Enterprising investment banker Michael Klein is leaving no stone unturned. The newly appointed head of the Credit Suisse spin-off CS First Boston wants to bring his own company into the fold, raising questions of conflicts of interest.

Following the unveiling of Credit Suisse's new strategy on Thursday, finews.com called him the secret winner of its restructuring sweepstakes. Michael Klein, former Credit Suisse board member and starting next year, the top person responsible for the planned relaunch of investment bank CS First Boston.

The spin-off from the former Credit Suisse investment bank will combine the capital markets and advisory businesses.

Merging Firms 

Now, the «Financial Times» (paywall) reports, citing anonymous sources, that Klein wants to hold the reigns at CS First Boston even more tightly. He plans to merge his private New York investment banking boutique M Klein & Company with the Credit Suisse spin-off. That would give him a substantial stake in CS First Boston.

While the bank would retain a majority for the time being with the merger, Klein would cement his influence at the new company, not only as the operational head but also as a major shareholder.

Excellent Connections

There is already chatter about the boutique going public one day, and the moment when Klein could cash in. At the strategy update, Credit Suisse CEO Ulrich Koerner explicitly pointed out employees can invest in CS First Boston and that third parties can also acquire shares.

For Klein, who has excellent connections in the Middle East and likely played a central role in the Saudi National Bank's (SNB) capital injection to Credit Suisse, it is a double victory.

Spac Pioneer

The 59-year-old American is one of the pioneers of transactions with Spac shell companies, investment vehicles used to sell companies to the stock market through a back channel. Klein has set up several Spacs, some named after Winston Churchill of whom Klein is known admirer. He knows the mechanics of IPOs and mergers inside out, also advising on the merger of commodities groups Glencore and Xstrata in Switzerland.

Secondly, his further dealings with CS First Boston will be familiar territory, since he is not joining the new company as an external investor. He sat on the board of directors of Credit Suisse since April 2018, entrusted with developing the new strategy for its investment banking unit. Accordingly, he has been privy to the plans from the very beginning and knows all the strengths and weaknesses of CS First Boston.

Expert Opinion

All this poses the risk of conflicts of interest, which have not escaped the attention of the bank's top management. According to the «Financial Times,» Klein recused himself from decisions on the Credit Suisse investment bank to avoid any conflict of interest.

Likewise, Credit Suisse commissioned Deutsche Bank for an expert opinion on whether the merger with Klein's boutique was feasible according to the ground rules. According to the report, Klein himself had not previously intended to sell his eponymous M Klein & Company.

Capital Infusion

He is already putting out feelers to wealthy individuals and major investors to sell CS First Boston shares, with an unnamed investor wanting to invest $500 million.

Separately beyond its capital infusion into Credit Suisse, Saudi National Bank is also showing interest in the spin-off, which one might day act as a counterpart to well-known Wall Street boutiques such as Moelis & Company or Perella Weinberg Partners. These would subsequently be the financiers of his choice.

Here, too, it seems the enterprising Klein has left nothing to chance.