-back and not exactly something that—let’s be honest—we weren’t all calling back in ’05 (or, you know, after Crossroads). Anyway, Freed writes:

While Healy and Dougan are long-time colleagues, there is friction between them, says the executive familiar with Healy's thinking. That is because Healy supported a decision by former CEO John Mack, now head of Morgan Stanley to send Dougan to London in March 2004, the executive says. That decision was widely viewed as a demotion for Dougan, but, according to news reports at the time, Dougan turned the tables on Mack, using his position in London to build relations with Credit Suisse influentials in Zurich. The board ousted Mack three months later and Dougan moved back to New York to become CEO of the investment bank. Spokespeople for Credit Suisse declined to make Dougan or any other executives available for comment, and they also declined all comment.

The hire of Ryan, announced Feb. 5, was effectively a demotion for Healy, as it inserted a new layer of management between him and Dougan. Prior to Ryan's recuitment, Healy had reported directly to Dougan as head of fixed income, alongside equities head Tony Ehinger. Now Ryan, 39, will supervise Healy and Ehinger. Healy is especially miffed because Ryan has little or no fixed income experience, says the executive familiar with his thinking. Ryan did not respond to a call or email at Goldman, where he is still working for now.

Interestingly—or interestingly-ish—enough, Healy, while declining to comment to IDD, was reachable in his office on the evening of February 14. So perhaps the impetus for the possible resignation is coming more from Mrs. Healy, who’s “sick and tired of having a relationship with [your] Blackberry!” than any chafing with Dougan et al. Or not. Your guess is as good as—or maybe better than—ours!

(We’re self-deprecating today. Roll with it).

Credit Suisse Fixed Income Chief to Resign? [IDD]