credit-suisse Business Review 2006

Credit Suisse

Bankingin Progress

Business Review 2006

CREDIT SUISSE GROUPParadeplatz 88070 ZurichSwitzerlandTel. +41 44 212 16 16Fax +41 44 333 25 87

www.credit-suisse.com 5520

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Highlights 2006

CHF 38,603 millionCredit Suisse Group’s net revenues amounted to CHF 38,603 million in 2006, an increase of 27% compared to 2005.

CHF 11,327 millionNet income for 2006 totaled CHF 11,327 million, up 94% compared to 2005.

CHF 8,281 millionIncome from continuing operations was CHF 8,281 million, up 83% compared to 2005.

CHF 95.4 billionIn 2006, Credit Suisse Group recorded net new assets of CHF 95.4 billion, compared to CHF 57.4 billion in 2005.

CHF 1,485.1 billionAssets under management stood at CHF 1,485.1 billion as of December 31, 2006, up 12.6% from December 31, 2005.

44,871At year end 2006, Credit Suisse Group employed 44,871 people, of which 20,353 were in Switzerland and 24,518 were in more than 50 countries around the globe.

From left to right:

CoverStephen PakCustomized Solution ManagementAsset Management Division, Hong Kong

Christina KimEquity Capital MarketsInvestment Banking Division, Hong Kong

Jennifer TheunissenProject Services Asia-Pacifi cAsset Management Division, Hong Kong

Gerard BichonPhilippinesPrivate Banking Division, Hong Kong

Back CoverGary KwokNon-Japan Asia Corporate FinanceInvestment Banking Division, Hong Kong

Karen LeungGreater ChinaPrivate Banking Division, Hong Kong

A Longstanding Commitment to AsiaHong Kong – More than seven million people live and work in Hong Kong. Now the second largest financial center in Asia, Hong Kong is strategically positioned as the gateway to China and is, therefore, of key importance to globally ac-tive companies such as Credit Suisse that are eager to par-ticipate in this dynamic growth market. Credit Suisse began operating in Hong Kong in 1955 but its presence in the Chinese market dates back to 1784, when the forerunner of Credit Suisse First Boston – the Massachusetts Bank – financed the very first trading mission from America to China. Some 220 years later, Credit Suisse was part of a consor-tium that successfully executed the USD 21.9 billion IPO of the Industrial and Commercial Bank of China (ICBC) in the largest transaction of this type to date.

More than 1,000 people work for Credit Suisse in Hong Kong in the two tallest skyscrapers pictured on the left and right in the photo. The Asia-Pacific region has played a pivotal role in the establishment of the integrated bank. With its Investment Banking, Private Banking and Asset Management businesses, Credit Suisse is ideally placed to meet the growing needs of clients in Asia and in particular to capitalize on the attractive business opportunities created by China’s economic success.

Credit Suisse Group Financial Highlights

Credit Suisse Group financial highlights

Year ended December 31, in CHF m, except where indicated 2006 2005 2004

Consolidated statements of income

Net revenues 38,603 30,489 27,033

Income from continuing operations 8,281 4,526 4,996

Income from discontinued operations, net of tax 1) 3,070 1,310 639

Net income 11,327 5,850 5,628

Return on equity 27.5% 15.4% 15.9%

Earnings per share, in CHF

Basic earnings per share from continuing operations 1) 7.53 3.98 4.25

Basic earnings per share 10.30 5.17 4.80

Diluted earnings per share from continuing operations 1) 7.19 3.90 4.23

Diluted earnings per share 9.83 5.02 4.75

Cost/income ratio – reported 63.2% 76.2% 72.4%

Cost/income ratio 2) 69.6% 81.6% 75.4%

Net new assets, in CHF bn 95.4 57.4 28.2

December 31, in CHF m, except where indicated 2006 2005

Assets under management, in CHF bn 1,485.1 1,319.4

Consolidated balance sheet

Total assets 1,255,956 3)1,339,052

Shareholders’ equity 43,586 42,118

Consolidated BIS capital data

Risk-weighted assets 253,676 232,891

Tier 1 ratio 13.9% 11.3%

Total capital ratio 18.4% 13.7%

Number of employees

Switzerland – Banking 20,353 20,194

Outside Switzerland – Banking 24,518 24,370

Winterthur 0 3) 18,959

Number of employees (full-time equivalents) 44,871 63,523

Stock market data

Share price per registered share, in CHF 85.25 67.00

Share price per American Depositary Share, in USD 69.85 50.95

Market capitalization 90,575 75,399

Market capitalization, in USD m 74,213 57,337

Book value per share, in CHF 41.02 37.43

Par value reduction, in CHF 0.46 4) –

Dividend per registered share, in CHF 2.24 4) 2.00

1) Before extraordinary items and cumulative effect of accounting changes. 2) Excludes minority interest revenues of CHF 3,663 million, CHF 2,074 million and CHF 1,088 million andminority interest expenses of CHF 103 million, CHF 32 million and CHF 16 million in 2006, 2005 and 2004, respectively, from the consolidation of certain private equity funds and otherentities in which the Group does not have a significant economic interest in such revenues and expenses. 3) Impacted by the sale of Winterthur on December 22, 2006. 4) Proposalof the Board of Directors to the Annual General Meeting on May 4, 2007.

Financial calendar

First quarter results 2007 Wednesday, May 2, 2007

Annual General Meeting Friday, May 4, 2007

Dividend payment Thursday, May 10, 2007

Par value reduction payment Wednesday, July 18, 2007

Second quarter results 2007 Thursday, August 2, 2007

Third quarter results 2007 Thursday, November 1, 2007

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Cautionary statement regarding forward-looking informationThis Business Review contains statements that constitute forward-looking statements within the meaning of the Private Securities Litigation Reform Act. In addition, in the future we, and others on our behalf, may make state-ments that constitute forward-looking statements. Such forward-looking state-ments may include, without limitation, statements relating to the following:– Our plans, objectives or goals; – Our future economic performance or prospects; – The potential effect on our future performance of certain contingencies; and – Assumptions underlying any such statements.

Words such as “believes,” “anticipates,” “expects,” “intends” and “plans” and similar expressions are intended to identify forward-looking statements but are not the exclusive means of identifying such statements. We do not intend to update these forward-looking statements except as may be required by applicable securities laws. By their very nature, forward-looking statements involve inherent risks and uncertainties, both general and specific, and risks exist that predictions, fore-casts, projections and other outcomes described or implied in forward-looking statements will not be achieved. We caution you that a number of important factors could cause results to differ materially from the plans, objectives, ex-pectations, estimates and intentions expressed in such forward-looking statements. These factors include:– Market and interest rate fluctuations; – The strength of the global economy in general and the strength of the economies of the countries in which we conduct our operations in particular; – The ability of counterparties to meet their obligations to us; – The effects of, and changes in, fiscal, monetary, trade and tax policies, and currency fluctuations; – Political and social developments, including war, civil unrest or terrorist activity; – The possibility of foreign exchange controls, expropriation, nationalization or confiscation of assets in countries in which we conduct our operations; – The ability to maintain sufficient liquidity and access capital markets; – Operational factors such as systems failure, human error, or the failure to implement procedures properly; – Actions taken by regulators with respect to our business and practices in one or more of the countries in which we conduct our operations; – The effects of changes in laws, regulations or accounting policies or practices; – Competition in geographic and business areas in which we conduct our operations; – The ability to retain and recruit qualified personnel; – The ability to maintain our reputation and promote our brand; – The ability to increase market share and control expenses; – Technological changes; – The timely development and acceptance of our new products and services and the perceived overall value of these products and services by users; – Acquisitions, including the ability to integrate acquired businesses successfully, and divestitures, including the ability to sell non-core assets;– The adverse resolution of litigation and other contingencies; and – Our success at managing the risks involved in the foregoing. We caution you that the foregoing list of important factors is not exclusive. When evaluating forward-looking statements, you should carefully consider the foregoing factors and other uncertainties and events, as well as the in-formation set forth in our Form 20-F Item 3 – Key Information – Risk factors.

For purposes of the Business Review, unless the context otherwise requires, the terms “Credit Suisse”, “the Group”, “we”, “us” and “our” mean Credit Suisse Group and its consolidated subsidiaries and the term “the Bank” means Credit Suisse, the Swiss bank subsidiary of the Group, and its consolidated subsidiaries.

Enquiries

Credit Suisse GroupInvestor RelationsIan Roundell, +41 44 333 17 48Marc Buchheister, +41 44 333 31 69Fax +41 44 333 25 87

Credit Suisse GroupMedia RelationsCharles Naylor, Andrés LutherTel. + 41 44 333 88 44Fax +41 44 333 88 77

Editorial: Credit Suisse Group, Corporate CommunicationsPhotography: Thomas Eugster, Berlin andMarc Wetli, Zurich (pages 7 and 10)Design: www.arnolddesign.chProduction: Management Digital Data AG, ZurichPrinter: NZZ Fretz AG, Zurich

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Share Performance

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Credit SuisseBusiness Review 2006

For a detailed presentation of Credit Suisse Group’s 2006 financial statement, its company structure, risk management, an in-depth review of the operating and financial results and additional information on corporate governance, please refer to the Annual Report 2006 and the Supplemental Information 2006.

A sparing and sustainable approach to dealing with nature’s resources is important to Credit Suisse. For this reason the Business Review 2006 was printed on paper that is made from at least 50 percent recycled fibers. And at least 17.5 percent of the fibre used to manufacture this paper comes from forests certified by the Forest Stewardship Council (FSC).

Credit Suisse GroupAnnual Report 2006

Investment Banking • Private Banking • Asset Management

Proof 3 as of12.03.2007

Credit Suisse GroupSupplemental Information 2006

Investment Banking • Private Banking • Asset Management

Proof 3.as of 13.03.2007

Mixed SourcesProduct group from well-managed forests and other controlled sourceswww.fsc.org Cert no. SQS-COC-100022© 1996 Forest Stewardship Council

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Credit Suisse Business Review 2006 �

8 Message from Walter B. Kielholz, Chairman of the Board of Directors

10 Message from Oswald J. Grübel, Chief Executive Officer

14 The Economic Impact of the Emerging Markets Is Growing The source of economic growth for the global economy in the years to come

18 International Diversification of Capital Flows Is on the Rise Emerging countries are increasingly taking part in global financial flows

22 Banking in the 21st Century New challenges for the financial services industry

28 The World Economy in 2007 Five members of the Global Economic and Strategy Group discuss trends

34 Global Infrastructure Gains Investor Interest Urbanization and globalization boost the demand for infrastructure

40 IT Transforms the Finance Industry Information Technology ( IT ) has completely transformed the banking business

44 Credit Suisse Group in Society

48 Executive Boards of Credit Suisse Group and Credit Suisse

52 Corporate Governance

56 The Strategy of Credit Suisse

58 Key Initiatives for Profitable Growth

60 Summary Operating Review: Credit Suisse Group and Credit Suisse

64 Statements of Income

65 Balance Sheets

Our Expertise

Company Information

Operating Review

Investment Banking

Credit Suisse at a Glance

In its Investment Banking business, Credit Suisse offers securities products and financial advisory services to users and suppliers of capital around the world. Operating in 57 locations across 26 countries, Credit Suisse is active across the full spectrum of financial services products including debt and equity underwriting, sales and trading, mergers and acquisitions, investment research, and correspondent and prime brokerage services.

As one of the world’s leading banks, Credit Suisse provides its clients with investment banking, private banking and asset management services worldwide. Credit Suisse offers advisory services, comprehensive solutions and innovative products to companies, institutional clients and high- net-worth private clients globally, as well as retail clients in Switzerland. Credit Suisse is active in over 50 countries and employs approximately 45,000 people. Credit Suisse’s parent company, Credit Suisse Group, is a leading global financial services company headquartered in Zurich. Credit Suisse Group’s registered shares (CSGN) are listed in Switzerland and, in the form of American Depositary Shares (CS), in New York.

Further information about Credit Suisse can be found at www.credit-suisse.com.

� Credit Suisse Business Review 2006

Asset ManagementPrivate BankingIn Private Banking, Credit Suisse provides comprehensive advice and a broad range of investment products and services tailored to the complex needs of high-net-worth individuals globally. Wealth management solutions include tax planning; pension planning; life insurance solutions; wealth and inheritance advice, trusts and foundations. In Switzerland, Credit Suisse supplies banking products and services to private banking clients as well as to business and retail clients.

In its Asset Management business, Credit Suisse offers products across the full spectrum of investment classes, ranging from equities, fixed income and multiple-asset class products, to alternative investments such as real estate, hedge funds, private equity and volatility management. Credit Suisse’s asset management business manages portfolios, mutual funds, and other investment vehicles for a broad spectrum of clients ranging from governments, institutions and corporations to private individuals. With offices focused on asset management in 18 countries, Credit Suisse’s asset management business is operated as a globally integrated network to deliver the bank’s best investment ideas and capabilities to clients around the world.


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A Record PerformanceCredit Suisse delivered a record performance in 2006. The new integrated banking model proved successful and en-abled it to capture the growth opportunities resulting from high levels of client activity, while significantly improving its profitability. Net income for the year increased by 94 percent to CHF 11.3 billion, including a net capital gain of CHF 1.8 billion from the sale of Winterthur. Basic earnings per share were CHF 10.30. Income from continuing operations was CHF 8.3 billion or CHF 7.53 per share. The return on equity improved significantly to 27.5 percent from 15.4 percent in 2005, and Credit Suisse generated net new assets of CHF 95.4 billion during the year.

Launch of the Integrated Global OrganizationThe new, integrated global organization was officially launched on January 1, 2006. The integrated structure provides a strong platform from which Credit Suisse can offer comprehensive financial solutions to its clients, cre-ate synergies for revenue growth, increase efficiency and enhance shareholder value. The structure includes the three divisions, Investment Banking, Private Banking and Asset Management, as well as a regional structure, which allows it to leverage resources and to develop cross- divisional strategies that span the Americas, Asia-Pacific, Europe, Middle East and Africa (EMEA) and Switzer- land. The divisions and regions are supported by the Shared Services functions, which provide a range of cor-porate services and business support. Credit Suisse ex-pects to generate significant revenue and cost synergies in the coming years as a result of its new business model and structure.

Credit Suisse underpinned the launch of its integrated global structure with the introduction of a single brand and new logo. The Credit Suisse brand is based on its 150-year tra-dition of banking excellence, which has provided the foun-dation to enable it to develop innovative solutions for its cli-ents – a tradition to innovate.

Expansion of Credit Suisse’s Global FootprintIn addition to maintaining a close proximity to its cli-

ents in mature markets, Credit Suisse is also committed to growing its footprint in emerging markets in order to meet the increasing demand for innovative and integrated finan-cial services and advice. In 2006, Credit Suisse expanded its operations in a number of key growth markets by open-ing offices, expanding its onshore activities, recruiting staff and extending its range of product offerings.

Credit Suisse strengthened its footprint in a range of emerging markets such as Brazil, Russia, South Africa, Qatar, Lebanon, China, Vietnam, Indonesia, Australia, and India.

Latin America is an important growth market for Credit Suisse. In December 2006, Credit Suisse announced that it had signed an agreement to acquire a majority inter-est in Hedging-Griffo, a leading independent asset manage-ment and private banking company in Brazil. This acquisition will significantly strengthen Credit Suisse’s onshore asset management businesses, expand its private banking opera-tions and complement its leading position in investment bank-ing in the Brazilian market.

In Russia, Credit Suisse opened an onshore wealth management business in Moscow in addition to its long- established investment banking operation in this market. The bank expanded its presence in the Middle East last

A Landmark Year for Credit Suisse2006 was a landmark year for Credit Suisse, which began with the launch of its new integrated global structure and the introduction of a single brand and logo. The sale of its insurance business, Winterthur, was another key strategic step during the year, which will enable Credit Suisse to focus fully on its core banking business in the future. The implementation of the bank’s new strategic positioning coincided with a series of events to mark its 150 th anniversary.

Credit Suisse Business Review 200� �

year by obtaining a license to operate in the Qatar Financial Centre. This license allowed Credit Suisse to open a subsid-iary in Doha, from which it now offers investment advisory services and products to wealthy individuals and institutional clients. A new subsidiary also opened in Lebanon, from which Credit Suisse supplies a comprehensive range of local and global products to clients in this market. In Africa, Credit Suisse founded a partnership with South Africa’s Standard Bank in order to further grow its equities business. Finally, in Asia-Pacific, Credit Suisse obtained an investment manager license in Indonesia and launched private banking operations in Australia. Credit Suisse continued to develop its business in India. India is one of the most promising mar-kets, with significant business opportunities in wealth man-agement and investment banking.

New Business InitiativesCredit Suisse believes that the establishment of joint ventures creates valuable opportunities for business development and consequently launched a number of new business initiatives around the globe in conjunction with first-rate partners dur-ing 2006. One example is its joint venture with South Korea’s Woori Asset Management, which combines Woori’s distribu-tion network with Credit Suisse’s expertise and knowledge of the global markets.

In the area of infrastructure, Credit Suisse and Gen-eral Electric established a joint venture − Global Infrastruc-ture Partners − with USD 1 billion in funds earmarked for global infrastructure investments in the areas of energy, transportation and water. Global Infrastructure Partners’ first transaction was the acquisition of London City Airport in con-junction with the US insurer AIG. In the area of commodities,

Credit Suisse entered into a strategic alliance with Glencore to create a derivatives and structured products trading busi-ness in oil and metals. In the field of alternative energy, the bank formed an investment partnership with the Abu Dhabi Future Energy Company.

Sale of the Insurance BusinessCredit Suisse’s insurance business, Winterthur, was sold to the French insurer AXA in 2006 for cash consideration of CHF 12.3 billion. Winterthur had been managed as a financial investment since 2004, after Credit Suisse decided to focus on the banking business.

Integration of the Independent Private BanksIn April 2006, Credit Suisse announced plans to merge its four independent private banks, Clariden, Bank Leu, Bank Hofmann and BGP Banca di Gestione Patrimoniale, as well as the securities dealer Credit Suisse Fides, to form a sin-gle private bank, Clariden Leu, effective January 1, 2007. The new bank focuses on serving wealthy clients in Switzer-land and selected international markets. 150th Anniversary Celebrations2006 marked the 150th anniversary of the founding of Credit Suisse by the Swiss pioneer and innovator Alfred Escher. In addition to establishing the original “Schweize-rische Kreditanstalt” bank, Escher was the inspiration behind other Swiss landmark institutions such as the Gotthard Rail-way, which celebrates its 125th anniversary in 2007, the insurer Swiss Life, and the Federal Institute of Technology (ETH) in Zurich. Gala events in Zurich, New York, Hong Kong, and London were the highlights in a series of anniversary activities with the theme‚ “150 Years of Tradition and Innova-tion” held by Credit Suisse throughout the year.

Continuity ensured: Chairman of Credit Suisse’s Board of Direc-tors Walter B. Kielholz (center), with Brady W. Dougan (left), who will succeed Oswald J. Grübel (right) as CEO on May 5, 2007.

Dear shareholders, clients and colleaguesIn 2006, Credit Suisse celebrated its long history of banking expertise and inno-vation in the context of its 150th anniversary, while building a solid platform for its future growth. It is particularly satisfying to note that 2006 was also the year in which we reported our best ever financial result, confirming the success of our efforts to realign the business over the last three years.

Our 150 years of banking experience have provided us with a strong foun-dation that allows us to constantly look ahead and anticipate the needs of our clients in a rapidly changing environment. It was this experience that enabled us to quickly adapt to the impact of globalization on our industry and to devise an appropriate response in the form of our integrated global banking model that mir-rors the increasingly integrated global marketplace in which we operate. As a re-sult, we began repositioning our business and − as one of the most highly inte-grated banks worldwide − now have the necessary structure, flexibility and re-sources to satisfy our clients’ demands for holistic solutions and global execution capabilities.

Our efforts to create an integrated global bank in 2006 included the sale of our insurance business, Winterthur, to AXA for cash consideration of CHF 12.3 billion. This key strategic step provided us with the best opportunity to deliver the full value of Winterthur to our shareholders in a single transaction, while provid-ing an opportunity to the future growth of the business within a leading global insurance company. The creation of an integrated bank and the sale of Winter-thur mean that we now have a very clear strategic focus and can concentrate our capital and resources on our banking business and the global expansion of Credit Suisse.

We already have a leading presence in Europe and North America, as well as in rapidly developing emerging markets such as Brazil, Mexico, China, Russia, and the Middle East. Going forward, we will continue to leverage our position in our existing markets and will target new high-growth regions through-out the world.

Our integrated model not only provides us with a platform for growth, it also enables us to generate significant operating efficiencies, to increase the scale of our business and to generate the necessary cash flow and capital to fund our ambitious growth plans.

The Strongest Capital Base in Our HistoryCredit Suisse today has the strongest capital base in its history. At the Annual General Meeting on May 4, 2007, the Board of Directors will propose a further share buyback program of up to CHF 8 billion over three years. It will also pro-pose a distribution of CHF 2.70 per share for the financial year 2006, comprising a dividend of CHF 2.24 per share, the latter of which returns capital from the sale of Winterthur to our shareholders. This compares to a dividend of CHF 2.00 per share for the financial year 2005.

In addition, the sale of Winterthur has provided us with additional capital to invest in the growth of our business. Of the total capital from the Winterthur sale, the majority − CHF 7.5 billion − will be invested in the organic growth of the business as well as in smaller and medium-sized acquisitions, joint ventures and partnerships. Our plans for organic growth include investments in our highly prom-ising alternative investments, commercial mortgage-backed securities and lever-age finance businesses, as well as in the expansion of our lending activities and our mortgage business for private banking clients.

We have set aside CHF 3.5 billion for targeted acquisitions of smaller and medium-sized institutions such as the Brazilian asset manager and private bank

Message from the Chairman

Walter B. KielholzChairman of the Board of DirectorsCredit Suisse Group

� Credit Suisse Business Review 2006

Hedging-Griffo, which we signed an agreement to purchase in the fourth quarter of 2006. Hedging-Griffo will complement our already strong Investment Banking operations in Brazil and enable us to offer asset and wealth management ser-vices and products to onshore clients, thus leveraging our integrated banking model in this market.

Strong Leadership for Sustained SuccessThe future of every company is charted by its leaders. Having successfully posi-tioned Credit Suisse for future growth, the Board of Directors had to reach an important decision regarding the bank’s future leadership in 2006. After more than 38 years with the company, Oswald J. Grübel informed the Board last year of his intention to retire from his position as Chief Executive Officer of Credit Suisse Group. He and his management team have worked relentlessly over the last three years to create a new organization and the integrated business model which leverages the expertise of the entire bank, combining its clear cli-ent focus with its truly global reach. Oswald J. Grübel has made an enormous contribution to the success of Credit Suisse, for which the Board of Directors owes him considerable thanks.

We are very fortunate that we were able to appoint a highly qualified and experienced successor to Oswald J. Grübel from within our management team. Brady W. Dougan, who has been with Credit Suisse for 17 years, will assume the position of CEO of Credit Suisse Group on May 5, 2007. He is currently the head of our Investment Banking business, which delivered a particularly pleasing per-formance in 2006 following its realignment under his expert guidance. As a mem-ber of the Executive Board, Brady W. Dougan was also instrumental in designing our integrated banking model. Together with his colleagues in Credit Suisse’s se-nior management team, he will continue to build on the strengths of our organi-zation and business model in the future. I personally look forward to working to-gether with Brady W. Dougan and his management team.

Today, the global economy offers outstanding growth opportunities for in-ternationally active financial institutions such as Credit Suisse. We believe that we have the right organizational structure and business model to capture this po-tential. At the same time, we are convinced that the systematic execution of our strategy will pave the way for sustained earnings growth in 2007 and beyond. 2006 was a vitally important year for Credit Suisse. We are confident that as we enter our next growth phase, we have the necessary financial strength, human capital and expert leadership to deliver on our ambitious targets.

Yours sincerely,

Walter B. KielholzMarch 2007


Dear shareholders, clients and colleagues2006 was a record year for Credit Suisse. We reported a 94% increase in net in-come to CHF 11.3 billion compared to 2005. This included a net capital gain of CHF 1.8 billion from the sale of Winterthur, which was recorded in the fourth quar-ter. Income from continuing operations was CHF 8.3 billion or CHF 7.53 per share in 2006, compared to CHF 3.98 per share in 2005. Basic earnings per share were CHF 10.3. The return on equity improved significantly to 27.5%, from 15.4% in 2005. Credit Suisse gathered CHF 95.4 billion of net new assets in 2006, compared to CHF 57.4 billion in 2005.

In 2006, Credit Suisse demonstrated its ability to embrace change and to achieve success in a rapidly developing global marketplace. In addition to deliver-ing a record result and building a strong integrated platform for future growth, we tapped into many of the attractive new opportunities resulting from globalization and technological advances.

I want to focus on just four examples: the rise of the emerging markets, the growing demand for infrastructure investments, the need for customized cli-ent solutions and the importance of accessing global talent. These areas offer sig-nificant opportunities for integrated and globally active financial institutions such as Credit Suisse.

Globalization is fuelling the rise of the emerging markets, and our clients in these markets are becoming more global in the way they think and grow. As a result, they need a dedicated partner who is close to and understands their re-quirements, and who can provide them with access to the global markets and capital. Credit Suisse is ideally positioned to fulfill this role. Over the years, we have established a leading presence in dynamic markets such as Brazil, Mexico, China, Russia and the Middle East. We are committed to achieving rapid growth in these regions by capitalizing on our Investment Banking, Private Banking and Asset Management offering.

Our emerging market capabilities are illustrated by a number of landmark deals on which we advised in 2006, including the USD 12.1 billion acquisition of Corus Steel in the UK by Tata Steel of India. We used our expertise in the com-modities industry and our skill in developing innovative financing solutions to help Tata Steel to realize its vision of global growth. We were also a joint bookrunner in the USD 21.9 billion IPO of China’s leading commercial bank, the Industrial and Commercial Bank of China Limited, in the largest transaction of this type to date. Our particular strength in this deal was our ability to reach out to investors in the US, Europe and Asia, including institutions and high-net-worth individuals.

As our clients develop an increasingly global outlook, their needs are be-coming more complex. One of the many ways in which we are meeting the in-creasingly sophisticated needs of high-net-worth individuals is through our Solu-tion Partners team. Operating in financial centers around the globe from Zurich to Singapore, this team draws on the expertise of the entire bank to provide cus-tomized solutions that go well beyond our traditional competencies in Private Banking. Sharing expert knowledge, developing innovative solutions for complex client needs and executing them on a global scale – that is what the integrated Credit Suisse is all about.

Globalization, urbanization and changing demographics will increase the need for infrastructure investments in the coming years. As a result, infrastruc-ture will become an increasingly important theme in banking – as an alternative asset class, for example. In anticipation of this future trend, in May 2006 Credit Suisse established Global Infrastructure Partners, a joint venture with General Electric. This venture has funds earmarked for global infrastructure investments in the areas of energy, transportation and water. This was just one

Message from the CEO

Oswald J. GrübelChief Executive OfficerCredit Suisse Group

10 Credit Suisse Business Review 2006

step we took last year to further strengthen Credit Suisse’s world-leading alter-native investment capabilities.

To be truly global in today’s environment, we need to be able to access the best talent on an international scale that mirrors the global spirit of our bank. We have therefore established “Centers of Excellence” in the US, Singapore, India and Poland. These centers enrich our talent, and give us the flexibility to meet a wide variety of needs across product areas and time zones and enhance the way we perform in terms of both innovation and efficiency. Sophisticated technology is key to the success of these centers. In addition, our leading Business School in Singapore demonstrates our commitment to developing a global workforce that can meet the diverse needs of our international clientele.

These four areas of opportunity have one thing in common; they are all emerging against a backdrop of globalization and new technology and Credit Suisse is benefiting from these developments. I believe that these two trends, which have changed the banking industry beyond recognition in the last ten years, will create dynamic markets for the foreseeable future. And the adjust-ments we made to our business in 2006 – which have made Credit Suisse one of only a few truly integrated banks with a global presence – have now provided us with a distinct competitive advantage.

By combining our leading Investment Banking, Private Banking and Asset Management businesses in 2006 and sharpening our focus on cooperation and knowledge-sharing, we are able to provide complete solutions to institutional in-vestors, high-net-worth individuals, governments and corporations globally. Our integrated model is clearly working: demand for our integrated offering of bank-ing solutions is increasing rapidly in today’s competitive marketplace.

This Business Review aims to provide a snapshot of the year 2006 at Credit Suisse. We want to show you how we have achieved the best result in our history and how we have created an integrated global bank. In particular, it is the expertise, innovation, global perspective and experience of our people that is driving the success of our bank and enabling us to create value for our share-holders and clients. That’s why, in the following pages, we will introduce you to some of the 45,000 talented individuals in our organization and share their insights, experiences and expertise with you.

Yours sincerely,

Oswald J. GrübelMarch 2007

Credit Suisse Business Review 2006 11

Participating in the Growth of the Emerging Markets

New York – The emerging markets are home to over half of the world’s population and are an important source of economic growth in the 21st century. The international banking industry plays a central role in the transfer of capital from industrialized economies to the emerging mar-kets, thus opening up new business and investment opportunities.

Credit Suisse has a leadership position in some of the world’s most dynamic emerging markets that dates back more than 20 years. Today, its integrated banking model serves as an effective platform from which to capture the attractive growth opportunities in the “E7” economies, comprising China, India, Brazil, Russia, Indonesia, Mexico, and Turkey. The bank’s Emerging Markets teams around the globe ad-vise sovereign and private sector clients in these regions on the under-writing and arrangement of securities offerings as well as a wide range of strategic transactions, including mergers and acquisitions (M&A) and major government privatizations.

The New York-based Emerging Markets team led the highest volume of new Latin American equity deals and M&A transactions on Wall Street in 2006, while the Hong Kong team was the number one underwriter of equities in China. With these teams, Credit Suisse com-pleted a wide range of major transactions in the emerging markets last year, including the USD 19.2 billion acquisition of Inco Limited by Bra-zil’s Companhia Vale do Rio Doce’s (CVRD). In another landmark deal, Credit Suisse advised on the USD 12.1 billion acquisition of Corus Steel in the UK by Tata Steel of India. The New York-based team is pictured here at a port in Brooklyn. International cargo volumes for ports in the area hit record levels in 2005, fuelled primarily by increased trade in the emerging markets.

From left to right:

Alejandro JankelevichEmerging Markets, Local Currency Trading, Investment Banking, New York

Alfredo AlarconEmerging Markets, Local Currency Trading, Investment Banking, New York

Maria RengifoLatin America Debt Capital Markets, Global Markets Solutions Group, Investment Banking, New York

Baltasar KrauseGlobal Structuring, Investment Banking, New York

Siobhan RocheEmerging Markets, Fixed Income Sales, Investment Banking, New York

Fernanda FentonLatin America Debt Capital Markets, Global Markets Solutions Group, Investment Banking, New York



Far-reaching political, economical and technological changes have led to ongoing global economic and financial integra-tion, strongly influencing the development of emerging mar-kets. The dynamics include changing demographics, the fall of the Iron Curtain, dramatic changes in communications, in-formation technology and mass transportation as well as the General Agreement on Tariffs and Trade (GATT) and the Gen-eral Agreement on Trade in Services (GATS).

A first growth phase was triggered by the global oil crisis of the mid-70s when oil-exporting countries invested their proceeds in the international bank market. A second growth phase began in the ’90s after the market liberalisa-tion of the GATT, when companies increasingly expanded and invested abroad, and after the formalization of the GATS in 1995, which turned out to be a main catalyst in the inter-national expansion of the services industry. All in all, since 1970, the annual volume of foreign investments in emerging countries has grown more than 11-fold.

As with every historical process, the development of the emerging markets did not proceed in a linear way. In 1997 and 1998, a major financial crisis in Asia and Russia high-lighted the shortcoming of those markets. Basic governance and regulations lacked at the time, making emerging mar-kets totally unprepared when the financial markets turned

against them. However, recovery came swiftly. The emerg-ing markets managed to re-attract foreign portfolio invest-ments, including bonds and equities, and the 2004 and 2005 capital flow levels have already surpassed 1997’s.

Demographical Changes and Investment OpportunitiesA recent study by Price Waterhouse Coopers highlights the growing economic impact of the emerging markets. The gross domestic product (GDP) of the so-called E7 – China, India, Brazil, Russia, Indonesia, Mexico, and Turkey – is fore-cast to exceed the GDP of the G7 – Canada, France, Ger-many, Italy, Japan, the UK, and the US – by 25% as of 2050. To put that in perspective: the GDP of the E7 is today just 20% of the G7’s.

The driving force behind this shift will be the growing prosperity of individuals and, even more important, the de-mographic development in the E7. For example, out of a pop-ulation of 1.1 billion in India, 700 million are in the working age group. Each year this group grows by more than 10 mil-lion young professionals. The economic sectors in which the growing population will find jobs will change, too. According to data provided by the International Labour Organization, between 1980 and 2000 in China employment in the primary sector decreased from 69% to 47%, in Korea from 34% to

The Economic Impact of the Emerging Markets Is GrowingOne of the economically most important developments of the last three decades is the rise of the emerging or developing markets. The term was coined in the ’80s, and at the time, an emerging market was defined as an economy with low per capita income and high risk characteristics. Since then, much has changed.

Dong Tao, Investment Banking Research


Figure 1 Source: Credit Suisse

Largest Economies in 2050In about 40 years the global economic landscape could have changed fundamentally. The underlying assumption is that emerging markets maintain their current growth policies.

10%, in Malaysia from 37% to 18%. Based on past experi-ence the results of this development will be two fold. First, it will lead to higher savings, higher investment, higher growth and higher consumption. Second, it will also lead to migra-tion on an astonishing scale, both within countries from the rural areas to the cities and between countries, as well.

As a consequence of the migrational movements many of the investment opportunities of the future will stem from a great demand for infrastructure, particularly in the booming mega-cities. We can expect to see a rise in demand for basic goods that consumers in the developed world take for granted as, for instance, housing, transportation, water, security, food, achievable, and accessible health care. In the wake of this process we will also see a booming demand for information services, for health and wellness or for premium consumer goods. China, for example, has not only 200,000 millionaires but also a rapidly growing middle class that has an unsatisfied desire for premium goods and luxury goods.

A further investment opportunity to keep an eye on is the development of financial centers in the emerging mar-kets, many of which will remain regional in nature, but some of which will rise up to challenge the established financial centers of the developed nations.

Changing Pattern in Capital FlowsThe emerging new global society has created a fast growing, integrated global market that is changing the framework for supply and demand. As a result, we are not only going to see significant changes in labour and consumer markets but in the capital markets, as well.

Foreign direct investments by American, Japanese and European companies – triggered by their international expansion – are still the primary factor behind the capital flows moving into emerging markets. Emerging and devel-oped countries attracted investments totalling a record USD 472 billion in 2005, up 45% compared with 1997. But now a second pattern is emerging: the internationalization and the diversification of the developed world’s financial savings. Attracted by the higher returns currently offered by the emerging markets, an increasing number of financial insti-tutions, and private and institutional investors have invested into emerging markets assets to better diversify their portfolios.

At the same time, there are growing flows from the emerging markets into industrialized economies. This trend is dominated by the central banks of the emerging markets, which are increasing their foreign exchange reserves to pro-tect their currency regimes. The chief destination for these capital flows is the US treasury market. As a consequence, at the end of 2005, the currency reserves of emerging and developing countries stood at USD 2.9 billion – more than twice the amount of the industrialized nations, which means that the world’s poorer countries are actually paying for the twin deficits of the US. Many emerging markets are there-fore not only receivers of capital but active players in the global financial markets and some of them have become a force with major influence.

Ch In Jpn RussUS Br Fr ItUK Ger

60,000

54,000

48,000

42,000

36,000

30,000

24,000

18,000

12,000

6,000

0

GDP (2003 CHF bn)


Financial Disintermediation in Emerging MarketsA interesting trend and one that is directly linked to the on-going development of the financial markets is the move from financing through loans to financing through capital markets, called financial disintermediation.

In the ’70s corporations in emerging markets financed their growth primarily through loans. For example, in Asia, corporate financing was historically covered by bank loans. Today, the corporate sector is moving away from bank credit. This process is driven by large profits, de-leveraging and the growth of domestic bond and equity markets – which, in turn, is driven by the increasing direct portfolio investments in the emerging markets from investors in the industrialized econ-omies who are looking for a means of diversification. The re-sulting demand for equity gives corporations a new source of financing.

Disintermediation also has another function. The growth of the capital markets makes it possible to bring to-gether international institutional investors. It also allows a growing global base of high-net-worth individuals – people with financial assets exceeding one million dollars – to meet the financing needs of emerging market companies.

Today, Brazil, Russia, India, and China are the coun-tries benefiting most from the attractiveness for international direct investments and portfolio investments but in the next 10 to 20 years we will see growing portfolio investments mov-ing into other emerging markets, as well.

Worldwide Reorganization of WorkIn many industrial economies, almost all of the manufactur-ing resources that can be relocated to low-cost countries have by now been moved. This is not the case for the ser-vice industry, which was slow to adapt to globalization, even though professional services and banking are ideally suited to it. But that is changing. The prime driver for the emerg-ing markets to enter into the global markets was GATS. The second most important driver was information technology, which makes it possible to distribute services functions glob-ally. In fact, an unintended consequence of the technology boom and the capital – that was invested in it – was that the outsourcing of the service sector has become much easier.

The US is a prime example of these trends. At first it largely outsourced its industrial base. Now its service func-tions are migrating to lower cost producers, as well. Differ-ent emerging markets have demonstrated different aptitudes for attracting service outsourcing, with India being at the top of most people’s lists.

The service sector has not only boomed in India. In-ternational Labour Organization data shows that Mexican employment in the services sector for example increased to 56% in 2000 from 24% in 1980. As a result of these struc-tural changes, increasing numbers of people in emerging markets can obtain a wide range of consumer products, ser-vices and technology. The demographic impact of these trends on the emerging markets manifests in many ways. It has speeded up the movement of people from agriculture to manufacturing and to services. And as more people enter

Figure 2 Source: IMF – Balance of Payments Statistics Yearbook

Capital Movements of Emerging MarketsCapital inflows into emerging markets declined in the wake of the Asian and Russian crisis, and following the bursting of the dot-com bubble. Capital inflows and outflows have, however, increased.

In CHF bn

Inflows Outflows Balance

1995 407 – 115 292

1996 464 –200 264

1997 526 – 286 240

1998 172 –13 159

1999 360 – 254 106

2000 466 – 454 12

2001 272 –209 63

2002 237 –166 71

2003 435 370 65

2004 754 – 617 137

Average 1995–2004 409 – 268 141


professions with higher value creation and higher wages, consumption rises. In addition, the transformation of the emerging markets into service-oriented economies creates a demand for proper infrastructure and, more important, for better education, which is the entry ticket into the global market place. As the flows of global capital change, we see the emergence of new financial centers.

Development of Financial CentersFinancial centers are becoming an important part of the busi-ness infrastructure. Singapore has made great progress with its financial center. Dubai launched one in 2004. Hong Kong and Shanghai have benefited from a wave of public offerings in China and are currently ahead of New York and London in initial public offerings. Many other emerging economies plan to build such centers.

As valuation discounts between emerging markets and developed markets are narrowing, as barriers to invest-ing in emerging market’s stock markets have come down dramatically and as emerging markets’ issuers prefer to trade close to their home markets, in their time zone and where their language is spoken, it is now apparent that there is less of an advantage in dealing with a global center. And so, along with increasing global integration, we will see the develop-ment of even more new financial centers.

It shows one of the great advantages of global inte-gration. Capital is no longer focused on one or two markets. It is made available on a global basis. This means more com-petition for traditional financial centers like New York, Tokyo, London, Switzerland, and Frankfurt. Not every emerging market economy will have its own financial center. To be competitive, these centers must reach the right scale and li-quidity. They must follow a consistent regulatory framework, and they must use compatible infrastructure. If they achieve this, their appearance is a very positive development for com-panies, such as Credit Suisse. As the new centers grow, mar-kets will open up for us in our role as bank, securities inter-mediary and asset manager. We can go where our clients are. This is particularly true for Asia and the Middle East, where we have been building up international on-shore busi-ness over the last few years.

Globalization Cannot Be Turned BackGlobalization creates many challenging issues, but it cannot be turned back. The emerging markets and the developed nations must work in partnership in the creation of the new global economy. They are partners who need each other to benefit fully from the fruits of a global economy. Capital mar-kets have become more diversified and complex as a result of globalization. As emerging markets mature, they will be-come more liquid and diversified and will have a lower risk profile. This will in turn make them more attractive for port-folio investments, making their capital markets and banks gain in importance.

Credit Suisse, with its business model and strategy, has already a strong presence in the emerging markets, and will continue its expansion there.


The annual volume of external financing for emerging coun-tries has grown 11-fold since 1970 (calculated in terms of constant, i.e. inflation-adjusted US dollars). As Figure 1 on the right shows, the first marked phase of expansion lasted until the early ’80s. It should be viewed in conjunction with the crude oil crisis at the time, which led to a massive recy-cling of petrodollars. The oil-producing countries, taken by surprise by their sudden wealth, plowed much of their oil rev-enue in the international banking market. The emerging countries, which were importing the crude oil, borrowed from banks to help them pay their mounting bills. When Mexico failed to keep up its repayments in 1982, this sparked off an international debt crisis. Consequently, capital flows slowed down significantly throughout the ’80s.

External finance experienced a second upturn in for-tunes in the ’90s in the course of increasing globalization. It was supported primarily by foreign direct investments (found-ing of or participation in companies). In view of the fact that they were eligible to return to the capital markets, emerging countries were also able to step up their portfolio investments (equities, bonds, etc.). The capital flows were only steered onto calmer paths again by the crises in Asia and Russia, al-though the annual influx remained higher than before. The 1997 record levels have been exceeded again since 2004.

The structural changes in external financing have been striking. Public development financing is making a com-paratively stable contribution even though it has – in relevant terms – experienced a discernible drop in significance. Bank loans were originally very much in the foreground in private capital flows. Bank loans now play a less pronounced role

as banks have been losing their appetite for risk since the outbreak of the various debt crises, the introduction of more stringent equity regulations, and a wide-ranging shift in weighting from balance sheet to neutral business.

Bank loans have been replaced by portfolio invest-ments by banks, institutional investors, and private investors. They reflect the desire for increased international diversifi-cation of securities portfolios and greater confidence in the emerging markets in particular. Direct investments have be-come the mainstay of capital flows in the past 15 years. They are less volatile than bank loans and portfolio investments.

In contrast to the capital flows outlined. There has been a sharp rise in the volume of investments by foreign creditors from emerging countries. There are a variety of eco-nomic backgrounds to these capital movements. Large in-dustrial investors and wealthy individuals have growing in-vestment and financial requirements, which can only be met to a limited extent in their own countries. Financial institu-tions require credit abroad in order to process payment trans-actions, for example. The same goes for businesses wish-ing to refinance foreign subsidiaries.

There have been very large increases in the foreign exchange reserves of central banks in recent years. The emerging countries had already overtaken the group of in-dustrial nations during the ’90s. They now hold more than two thirds of the worldwide foreign exchange reserves with some 2900 billion US dollars. In addition, China over took its neighbor Japan last year as the single biggest holder of re-serves. However, reserves are evidently very concentrated within the emerging markets: the top five account for half of

International Diversification of Capital Flows Is on the Rise Capital flows are taking on an ever more global dimension. The international diversification of the procurement of funds and of capital investment is playing a particularly important role in industrial countries. However, emerging countries are becoming more and more embedded in international capital flows.

Alois Bischofberger, Chief Economist of Credit Suisse Group


the total (China, Taiwan, South Korea, Russia, India) and the top 10 make up two thirds (including Hong Kong, Singapore, Malaysia, Mexico, and Brazil).

Given their experience of the Asian crisis in 1997/98, many countries are tending to draw upon their own resources to protect themselves against any currency crises that may occur in the future. They no longer want to be (so heavily) reliant on the International Monetary Fund, which provides extensive funding in times of crisis but makes its aid contin-gent upon clear reform conditions. Some countries have also held foreign exchange reserves for alternative uses for some time. They include crude oil funds in countries like Russia, Norway, Venezuela or Kuwait, in particular; these funds are intended to smooth the volatile oil revenue for the state cof-fers or to provide for future generations. However, other ex-amples are China, where state-owned banks have been re-capitalized on the strength of foreign exchange reserves, and Russia which has used its reserves to pay back foreign debt (early).

Around two thirds of the world’s foreign exchange re-serves are held in US dollars, and about a quarter in euros. This reflects the fact that central banks still have a strong preference for investments in US (Treasury) securities. This, in turn, is due to the breadth, depth and liquidity of the US financial markets, which is unrivalled internationally. Com-pared to before, the currency reserves are increasingly be-ing managed more actively. Some central banks differentiate between a liquidity portfolio and an investment portfolio – with different objectives, risk profiles, investment horizons and instruments.

The growing integration of emerging countries in the world’s financial flows is playing an important part in opti-mizing capital allocation. However, at the same time it also represents a challenge. Firstly, the money flowing into the emerging markets must last as long as possible. This neces-sitates further efforts to improve local framework conditions (political stability, law and order, economic reforms, strength-ening of the financial sector, etc.). Secondly, the sharp rises in foreign exchange reserves held on key emerging markets reflect imbalances in the world’s economy. In order to pre-vent rejections whenever these foreign exchange reserves are used, sooner or later, in the domestic economy, the pro-cess of adaptation needs to be as gentle as possible. Par-ticular examples of this, at present, are the twin deficits in the US (state budget and balance of payments) and China’s exchange rate policy.

Figure 1 Source: World Bank, Credit Suisse Economic Research

External Financing of Emerging CountriesThe annual volume of external financing for emerging countries has grown 11-fold since 1970 (calculated in terms of inflation-adjusted US dollars).

450

400

350

300

250

200

150

100

50

0

In USD bn (real, actual 1995)

1970

1975

1980

1985

1990

1995

2000

2005

Official development aid Portfolio investments Direct investments Bank credits

Delivering Customized Client Solutions

Zurich – The interdisciplinary Solution Partners team is part of Credit Suisse’s response to the increasingly complex needs of its global clientele. This internationally networked team − including seasoned experts in the fields of capital markets, corporate finance, private equity, law and taxation − draws on the bank’s combined capabilities and resources to provide customized solutions to high-net-worth private clients that go beyond Credit Suisse’s traditional competencies in the area of private banking.

To develop these specially tailored solutions, the members of the team not only collaborate closely with one another but also exploit the know-how and resources of the entire bank, thus capitalizing on Credit Suisse’s integrated business model. Solution Partners operates in financial centers around the globe, including Zurich, Geneva, London, Hong Kong, Singapore, and Dubai.

Five members of the Solution Partners team are pictured here in the dining room of the Bocken estate, located above Lake Zurich. The villa was built in 1670 and renovated in 1993 to serve as a venue for meetings and events. The estate also includes the Credit Suisse Forum Horgen, a conference and training center that has been in use since 1994.

From left to right:

John ZafiriouHead of Solution Partners, Private Banking Investment Services & Products, Zurich

Evelio Garay SalazarSpecialist Fixed Income, Solution Partners, Private Banking ISP, Zurich

Mariana Mayer-WolfCoverage Americas and Iberia, Solution Partners, Private Banking ISP, Zurich

Jacques-Alban CalliesCoverage France, Asia and Middle East, Solution Partners, Private Banking ISP, Zurich

Philipp BarettaCoverage Switzerland, Italy and Americas, Solution Partners, Private Banking ISP, Zurich



Over the past 50 years the population of the world has in-creased like never before. The number of people has in-creased from about three billion people to a current figure of just under seven billion over the past half-century, a unique phenomenon in the history of mankind. Population increases are most evident in the areas of the world where poverty is rife. Evidence of rapid migration, in some cases geographi-cal, in some cases social, is leading millions and millions of people out of poverty and into what are at least the lower echelons of the income scale in modern societies. In China people are flocking from the countryside into the cities. Thou-sands of new jobs are being created in the world’s mega-cit-ies, from Mexico City to Bangalore. People are changing sides en masse at the interfaces between the world’s lower-income zones and rich countries, for instance along the bor-der between Mexico and the US or from Africa to Spain, a country which, according to official statistics, has recorded five million immigrants in the last five year’s. Migrant popu-lations take up employment, receive wages and buy houses; in other words, they require high-quality, but keenly priced and omnipresent financial service providers. This provides an ideal opportunity for banks which have correctly identi-fied the signs of the times.

More Affluent People in the Emerging CountriesAt the other end of the spectrum, banks’ private client busi-ness is flourishing because globalization is leading to a growth in wealth of around 6% year-on-year. Affluent sec-

tions of the population in emerging countries grew at record rates in 2005 and 2006: South Korea led the way with 21.3%, followed by India (19.3%), Russia (17.4%), Indonesia (14.7%), and Hong Kong (14.4%). In addition to that, there has been dramatic increase in wealth being left by one generation to the next in the industrial countries of the West. These two developments call for a rethink, both in terms of the service strategies of bank networks and amongst product and asset managers. There is an increasing need to develop integrated asset-management models.

Investment in Infrastructure Continues to BoomThe growth of the mega-cities is being driven by the search for employment and wealth. The United Nations predicts that the percentage of the world’s population living in urban ag-glomerations is set to rise from the current 48.7% to 60% by 2030. In other words, a city the size of Barcelona will spring up every ten days! According to these UN forecasts, the li-on’s share of this growth will take place in the underdevel-oped regions of Asia and Africa. The percentage of the pop-ulation of Africa living in urban regions is expected to rise from a figure of 14.7% in 1950 to an estimated 50% by 2030, i.e. roughly three-and-a-half times today’s figure. The same calculations for Asia over the same timeframe reveal that ur-ban populations there are set to more than triple. It goes without saying that investments will have to be made in the infrastructure of the emerging countries. However, this is also true of older cities in industrial countries, which were

Banking in the 21st CenturyThe world’s rapidly increasing population is moving geographically, financially, and socially more quickly than ever before. This presents new challenges to the financial services industry. Therefore, the private banking sector, in particular, is experiencing rapid growth in the course of globalization. At the same time, a new technology and volume-driven retail banking sector is emerging at the other end of the income pyramid.

Giles Keating, Head of Global Research Private Banking and Asset Management


not built to accommodate these transient populations or with the vast metropolises of the 21st century in mind. In the long run, this will lead to extensive, costly investments in infra-structure, as well as decentralization in the world’s largest cities. There could soon be further privatizations in order to fund these 21st century investments; there are calls in Ger-many, for instance, for partial privatization of the motorways. Studies show that the private financing of infrastructure leads from 10% to 25% growth in efficiency. The capital markets look set to gain in importance in view of the financial con-straints of state budgets; the stature of infrastructure finance companies will rise with it.

Benefiting from MigrationThe World Bank expects the increasing migration from de-veloping countries to reap profits for the world economy, which we can all tap into. Migration of up to 3% of the work-force in high-wage countries could generate additional wealth worldwide in the order of 356 billion USD by 2025. Accord-ing to estimates, this is twice as much as the global profits from the complete deregulation of the trade in goods.

Migrants’ levels of skills and wages have an impact upon the amounts that they are sending back to their home countries. Studies compiled for the US indicate that highly skilled and well-paid migrants (80% of migrants from India working in the USA have university degrees) are in the habit of saving and investing in their host country. There is every possibility that the majority of highly skilled migrants come from well-off families that do not need financial support from abroad. By contrast, less well-skilled workers, such as some of the Hispanic Americans in California or Texas, tend to transfer larger amounts to their families; estimates put this at approximately 500 dollars a month, on average. The up-heaval in the migration process discussed up to now will lead to two new business opportunies in banking.

Business Opportunities in BankingBanking for the mass market: Present-day migration pat-terns are revolutionizing the entire spectrum of banking ser-vices. Many of today’s migrants are displaced people or ref-ugees; they are also the potential retail customers of tomor-row. In addition, thanks to shorter travel times, the mobility of people in the 21st century is higher than ever before, lead-ing to rising numbers of highly skilled economic refugees and people who regard themselves as citizens of the world.Credit Suisse itself does not follow a global retail banking strategy, however, it is an area which we closely follow as an investment strategy for our clients.High-Net-Worth Individuals (HNWI): As an integrated, globally active bank, Credit Suisse focuses on investment banking, private banking and asset management. We have observed that the needs of our clients in these three areas increasingly converge. This is particularly true in private banking, where the clients’ needs have become more global and complex. The strong growth in private banking business is currently being driven by Asia and Latin America. The age structures in industrial countries are leading to wealth being

Figure 1 Sources: BBVA and INE

The Changing WorldThe number of people worldwide living outside of their home country is estimated at 175 million. Spain provides a good example:

20052000 2001 2002 2003 2004

4000

3500

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Number of migrants in Spain in thousands

923.

8 1370

.6

1977

.9

2664

.2 3050

.8

3691

.5

1794

.4

Migrants Migrants from Latin AmericaForeign population as a percentage of a total population

2.3 %

3.3 %

4.7 %

6.2 %

7.1 %

8.5 %


transferred between generations in the private banking sec-tor. The new needs of younger customers who, as research shows, are better acquainted with the ins and outs of invest-ment processes, are bringing about structural changes in the services offered to private customers.

Workforce Migration Driving Retail BankingThe number of people worldwide living outside their home country is put at 175 million and rising steadily. Even though the transfer of money abroad has long since been an issue in debates about migration, it has been playing an ever in-creasing role for some time. The reason for this is obvious. There has been a sharp rise in the volumes of money trans-ferred to developing countries, which is making this high-vol-ume business increasingly more attractive.

These people often wish to support their relatives who have remained at home. To facilitate this they require the services of money transfer operators or bank accounts. Mi-gration is creating potentially new groups of customers, and the banks should tailor their services to meet the needs of these groups. Migration does not just start off in poor coun-tries; it is also driven by the current labor market situation, as well as by demographic factors. Germany could soon be-come a country with a negative migration balance. It is los-ing more and more of its young, highly skilled workers and attracting fewer workers, who tend to be unskilled. This is accentuating the imbalances in the social security system yet further. The fact that 60% of students currently enrolled at German universities have stated that they would be happy to leave Germany is symptomatic of how things are set to develop in the future.

Migration for Work and Better WagesA recent example is the migration of Polish workers. Some 450,000 Poles have emigrated to Ireland and England. Once again, the reasons for this seem clear: unemployment in Po-land stands at over 16%; besides that, there are also signif-icant differences in earning capacity. A Polish nurse can earn seven to eleven times more in Ireland than she can in Po-land. As a result, the Polish health system has a shortage of around 60,000 employees. The snowball effects of a phe-nomenon like this are easy to imagine, such as the increas-ing volume of foreign transfers made by these new bank cus-tomers. To remain competitive and successful, Irish banks are appointing employees who can speak Polish in order to forge ties with the new customer group.

New Rivals in the Banking SectorBanks are running the risk of losing out on many of tomor-row’s customers, namely people who do not have a bank ac-count yet because they have until now not been profitable enough or because of their legal status as immigrants. New media for transferring money such as mobile phones, smart credit cards, and the Internet are putting pressure on traditional money transfer operators (MTOs) such as West-ern Union, as well as on banks which specialize in this area of business. Furthermore, supermarket chains are also of-

Figure 2 Source: Capgemini Lorenz curve analysis, 2006

High-Net-Worth Individuals (HNWI) Financial Wealth Forecast by RegionStrong global net new money growth of 6 percent till 2010 is supporting wealth management significantly.

45

40

35

30

25

20

15

10

5

0

2003 2004 2005 2010E

Annual Growth Rate, 2005 – 2010E

Global 6.0%

Africa 5.2% Middle East 8.0% Latin America 5.9% Asia-Pacific 6.7% North America 7.4% Europe 3.7%

28.5 30

.7 33.3

44.6

In USD Trillions


fering credit cards, thereby forging links with the “bankless”. The competition along the US-Mexico corridor, for example, has led to large reductions in charges in Mexico. On aver-age, it is now 56% cheaper to transfer 300 USD abroad than it was seven years ago.

The Rich Are Getting Richer and Younger We are at the dawn of a decade when wealth is transferred between generations, driven by the demographic develop-ments in the wealthy industrial countries of the West. Stud-ies show that 15% of the world’s population was aged 56 or more in 2005. The comparable percentage of high-net-worth individuals (HNWIs with capital assets in excess of 1 million USD) is closer to 60%. US studies predict that 41 trillion dol-lars worth of assets will be transferred by 2053. About 19% of the children of HNWIs live abroad. What’s more, growth in asset management divisions in emerging countries is keep-ing pace with the corresponding growth in industrial coun-tries. Both trends clearly suggest a globalization of portfo-lios which previously would have been invested on a more local or regional basis. There is also an assumption that the new customers are more willing to take financial decisions, which is definitely a challenge for today’s financial advisors. A close relationship with customers and advice which is tai-lored specifically to meet their particular needs make the dif-ference in being successful during this period of transition and growth in asset management – this is much more impor-tant than segmentation solely on the basis of the extent of their capital assets.

A study of the US market by Phoenix Marketing Inter-national shows that wealthy private customers increase their number of bank accounts up to the age of 50 because they require a wide range of banking services in their day-to-day life and for secondary matters, such as student loans or prop-erty issues. After age 50, their number of bank accounts nor-mally reduce and capital investments then generally become their primary financial service. Banks could learn a lesson from this for the future in order to become one of the main service providers. In other words, “big is beautiful” because the organic growth of the largest players on the market will probably outstrip the average growth rate of the asset-man-agement sector. As the market is splintered, we anticipate that the big banks with worldwide brands and solid balance sheets will show above-average rates of growth and that the smaller operators in the sector will increasingly be merged or taken over.

Growing Importance of WomenWomen currently make the financial decisions in 15% of US households with capital assets in excess of 1 million USD. Female customers are becoming increasingly important, be-cause there are more and more well-off widows due to de-mographic trends and also because an increasing number of women are high earners. Women tend to prefer banks which offer comprehensive advice, are less willing to take risks and are, therefore, interested in diversified investment portfolios focusing on preserving their wealth. Banks wishing to assert

themselves in this growth segment should take these fac-tors into account and align themselves accordingly.

Lack of Skilled WorkersThe search for skilled personnel will have to be stepped up – increasing customer competence and high demand for per-sonnel in the high-growth regions of the world such as Asia, Latin America and the Middle East could result in a short-age of experienced advisors, which is likely to drive income levels up. Initial and further training initiatives have been in place for young investment advisors for some time. What’s more, an increasing number of banks are transferring expe-rienced employees from their institutional investment side to asset management in order to meet customers’ needs.

Success Through Integrated Asset ManagementThe response to the new challenges facing banking in the 21st century is an integrated asset-management model.Banks wishing to ensure the loyalty of customers in the fu-ture, have a global presence, a wide range of products, of-fer sound advice, have a strong brand, and are renowned for comprehensive risk management, as well as top-notch dis-tribution and implementation capabilities. Focusing on the core business – asset management, which in the broad sense includes capital management – and in-depth knowledge of the customer are essential for gaining the customer’s trust and guaranteeing long-term success and growth in this area of business.

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Experts in Research and Analysis

Zurich – The Global Economic Strategy Group (GESG) is a panel of nine senior economists, strategists and investment professionals from across Credit Suisse. The GESG meets on a monthly basis to review key developments in the global economy, such as growth trends and the outlook for inflation, as well as discussing forecasts for the bond, equity and currency markets. The findings of these meetings are integrated into Credit Suisse’s internal investment process and play a determining role in the bank’s decisions on asset allocation on behalf of its clients in Private Banking and Asset Management. The purpose of the GESG is to make Credit Suisse’s research and analytic expertise available to both current and potential clients. The group is headed by Giles Keating, Head of Research for Private Banking and Asset Management.

The GESG members are pictured in the Board room at Credit Suisse’s headquarters at Paradeplatz in the center of Zurich, Switzerland.

From left to right:

Giles KeatingHead of GESG, Head of Research for Private Banking and Asset Management, Zurich

Andrew GarthwaiteHead of Equity Strategy, Investment Banking, London

Arun RatraChief Investment Officer Multi-Asset Class Solutions, Asset Management, Zurich

Jonathan WilmotChief Strategist, Investment Banking, London

GESG members not pictured:

Alois BischofbergerChief Economist of Credit Suisse Group, Zurich

Mark BurgessHead of Equities, Asset Management,London

Bunt GhoshHead of Fixed Income and Economics Research,Investment Banking, London

Joe PrendergastHead of Foreign Exchange Research, Investment Banking, London

Neal SossChief Economist, Investment Banking, New York



The World Economy in 2007What is in store for the world economy in 2007? Will economic growth accelerate in the coming year ? Five members of Credit Suisse’s Global Economic and Strategy Group take up the debate. They discuss possible trends for 2007 and identify which sectors are likely to perform best.

Credit Suisse’s Global Economic and Strategy Group (GESG) meets to discuss global economic trends on a monthly basis. The group is lead by the bank’s Head of Global Research for Private Banking and Asset Management, Giles Keating. Other GESG members present at the January meeting in Zurich were: Andrew Garthwaite, Head of Equity Strategy, Investment Banking; Arun Ratra, Chief Investment Officer, Multi-Asset Class Solutions; Neal Soss, Chief Economist, Investment Banking; and Jonathan Wilmot, Chief Strategist, Investment Banking. The following is a transcript from their roundtable discussion.

Is the global economy on track for another year of growth?

All: Yes.Andrew Garthwaite: Another good year of growth lies ahead. Growth will

probably be a bit softer in the first half of 2007, before accelerating again in the second half.

Giles Keating: The good news is that this is a very helpful slowdown, as it has taken the inflationary edge off the world economy.

Neal Soss: The GESG is forecasting growth in the world economy for the sixth consecutive year. The global growth rate should be in the region of 5 % this year. It is by far the best period of growth in a century − if not centuries. It is also worth pointing out that growth will be better balanced throughout the world than it has previously been. Economic expansion will be less dependent on the US. Europe, in particular, will make more of a contribution to global growth.

Jonathan Wilmot: The GESG also agrees that there is a high probability the economy is roughly in the middle of a mid-cycle slowdown. Within this longer period of exceptional growth, the GESG thinks a slowdown began quite signifi-cantly in the middle of 2006 and will extend roughly into the middle of this year. Depending on which country you look at, this has, in turn, reduced inflationary pressures and allowed interest rates to come down slightly rather than rising − or to rise more slowly than would otherwise have been the case. Longer-term growth prospects have been boosted by this friendly interest-rate environment, as have the equity markets. In addition, the pause in the interest-rate cycle has helped to bring down some overheated prices such as oil, copper, etc., which were seen in the global system. If there were to be a very strong reacceleration of growth in the second half of this year and into 2008, the global economy would be back into a scenario of inflation worries. If the world economy stays on the same sort of track that began in 2006, and which we are seeing right now, then inflation worries will continue to subside. That is good news. It makes growth more sus-tainable and is good for the financial markets. Ultimately, the risk to growth is on the upside. But an acceleration of growth to a level that would be regarded as a

Giles Keating:

“The current slowdown is very helpful as it has taken the infla-tionary pressure off the world economy.”


negative risk to the financial markets is unlikely to materialize before the second half of this year at the earliest.

Will any regions outperform in 2007?

Giles Keating: It clearly looks as if Europe is more buoyant than the US, which is unusual. Europe won’t be completely exempt from the slowdown in the US but shouldn’t suffer very much. Asia has seen a bit of a slowdown but, in aggregate, the growth rate there is still very healthy. Both China and India will continue to grow at around double-digit rates.

Could the slump in the US housing market derail global economic growth?

Giles Keating: At the moment, it looks as if the US economy is on track for a soft landing in the housing market. Obviously, the housing market is much weaker than it was 12 months ago. However, the good news is that it looks as if we are no longer seeing a build-up of unwanted housing in the pipeline. As a result, the number of unsold houses seems to have stabilized. Things will stay weak in that market for perhaps six months. At the moment, it doesn’t look as if it is going off the edge of a cliff.

Neal Soss: That risk remains present and omnipresent in forecasts. How-ever, professional opinions are increasingly converging − saying that the global economy has weathered the slowdown in the US housing market. This slump has, perhaps, been more abrupt than in past housing cycles and may not lead to a pro-nounced recovery. But if housing demand stabilizes, the outlook losses can be calculated. Once you can calculate your losses, they are not nearly as frightening as they seemed at the outset. That is very good news. In the face of the risks posed to the US and − by extension − the global economies from the housing slowdown, central banks have been maintaining very high levels of liquidity, most likely higher than they would otherwise have been. There are some grounds to be concerned that as the housing market stabilizes, part of this liquidity that is still built into financial asset prices may come to be viewed as not fully justified by long-term fundamentals.

Is the global economy facing any other risks?

Giles Keating: There are always risks. Ironically, in economic terms, the big-gest risk is that the world economy may grow a little too strongly. If that happens − which would probably not be in the first half of 2007 but, perhaps, in the second half of the year − then we’ll see expectations about interest rates going up and inflation worries coming in. That could, of course, damage the equity markets. There are other geopolitical risks, which could affect the oil markets. Those kinds of risks can never be ruled out. At the moment, however, they perhaps look that little bit less worrying than at certain times over the last year.

Jonathan Wilmot: The geopolitical risks are well known. Venezuela. Nigeria is more unstable, as is Iraq. The situation is getting worse in Iran. What is inter-esting is that the oil market is beginning to get bored of these risks. The economy has been living with them for the past 18 months, if not the past two years. The current assessment is that these risks, perhaps, shouldn’t be priced into the mar-ket quite so actively. At present, OPEC is struggling to maintain its oil prices at current levels. That could, however, change very quickly if global growth acceler-ates and the demand for oil gathers speed. For the first half of the year − and maybe for most of 2007 − the market seems to be less focused on the above-mentioned geopolitical risks. They will come back into the general consciousness, particularly the Iranian risk, later on in the year.

Andrew Garthwaite: Let’s start with what is probably not a risk: oil. Spare oil capacity has tripled since last year. The global economy can today accommo-

Andrew Garthwaite:

“Another good year of growth lies ahead. It will be softer in the first half and accel-erate in the second.”


date a surge in oil prices far better than it could just one year ago. Another risk is that Ben Bernanke, Chairman of the Federal Reserve, could lose his credibility. He did a complete U-turn on inflation within the space of a month last year. It would be a great problem if investors stopped believing Bernanke’s rhetoric. Changes in the reserve recycling by China are an additional risk. Huge pressure on the Chinese currency, the renminbi, to revalue by 30% or even 40% would be bad for US inflation, bad for global growth and bad for real trade volumes. It would be a triple negative. A sharp increase in protectionist measures in China would also harm the global economy.

How about oil prices? Will they stabilize at around USD 50 per barrel?

Giles Keating: The oil price has come down from its peak of almost USD 80 per barrel last summer. It looks as though it could continue to stay pretty soft. That trend could, of course, be interrupted by geopolitical factors. Sooner or later, if the oil prices really start coming down from the level of USD 50 per barrel, OPEC would step in with more decisive output cuts, resulting in a bounce back in oil prices.

How about interest rates? Will they remain unchanged in 2007?

Giles Keating: The likelihood is that the US Federal Reserve will keep rates steady over most of this year. We don’t think the Fed will cut rates. The European Central Bank looks as if it will take its rates up two more times in the first half of the year, with the Swiss National Bank following suit. The Bank of Japan looks as if it might do just one rise during the course of the year. The Bank of England is almost certainly set to raise its rates.

Jonathan Wilmot: Provided there is a slowdown in growth in the first half of the year, there will be a turning point for short-term interest rates by the time we reach the middle of the year. Europe will have completed the first phase of its tightening phase, while the Federal Reserve won’t yet be in a situation where it is hiking rates up again. Japan may have gone quite a long way in terms of raised interest rates. Some of the bigger risk may arise towards the end of this year and in 2008, because global growth may then reaccelerate.

Giles Keating: To summarize the situation: the big message on interest rates is that the risks will really come later on this year – in the third quarter or at the beginning of the fourth quarter, when investors and central bankers will start to look towards 2008. If they think the world economy will accelerate too much, the central banks will have to take more action than seems likely at the moment. That could become quite unsettling for the markets.

How do you expect the US dollar to move during the year?

Giles Keating: The US dollar should remain relatively flat against the euro during the first half of this year but that doesn’t mean there will be no movement at all. The GESG expects the dollar to trade in a range of 1.27 to 1.33 against the euro during 2007, with fairly powerful sources acting both in favor of and against the US currency.

Jonathan Wilmot: The dollar is forecast at 1.28 against the euro at the end of the year, not far from its current level. The GESG is more optimistic than most financial experts.

Why?

Jonathan Wilmot: Because the dollar is already undervalued against the euro. There is quite high nominal rates support in favor of the dollar. Asian curren-cies like the renminbi, which appreciated in 2006, are the ones under pressure to

Arun Ratra:

“Alternative assets should always be part of any investor’s portfolio.”

Neal Soss:

“Growth will be better balanced throughout the world than it has previously been.”


rise. When investors worry about the US housing market, the European curren-cies get strong and, in turn, overvalued.

Which world currencies will be of interest in 2007?

Jonathan Wilmot: The most interesting currencies right now are actually not the US dollar but the two currencies in the world which are the cheapest from an overall trade-weighted point of view: the yen and the Swiss franc. They are the currencies investors love to borrow in. The Swiss National Bank isn’t 100% comfortable with that, and this is now having an impact on its decision-making. The Bank of Japan isn’t 100% comfortable with this situation either. Real poten-tial for volatility in the currency markets would arise if something were to sud-denly force the Swiss franc and yen borrowers to cover their positions. That’s not happening right now but it is an issue that we should keep an eye on.

Andrew Garthwaite: That situation occurred in August to October 1998, when investors suddenly became more optimistic about Japanese growth. The carry-trades stopped and the yen appreciated significantly.

Jonathan Wilmot: The longer the carry-trades continue, the bigger the market build-up. That build-up is overshadowing the dollar issue. Investors should worry about the Swiss franc, not about the US dollar. Let’s take Japan as an ex-ample. Japanese investors invest abroad, reducing their hedge ratios or their hold-ings on an unhedged basis. If the yen weakens, the capital outflows are consid-erable. The hedge ratios drop to below-average levels. At that point, any events making the yen appreciate in a fundamental way force investors to cover their positions.

Andrew Garthwaite: The amount of mortgages in Eastern Europe that are denominated in Swiss francs is another source of concern. It could be very nasty if investors decided to recognize the currency risks in places like Hungary.

Giles Keating: The Swiss franc and the yen will probably stay pretty weak in the first half. At some point they will be heading for a marked rebound, proba-bly as the world economy gets stronger again and the prospects of higher inter-est rates begin to come through. The franc and the yen could then move up pretty sharply after a long period of weakness. Another trend we may see through most of the year is that the emerging Asian currencies will tend to trend upwards.

How about the Chinese currency, the renminbi? Will it continue to appreciate?

Giles Keating: The Chinese currency is clearly trending upwards. The ques-tion is whether it will move up rather strongly. Our view is that the renminbi will move up by perhaps 5% to 8% this year. This is clearly a managed currency, which is subject to exchange controls as well as political considerations. We think the Chinese government wants a stable situation, in which the renminbi moves up gradually in order to be able to relieve potential trade tension with the US and elsewhere. However, the renminbi won’t be allowed to appreciate so rapidly as to create disruption. The Chinese government has the necessary tools − in terms of control − to achieve that goal.

Are there other issues to bear in mind for 2007?

Jonathan Wilmot: If you look at the periods from 1980 to 1987 and from 1995 to 2000, you roughly had the same gain in world asset markets over the last four years as in the first four years of the two previously mentioned periods. The global economy never actually had a round as good as now, lasting longer than five years. The economy is in year four out of five. That’s no guarantee that the markets will then correct, but it is worth bearing in mind.

Jonathan Wilmot:

“The most interesting currencies right now are the yen and the Swiss franc, not the US dollar.”

Infrastructure – Investments in the Future

London – A solid infrastructure, including transportation and communications networks and energy and water supplies − is an essential part of any developed economy. Infrastructure is also gaining in importance as an alternative asset class. Key trends such as urbanization, globalization and demographic changes are factors that are likely to boost infrastructure investments in the coming decades.

Credit Suisse estimates that developed countries will invest around USD 500 billion in their infrastructures by 2011, while the emerging markets may spend more than USD 1 trillion on infrastructure development over the same period. In anticipation of this trend, Credit Suisse established a joint venture − Global Infrastructure Partners − with General Electric in May 2006. This venture has more than USD 1 billion in funds earmarked for global infrastructure investments in the areas of energy, transportation and water.

The members of the Credit Suisse team responsible for setting up Global Infrastructure Partners are pictured here at London City Airport. The airport was acquired by Global Infrastructure Partners and the US insurer AIG in October 2006 and is located in the east of London, less than three miles from Credit Suisse’s European regional headquarters in Canary Wharf.

From left to right:

Veeral KanjiGlobal Infrastructure Partners, London

Antoine KerrenneurGlobal Infrastructure Partners,London

Michael McGheeGlobal Infrastructure Partners,London

Raj RaoGlobal Infrastructure Partners, London

Mehrdad NooraniGlobal Infrastructure Partners, London



Infrastructure has evolved from being a fundamental require-ment to meet our basic daily needs to the very cornerstone of modern life. Today, a well-developed infrastructure is a symbol of economic progress and globalization. Infrastruc-ture – including transportation and communications networks and energy and water supplies – is the backbone of all ad-vanced economies. Parks, universities, hospitals and, in some cases, luxury hotels, restaurants and sports facilities can also be classed as infrastructural components.

Developed nations and emerging markets present two different investment cases in this context. While developed countries constantly need to renew and improve their exist-ing and often outdated infrastructural systems and networks, the focus in the emerging markets is on building new infra-structures.

Banks such as Credit Suisse are today playing an in-creasing role in major infrastructure projects in their capac-ity as financial intermediaries. At Credit Suisse, the Invest-ment Banking business offers financing for infrastructure projects, while the Asset Management business offers its expertise to institutional or private clients seeking to invest in infrastructure themes.

A number of notable infrastructure deals were an-nounced in 2006, including the acquisition of P&O’s port and logistics services by Dubai Ports World and the take-over of London City Airport by a consortium led by the US insurer AIG and Global Infrastructure Partners. Global Infra-structure Partners is the joint venture established by Credit Suisse and General Electric in May 2006, with more than USD 1 billion in funds earmarked for global infrastructure in-vestments.

Globalization – the Driving Force Behind Infrastructural DevelopmentGlobalization has accelerated as a result of the improved transportation of goods and various free trade agreements and is today the main driver behind the global infrastructure boom. Increased travel and trade and the mass transfer of data have intensified the need for a new or modernized infra-structure. The internationalization of manufacturing has also created the need for new infrastructural components, such

as warehouses, processing plants, facilities enabling the transportation of goods by land and sea, and international payment networks.

Emerging markets – particularly those in Asia – are increasingly exporting commodities and industrial goods to developed countries. This trend was boosted by China’s entry into the World Trade Organization (WTO) in 2001, as well as efforts by countries such as India and China to enhance their competitiveness. India has increased its level of investment in technology parks and in technical training, while China aims to create 50 national export champions over the next five years. Emerging nations, such as Russia, Brazil, and Chile, have been able to invest in their domestic manufacturing in-dustries thanks to rising commodity prices and growing ex-port revenues.

Infrastructure Still Fails to Satisfy Existing NeedsGlobalization is increasing the mobility of both goods and people. For example, the number of kilometers traveled by air in 2005 has almost tripled compared to the level in 1980. The global population increased by approximately 20% over the same period. Globalization is also resulting in the reloca-tion of the workforce to cost-effective locations, while the West is experiencing a transition towards a service-oriented economy as the industrial sector loses ground. The European clothing industry has, for instance, shed around 300,000 jobs since 2004. All of these changes are giving rise to new infra-structural requirements that take account of our increasingly service-oriented society.

Today, the infrastructures of many countries still fall short of the requirements of the population for a variety of reasons. In the emerging markets, for example, the financial crisis of 1998 resulted in a shortage of funding and the in-frastructure suffered as a result. Since 2002, however, these countries have been able to increase their exports of commo-dities, thus generating new sources of income. In developed nations, widening current account deficits have led to capital shortages, which have limited the ability of governments to finance long-term infrastructure projects.

The lack of urgency regarding the renewal of the infra-structure in developed countries is another significant factor.

Global Infrastructure Gains Investor InterestGlobal infrastructure projects driven by large capital injections from private and public sources, as well as the rising demand from the emerging markets, are attracting growing investor interest. Urbanization, globalization and changing demographics are expected to further boost infrastructure investments in the coming decades. Today, global infrastructure is becoming an increasingly popular theme among institutional investors seeking long-term investment opportunities.

Lars Kalbreier, Global Equity & Alternatives Research, and Hervé Prettre, Commodities & Equities Trading Research


European governments did not wish to raise infrastructure spending in times when eurozone members faced sanctions if their public deficits exceeded 3% of their gross domestic product (GDP), while the US government has preferred to focus its resources on national security since 9/11.

However, infrastructural deficiencies over the past few years – as illustrated by the power cuts in New York and Spain in the summer of 2003 – have underscored the need for immediate action. The large volume of goods stockpiled in Chinese harbors in 2005 due to the lack of an efficient transport network is another prime example.

Governments have started to bridge the gap between infrastructural shortcomings and infrastructural demand by engaging in joint ventures between the public and private sector. Many governments are granting long-term conces-sions to private companies for specific development projects, while banks are increasingly offering sizeable long-term loans. Credit Suisse estimates that this form of financial le-verage will grow, as banks become more involved in infra-structure financing.

Two Different Investment Cases: Developed Countries and Emerging Markets Investment needs in the global infrastructure sector differ, depending on levels of economic development: advanced na-tions need to renew and improve outdated roads, power grids and water supply networks, while emerging markets need to build up their entire infrastructure.

Developed CountriesThe focus in developed countries is on renewing an aging in-frastructure in order to meet the growing demand for trans-portation, power and communication. Social, political and economic factors also underpin the demand for additional in-frastructure investments. Credit Suisse estimates that de-veloped nations will invest around USD 500 billion in their infrastructures by 2011.

Regulatory Changes For decades, the infrastructure in re-gions such as Europe, in particular, was fully regulated and funded by government entities. Regulatory changes leading to the privatization of former government-owned utilities and the establishment of public-private partnerships have en-abled both private and institutional investors to invest in in-frastructure. As a result, more and more capital is flowing into this sector. Private companies often also offer better re-turns than state-owned companies. But what are the factors driving additional infrastructure spending?

Global Competition Against the backdrop of an increasingly mobile and competitive environment, cities, regions and coun-tries today compete fiercely with each other to attract new business. In addition to favorable tax environments, an exten-sive and efficient infrastructure has become a major compe-titive advantage 1. Reliable power grids, well-maintained road networks, well-developed public transport systems and ac-cess to leisure facilities are key factors which companies

Figure 1 Source: UN Department of Economic and Social Affairs, World population prospects: the 2003 revisions

Urbanization Estimates in Asia by RegionMany factors justify an above-consensus view on pan-Asian domestic demand. China and India are benefiting from overall economic trans-formation based on the industrialization and urbanization of the rural population.

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consider when selecting a business location. Security is also of decisive importance in this context: a strong sense of safety and security represents a vital competitive advan-tage for today’s cities.

Focus on Quality of Life A well-developed infrastructure is not only important to business – it also influences the pop-ulation’s quality of life. The cities in advanced nations must therefore constantly work to renew their ageing infrastruc-ture if it fails to meet the requirements of today’s urban and mobile lifestyle and growing population. Given that good quality of life is more important to people now than it was 20 years ago, the demand for an improved infrastructure has risen sharply. Citizens want a reliable and safe public trans-port system, a reliable electricity and water supply and well-maintained roads. In terms of the demand for real estate, there is a clear trend away from oversized buildings accom-modating large numbers of families in small apartments to-wards individual homes or small apartment blocks in the vici-nity of shops and services.

As a result, all major quality of life surveys use infra-structure as the principal criterion when evaluating cities. Zurich offers the highest quality of life among 215 cities ac-cording to the Mercer Quality of Living Survey 2006 due, in particular, to its high level of security and the quality of its public transport system.

Demographic Changes Demography is another driver be-hind infrastructure spending in developed countries. As the population ages, more hospitals and retirement homes need to be constructed, while the transportation network has to be adapted to cater for the elderly. Changes in the typical composition of households – with a rising proportion of one-parent families – push up the demand for apartments and childcare facilities. A more recent trend is the rise in the av-erage age for marriage (currently 34 years in Zurich) and the divorce rate, which means that more single people are seek-ing medium-sized apartments. In cities such as Frankfurt and Zurich, the lack of two or three bedroom apartments prompted a construction boom in the ’90s.

Emerging MarketsAfter years of underinvestment in essential infrastructural developments in the wake of the Asian crisis in 1998, govern-ments in the emerging markets have recognized the need to spend more money on vital networks and systems in order to remain competitive in the global marketplace.

According to the World Bank, the emerging markets will focus their capital spending on three main areas going forward: telecommunications (USD 187 billion annually over the next 20 years), power production (USD 138 billion an-nually) and transport (USD 101 billion annually). In fact, these countries may spend more than USD 1 trillion on infrastruc-ture over the next five years, according to Credit Suisse esti-mates. This increase in infrastructure spending will be driven by improved public finances, continued economic growth and urbanization.

Figure 2 Source: International Cement Review, 6th edition, Credit Suisse

Cement Consumption in Major RegionsChina is actually the fastest growing construction industry in the world and currently accounts for approximately one quarter of the world’s building projects.

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1 Robert Reich in his book “The World Economy”


Improved Public Finances The public finances of most emerging markets have improved considerably over the past few years, while a wealthier and urbanized population is exert-ing growing pressure with its demands infrastructure im-provements. The budget deficit in the emerging markets was reduced from an average of 4% in 1999 to 1.2% in 2005, while their current account balances expanded from a com-bined USD 86 billion deficit in 1996 to a surplus of more than USD 280 billion in 2005. This improvement is largely linked to the surge in commodity exports and the improved management of public finances. Large current account sur-pluses and improved fiscal positions have enabled govern-ments to free up funds for additional infrastructure invest-ments.

Desire for Continued Economic Growth The most compel-ling reason for governments in the emerging markets to spend an estimated 3% to 4% of their GDP on infrastruc-ture projects is the general acknowledgement that a lack of infrastructure is a barrier to growth and that a certain level of infrastructure is necessary to improve their attractiveness to international businesses.

India has a highly educated and skilled workforce and low labor costs, for example, but the country cannot bene-fit fully from these assets because its ports, rail networks, motorways and power infrastructure fall short of require-ments. In fact, India’s rail network is much less advanced

than that of China. India’s business sector is affected by power shortages during 13% of peak time usage, while the capacity utilization of Indian ports stands at 97%. According to estimates by the UN, India’s economic growth may be hampered unless it invests between USD 25 billion and USD 45 billion in its infrastructure each year.

Urbanization More and more people are migrating from rural areas to cities in search of better job opportunities. More than half of the world’s population today lives in cities, compared to less than a third in 1950. It is anticipated that by 2030, approximately 5 billion people around the globe will live in urban areas, compared to 2.8 billion in 2000. In Asia alone, around 33 million people – four times the population of New York – migrate from rural to urban areas each year.

Infrastructure investments in many emerging mar-kets have so far failed to keep pace with urban population growth. In Shanghai, for example, 60% of the drinking wa-ter is lost due to leakages in the water supply network, while Bangkok’s Sukhumvit Avenue is constantly congested with traffic because it has only four lanes. Bangalore in India even has roads without sidewalks. Credit Suisse believes that these deficiencies are likely to be addressed as emerg-ing countries get wealthier and the urban population de-mands an improved quality of life. The acceleration of ur-ban migration will also force governments to tackle exist-ing weaknesses.

Studies have shown that the private sector’s involvement in the development and financing of major infrastructure initia-tives can improve the efficiency of these projects by between 10% and 25%, since the capital markets provide more effi-cient forms of financing. The capital markets and banks may therefore begin to finance more and more infrastructure pro-jects going forward.

Credit Suisse also expects infrastructure investments to attract the interest of asset managers due to the sheer size of the market. More importantly, infrastructure invest-ments can reduce the overall correlation of an investment portfolio and may protect it against inflation. Increasing in-terest in global infrastructure themes among private and, in particular, institutional clients is already evident.

To seize the opportunities stemming from the grow-ing demand for infrastructure financing, it is important for banks to be able to offer an integrated banking model – with combined investment banking and asset management exper-tise – to benefit their clients. At Credit Suisse, for example,

the Investment Banking business provides financing for infra-structure projects, while the Asset Management business bundles its know-how and resources to offer infrastructure-related investment opportunities to both private and institu-tional clients.

Credit Suisse believes that the growth in the public financing segment could lead to the convergence of less capital-intense public financing deals offered by banks such as Dexia or Depfa, which specialize in public financing, and the traditional commercial banking offerings of most larger banks.

Today, investment banks structure investment deals together with credit insurance companies in order to give the projects a better risk classification. This, in turn, makes infra-structure projects more attractive to defensive long-term in-vestors such as pension funds. Credit Suisse anticipates that the demand for long-term infrastructure-related investment opportunities will grow continuously as pension funds actively seek to diversify their portfolios.

Is Infrastructure a Growing Business for Banks?Despite the increased demand for infrastructure, many governments are today unable to fund large-scale projects. Budget restrictions such as the Maastricht criteria could therefore encourage the private financing of public infrastructure projects.

Christine Schmid, Fundamental Analysis, Banking

Maximizing Talent Use Across the Globe

Singapore – Credit Suisse has set up Centers of Excellence to maximize the use of the bank’s talents globally, while continuing to efficiently support the needs of its clients. More than 2,000 support staff work in the bank’s three centers, located in Singapore, India, and the US. They back up the entire business by covering a range of activities including information technology, operations, finance and product control work.

The centers also enable Credit Suisse to better position itself for further business expansion, as they build on a culture of high per-formance and permanent improvement. A center is scheduled to open in Poland by the third quarter of 2007. With locations on three conti-nents, the centers manage to deliver the right work in the right loca-tion at the right price.

The support staff stand in a server room in Singapore’s Center of Excellence, where millions of gigabytes of information are stored and terabytes of information transit through its servers everyday. Backup systems for operational or disaster recovery, as well as firewalls de-signed to prevent unauthorized access to or from other networks are also found in server rooms like the one pictured.

From left to right:

Matthew WorthyIT Investment Banking, Singapore

Alvean LeeIT Operations & Support, Singapore

Conrad WilsonTechnology Infrastructure Services, Singapore

Pierre RebufatIT Asia-Pacific, Singapore

Alpana ChatterjiSecurities Processing Singapore, Singapore



IT is of key importance in today’s financial sector, where it supports a wide range of vital operations, such as equity and fixed-income trading, account management, portfolio track-ing, balance sheet analysis and online banking. Technology enables financial institutions to provide innovative solutions to their clients, as well as facilitate the work of their employ-ees. Without its complex network of IT tools, servers and ap-plications, the industry would cease to function.

Technological development is one of the main sources of growth within the banking sector. In addition to acceler-ating business processes, enhancing efficiency and signifi-cantly reducing costs, it is also the driving force behind the creation of new and innovative financial products and ser-vices, such as algorithmic and derivatives trading.

The way in which bank employees interact is also be-ing transformed as a result of modern technologies, such as e-mail and video-conferencing, which promote virtual com-munication and cooperation. Traditional working methods are changing radically within today’s financial institutions, with many projects now being executed by highly-skilled teams across different continents.

However, it is the virtualization of production which is set to revolutionize the financial sector in the years to come, creating exciting new business opportunities for the entire industry. This means that IT infrastructure will be shared and available on an on-demand basis, rather than being stored on thousands of servers.

The Rapid Spread of IT Within the Banking IndustryThe use of IT within the banking industry has grown contin-uously since the first generation of computers was introduced

in the 1960s, followed by the opening of central computer centers for online services in the 1970s. Minicomputers − the predecessor of today’s personal computers (PCs) − repre-sented another milestone in the development of IT in the financial sector and remained in widespread use until the arrival of the first PCs in the mid-80s.

Credit Suisse introduced telephone banking in 1993 but this offering soon became obsolete with the advent of the Internet in the late 1990s. Credit Suisse launched its first online banking services in 1997, followed by its online trad-ing platform two years later. Today, clients can use real-time online banking services to execute payments, trade stocks or check their account balances and portfolios at any hour of the day.

IT Is Driving the Growth of the Banking SectorToday, IT expertise is regarded as one of the key drivers of growth and innovation in the banking sector, rather than sim-ply as a tool to support business operations. Standardized processes are a prerequisite to achieve increased revenues and profitable growth. IT applications enable banks to ratio-nalize their operations − particularly by eliminating repetitive administrative tasks.

The integration of various IT platforms onto a single powerful platform is another way of enhancing profit growth. The IT functions of Credit Suisse’s core businesses – Invest-ment Banking, Private Banking and Asset Management – operated independently until 2006, when they were com-bined to form a single bank-wide IT organization. The suc-cessful realization of the integration process was a significant achievement, which resulted in significant cost savings in

IT Transforms the Finance IndustryThe phenomenal advances in Information Technology (IT) over the past few decades have completely transformed the finance industry. Thirty years ago, banks were still using punch card technology, and the first generations of computers were being unveiled. Today, the banking sector uses highly sophisticated IT solutions in virtually all of its daily operations – with integrated platforms, countless applications and secure software ensuring the rapid flow of information and the flawless execution of transactions.

Dorothée Enskog, Senior Editor at Group Communications


2006, as well as new efficiencies. More synergies and sav-ings are yet to come.

IT expertise can also be used to produce intelligent new solutions such as fully automated trading systems that accelerate business transactions and minimize costs. For example, Credit Suisse has exploited its technological know-how to develop its Advanced Execution Services (AES) plat-form − a sophisticated suite of algorithmic trading strate-gies, tools and analytics which are used by the bank to fa-cilitate global equity trading. AES is based on the concept of “Black Box” trading, which essentially means that the sys-tem is programmed to “think” and “behave” like a trader. It consequently helps clients to reduce market impacts, im-prove performance versus benchmarks and add consistency to their trading.

Harnessing IT Expertise to Create Innovative Products Technical innovation has spurred the development and trad-ing of products, such as complex derivatives − financial in-struments whose value is derived from an underlying market value but also includes additional assumptions influencing the trade over time. The derivatives industry is booming now that financial professionals are able to accurately and effec-tively design and deliver the mathematical algorithms behind the valuation of these sophisticated products using power-ful computing applications.

Traders use the analytical data produced by thousands of computer simulations, which take account of all the assump-tions used to determine the value of a derivative trade. An extremely complicated trade can require millions of individ-ual calculations to determine its price or value. For example,

if a trader decides to forecast the trade for 30 years, multi-ple computers will simulate the lifecycle of that trade every day for the next 30 years in order to determine when it will have the greatest value for clients.

Virtualization Is Set to Revolutionize the IndustryEmployees are increasingly working in virtual rather than physical teams due to the availability of tools, such as desktop videos. At Credit Suisse, teams often comprise a number of specialists across several continents who coop-erate on a virtual basis while working on the same project or deliverable. For example, process designers and busi-ness analysts may work with traders in London to define improvements to specific operations and procedures, while coding work is carried out in India and testing is performed in one of Credit Suisse’s Centers of Excellence around the world. These centers seek to leverage the bank’s global talent and resources in order to supply high-quality inter-nal services and support to the whole of Credit Suisse.

The virtualization of the IT infrastructure within banks is set to revolutionize the entire finance industry in the com-ing years. Today, the industry’s IT platforms are typically run by applications which are managed by tens of thousands of servers. Each time a server runs out of memory, hardware has to be purchased and installed and systems have to be reconfigured − resulting in significant latency time.

Banks are currently investing large sums in research and development to ensure they will be able to support their business operations on an on-demand basis in the future. With the virtualization of disks and servers, access to IT infra-structure will become possible on an on-demand basis and shared across systems − freeing valuable resources as re-sult. Numerous applications will be able to run on the same IT platform, while it will be possible to upgrade or downgrade capabilities on an almost real-time basis, thus saving time and reducing costs.

Clients Also Benefit From IT InnovationThe rapid evolution of mobile devices such as BlackBerries and handheld PCs will continue to strengthen the relationship between banks and clients going forward. Banks will be able to provide their clients with more immediate, easily accessi-ble and personalized information and advice that leverages their entire financial expertise. At the same time, the bank-ing industry will continue to use technology to maintain and reinforce the very high levels of security and protection that are the hallmarks of the financial sector.

In the fiercely competitive financial marketplace, banks can also draw on pioneering technological solutions to secure key advantages over their peers. The use of cut-ting-edge IT applications and products not only improves pro-ductivity and reduces costs: IT also creates significant new revenue opportunities that will help to drive profitable growth and increase shareholder value in the future.

A Good Corporate Citizen

New York – Sustainability is all about striking a balance between our current need to improve our quality of life and the need to preserve the environment for future generations. Credit Suisse is fully committed to sustainable development and actively assumes its responsibility towards society and the environment, as well as towards its stakeholders.

The bank takes environmental and social issues into account in its business decisions and in the management of its resources and infrastructure. For example, Credit Suisse’s Corporate Real Estate & Services team focuses on reducing the environmental impacts of the bank’s premises. The team is also responsible for facilities management, which includes the design, construction and operational management of the bank’s offices and branches around the world in accordance with environmental and security standards, as well as strict cost limits.

The New York Corporate Real Estate & Services team is pic-tured here in the south-east corner of Central Park in New York City. The park, designed by Frederick Law Olmsted and Calvert Vaux around 1850, is also known as “the heart and lungs of Manhattan”.

From left to right:

Andrew FederbuschCorporate Real Estate & Services, New York

Victoria LangellFacilities – Americas, Corporate Real Estate & Services, New York

Luther L. Terry Jr.Global Head Corporate Real Estate & Services, New York

Mike CovinoMedia Services, Corporate Real Estate & Services, New York

Beth WintersBuilding Services – Americas, Corporate Real Estate & Services, New York

Joseph RobertsonGlobal Sourcing Corporate Services, Supply Management, New York

Timothy TobiasenCritical Engineering Systems Americas, Corporate Real Estate & Services, New York

William BeckCritical Engineering Systems, Corporate Real Estate & Services, New York



Credit Suisse Group in Society

Successful companies combine profitability with social responsibility, thus creating added value for their shareholders and clients and contributing to the prosperity of society. Their long-term success is founded on a sustainable approach to business and the trust of their stakeholders.

The companies which operate in today’s increasingly complex environment are closely connected with different stakeholder groups in a variety of ways. In the case of Credit Suisse, these stakeholders comprise shareholders, clients, em-ployees, the local community and the broader social environment. The company has both an obligation and a desire to achieve business success but is, at the same time, aware of the economic, ecological and social expectations of its stakeholders.

To meet the constantly growing requirements within this environment, Credit Suisse introduced a Code of Conduct with 12 ethical and performance-related values in 2000. This Code, which applies to all employees, also demonstrates the company’s commitment to sustainability and refers to international agreements that it has pledged to uphold. They include the United Nations Environment Pro-gramme (UNEP) Declaration for Financial Services Providers, which defines prin-ciples for the inclusion of environmental aspects in business operations, as well as the United Nations Global Compact, an initiative under which companies com-mit themselves to ten principles relating to environmental protection, working con-ditions, human rights and anti-corruption efforts. An internal Sustainability Com-mittee monitors the bank’s compliance with these commitments.

Credit Suisse takes issues relating to the environment and society into ac-count when conducting its business activities, in line with its sustainability com-mitments. Its efforts are focused on satisfying due diligence requirements, pro-viding a needs-oriented product and service offering, operating a responsible hu-man resources policy and making efficient use of resources.

Diverse Due Diligence RequirementsCompliance with due diligence requirements − as well as all relevant legislation − is a prerequisite for long-term business success. Credit Suisse therefore uses its risk management process to evaluate any potential environmental risks in busi-ness transactions such as loans and project finance. To avoid credit-, liability- and reputation-related risks, sensitive transactions undergo a clearly defined process that enables environmental risks to be identified and assessed. In the case of project finance, the bank applies the Equator Principles to analyze potential eco-logical and social risks in accordance with World Bank guidelines. This voluntary agreement, which was launched in 2003 and revised in 2006, has been endorsed by around 40 banks.

To safeguard its reputation, it is also vital for Credit Suisse to prevent its products and services from being abused, while still respecting the privacy of its clients. As well as adhering to local legislation, the bank therefore applies the strict Swiss regulations for the prevention of money laundering and terrorist fi-nancing in all of its international locations. It is important for banks that operate in a globalized environment to also make a contribution on an international level. Credit Suisse is therefore one of the 12 globally active banks in the Wolfsberg Group that are working to establish international industry-wide standards.

Sustainable InvestingCredit Suisse offers its clients a range of investment opportunities with a focus on the environment and society. The Credit Suisse Global Sustainability Fund and


the Credit Suisse Fellowship Fund invest in companies from various sectors that are leaders in the field of sustainability or engage in ethically or ecologically oriented activities.

Various themed products address the increasingly pronounced shortage of resources (water and energy) or efforts to reduce greenhouse gases. New products launched in this field in 2006 are the Future Energy Fund, which is geared towards the future-oriented generation and distribution of energy, and Clariden Leu’s CO2 Certificate, which enables investors to participate in the price movements of European emission rights.

The responsAbility Global Microfinance Fund, which was co-founded by Credit Suisse in 2003, is an example of a socially oriented product. It allows for the provision of very small loans to microentrepreneurs in developing and newly industrialized countries and thus helps them to establish their own businesses. The Nobel Peace Prize 2006 was awarded to Muhammad Yunus, the founder of Grameen Bank and the pioneer of microcredit, thus illustrating the important role played by microfinance.

Services such as individual portfolio screening, including specialist advice, complement the range of sustainable investment opportunities offered by Credit Suisse. The bank’s open product platform also enables clients to ac-cess sustainable offerings from third-party providers.

Masdar Clean Tech FundIn 2006, Credit Suisse, the Abu Dhabi Future Energy Company and other part-ners launched the USD 250 million Masdar Clean Tech Fund, which invests in clean energy and sustainable technologies, thus contributing to the economic di-versification of the Gulf region. The fund is part of the Abu Dhabi government’s Masdar Initiative, which encompasses a special economic zone, a research net-work and an innovation center focusing on renewable energies and the reduction of emissions.

EmployeesCredit Suisse wants to further consolidate its position as one of the world’s lead-ing banks and therefore aims to strengthen its image as an employer of choice. A good working environment, challenging work and attractive career prospects within a multicultural environment are factors that make it an attractive employer. In 2006, Credit Suisse implemented various measures to integrate its businesses so that clients can benefit from the resources of the entire bank. This, in turn, leads to increased teamwork and creates new opportunities for employees.

Large organizations require managers who can successfully execute their strategies. To satisfy this need, Credit Suisse introduced an assessment and de-velopment process to support both the current and future members of its senior management. The process is also intended to assist senior managers when ap-pointing employees to key roles, and it ensures continuous talent management throughout the organization. The Credit Suisse Business School supports the bank’s employees by providing internal and external training opportunities. Today, the Business School is a global organization with central training locations in Swit-zerland, New York, London, Singapore, and Hong Kong.

To achieve ambitious business goals, companies require committed em-ployees who can master the challenges that face them. The bank periodically conducts surveys to assess employee motivation and commitment and to identify areas for improvement. It has also introduced “Credit Suisse Awards” − a global program that rewards individual employees and teams for outstanding achieve-ments that reflect the bank’s principles.

Diversity and InclusionCredit Suisse’s clients have an increasingly international focus, which means that its employees must work together across its businesses and regions. The bank


has a unique approach to diversity and inclusion. We are able to win new business and to strengthen existing client relationships by exploiting the considerable diver-sity within the company. In addition, a culture in which employees’ differences are valued and leveraged is one of the drivers of the bank’s continued success.

Sustainability RatingsCredit Suisse once again ranked as one of the leading financial services provid-ers in the field of sustainability in 2006, as confirmed by specialist rating agen-cies and index providers. The bank has been included in the Dow Jones Sustainability Indexes and the FTSE4Good Index Series since they were launched. Details of Credit Suisse’s sustainability commitments can be found at: www.credit-suisse.com/responsibility.

Sustainable Energy Finance Deal of the YearIn 2006, Credit Suisse was presented with the “Sustainable Energy Finance Deal of the Year” award by the Financial Times and the International Finance Corpo-ration for successfully executing the USD 455 million IPO of Suntech Power Hold-ings Co. Ltd. Suntech is a leading solar energy company and the first major alter-native energy firm to be based in China. This prize was awarded to the bank which “executed the energy transaction with the largest sustainable impact in terms of environmental, social and financial value creation, its innovative structure and its potential for replication.”

Environment and ClimateCredit Suisse is committed to using natural resources as sparingly as possible in its internal processes. It has been operating an environmental management sys-tem that is certified according to ISO 14001 since 1997. In 2006, the external au-ditor SGS confirmed the successful global recertification of the environmental management system.

Credit Suisse also implemented other measures in the field of environmen-tal management: a total of 11 buildings with an energy reference area of approx-imately 200,000 m2 − mostly comprising Credit Suisse investment projects − have now been certified according to the Swiss “Minergie” standard. In addition, the bank is one of the principal consumers of certified green electricity in Switzer-land and has concluded multi-year contracts for the use of electricity from renew-able energy sources for its premises in Frankfurt and London. Furthermore, e-documents with digital signatures were introduced in the area of electronic pay-ment transactions, significantly reducing the volume of paper-based correspondence for clients and the bank. Finally, Credit Suisse received an award for its efforts in the field of energy efficiency in New York.

Credit Suisse reached an important milestone and made a key contribu-tion to climate protection in 2006 with its pilot project to achieve greenhouse gas neutrality in Switzerland. Using a multi-level strategy, Credit Suisse has neutralized all of the greenhouse gas emissions from its operational activities in Switzerland and is thus reducing its global emissions by approximately 20%.

Emissions trading and the reduction of emissions are important topics that extend beyond the boundaries of the company. Credit Suisse conducts carbon emissions trading from its Energy Trading desk in New York and London. The car-bon trading team also helps to finance investments in project-based reductions of carbon emissions in the emerging markets.

Credit Suisse has also been involved in the Carbon Disclosure Project − an international initiative that aims to create transparency about the greenhouse gas emissions of listed companies to benefit institutional investors since 2002. In 2006, 72% of the world’s 500 largest companies (FT500) completed a questionnaire on this subject. Based on their responses, a Climate Leadership Index was compiled, in which Credit Suisse ranks second in the banking sector.


Dialog With SocietyAs a global company, Credit Suisse maintains a dialog with society at a number of different levels: it exchanges views and ideas with clients, shareholders, ana-lysts and the media, while also cultivating contacts with regulators, associations, government representatives, international bodies, and non-governmental organi-zations. The aim of this dialog is to promote mutual understanding and to jointly find solutions to social challenges. A large number of Credit Suisse employees in Switzerland also exercise a political function in addition to their work at the bank. Credit Suisse allows these members of staff to use part of their working hours for this purpose.

Credit Suisse contributes to the public debate through publications such as the studies that are regularly produced by its Economic Research department, which address current economic and sociopolitical issues including the retirement age, youth unemployment, disposable income, and international capital flows. There is also a great deal of interest in the Credit Suisse “Sorgenbarometer” sur-vey, which has been published annually since 1976 and reveals the issues that are of greatest concern to the Swiss public.

The company has long-term sponsorship commitments in the areas of sport and culture on both a national and international level and also supports special projects. These activities raise the bank’s profile in the public arena and contrib-ute to its good reputation both within and outside Switzerland.

Charitable CommitmentsCredit Suisse, its foundations and its employees actively help to create a stable social environment. To mark the 150th anniversary of Credit Suisse, the Jubilee Foundation added a number of selected activities to its longstanding commit-ments and lent its support to over 100 large and small projects within Switzerland, thus contributing to the realization of a wide range of social and cultural initia-tives. Youth unemployment was another core theme in 2006. Credit Suisse ad-dressed this issue by supporting projects such as Speranza 2000, Caritas incluso and the Zürich-Jobs foundation in Switzerland, as well as by continuing its in-volvement in the Swiss-South African Cooperation Initiative in South Africa.

The bank’s charitable commitments also address a variety of needs in different regions of the world, reflecting the global nature of its business. These efforts range from support for artistic talent, the social integration of people with disabilities, and the construction and equipping of schools and libraries, to the mentoring of young people and measures to assist the sick and elderly. Credit Suisse’s activities in this field are supported by countless employees, who con-tribute their own time and resources and play an active role in volunteer projects. Together with the UN’s World Food Programme, Credit Suisse also launched a “Food for Education” initiative in Sri Lanka. As part of the initiative, kitchen and food storage facilities will be constructed for 61 schools, which will be able to of-fer school lunches to approximately 19,000 children throughout 2007 and 2008.

Executive Boards of Credit Suisse Group and Credit Suisse (as of December 31, 2006)From left to right:

Tobias GuldimannChief Risk Officer, Credit Suisse Group

Thomas J. SanzoneChief Information Officer, Credit Suisse

Michael G. PhilippChief Executive Officer, Credit Suisse Europe, Middle East and Africa

Paul L. CalelloChief Executive Officer, Credit Suisse Asia Pacific

Walter BerchtoldChief Executive Officer, Private Banking

Oswald J. GrübelChief Executive Officer, Credit Suisse Group and Credit Suisse

David J. BlumerChief Executive Officer, Asset Management

Brady W. DouganChief Executive Officer, Investment Banking and Credit Suisse Americas

Ulrich KörnerChief Executive Officer, Credit Suisse Switzerland

Urs RohnerGeneral Counsel, Credit Suisse Group and Credit Suisse,Chief Operating Officer, Credit Suisse

Renato FassbindChief Financial Officer, Credit Suisse Group and Credit Suisse

D. Wilson ErvinChief Risk Officer, Credit Suisse

Promoting Moments of Excellence

Zurich – Sponsorship is an integral part of Credit Suisse’s corporate and communication strategy. The bank focuses its sponsorship commitments on high-quality cultural and sporting events and aims to establish rewarding long-term relationships with its partners. Its cultural sponsorship activities center on classical music, jazz, and the fine arts. The bank’s latest international commitments in this field include its partnership with the Salzburg Festival and the Bolshoi Theater in Moscow. Its sports sponsorship commitments include Formula One motor racing, golf, soccer, and equestrian sports.

The Executive Board is pictured here at the “Kunsthaus” in Zurich, where a retrospective exhibition of the works of the French artist Auguste Rodin (1840-1917) was sponsored by the bank during spring 2007. Visitors could see Rodin’s works, including 160 bronze sculptures, works in plaster and drawings.



Summary of the Responsibilities of the Board of Directors and the Executive Boards of Credit Suisse Group and Credit Suisse

Credit Suisse Group Board of DirectorsCredit Suisse Group’s Board of Directors is responsible for the overall direction, supervision and control of the company. The Board regularly assesses the Group’s competitive position and approves its strategic and financial plans.

At each meeting, the Board receives a status report on the financial results of the Group. In addition, the Board regularly receives risk reports and updates on key issues. All members of the Board have access to all information concerning the Group.

The Board also reviews and approves significant changes in the Group’s structure and organization and is actively involved in significant projects, including acquisitions, divestitures, and investments and other major projects. The Board and its committees are entitled to engage independent advisors to look into any matters subject to their authority, as they deem appropriate. The Board also performs a self-assessment once a year.

Walter B. Kielholz Chairman, born 1951, Swiss citizen Hans-Ulrich Doerig Vice-Chairman, born 1940, Swiss citizen Thomas W. Bechtler born 1949, Swiss citizen Robert H. Benmosche born 1944, US citizen Peter Brabeck-Letmathe born 1944, Austrian citizen Noreen Doyle born 1949, US and Irish citizen Jean Lanier born 1946, French citizen Anton van Rossum born 1945, Dutch citizen Aziz R. D. Syriani born 1942, Canadian citizen David W. Syz born 1944, Swiss citizen Ernst Tanner born 1946, Swiss citizen Peter F. Weibel born 1942, Swiss citizen Richard E. Thornburgh born 1952, US citizen


Executive Board of Credit Suisse Group (as of December 31, 2006)The most senior executive body of Credit Suisse Group is the Group Executive Board. The Group Executive Board, led by the Group Chief Executive Officer, is responsible for the day-to-day operational management of the Group as a whole and the im-plementation of the principal business strategy and the financial plans approved by the Board of Directors. It coordinates significant Group-wide initiatives, projects and business developments and establishes general Group-wide policies.

Oswald J. Grübel Chief Executive Officer, Credit Suisse Group Brady W. Dougan Chief Executive Officer, Investment Banking Walter Berchtold Chief Executive Officer, Private Banking David J. Blumer Chief Executive Officer, Asset Management Renato Fassbind Chief Financial Officer, Credit Suisse Group Tobias Guldimann Chief Risk Officer, Credit Suisse Group Urs Rohner General Counsel, Credit Suisse Group

Executive Board of Credit Suisse (as of December 31, 2006)The most senior executive body of the banking organization is the Executive Board of Credit Suisse. It is responsible for the day-to-day operational management of the Group’s banking business. It develops and implements the strategic business plans for the bank, subject to approval by the Board of Directors, and reviews and coordinates significant initiatives and projects in the divisions and regions or in the Shared Services functions.

Oswald J. Grübel Chief Executive Officer, Credit Suisse Brady W. Dougan Chief Executive Officer, Investment Banking, and Chief Executive Officer, Credit Suisse Americas Walter Berchtold Chief Executive Officer, Private Banking David J. Blumer Chief Executive Officer, Asset Management Paul L. Calello Chief Executive Officer, Credit Suisse Asia-Pacific D. Wilson Ervin Chief Risk Officer, Credit Suisse Renato Fassbind Chief Financial Officer, Credit Suisse Ulrich Körner Chief Executive Officer, Credit Suisse Switzerland Urs Rohner General Counsel and Chief Operating Officer, Credit Suisse Michael G. Philipp Chief Executive Officer, Credit Suisse Europe, Middle East and Africa Thomas J. Sanzone Chief Information Officer, Credit Suisse

Management Changes In February 2007, the Group announced the appointment of Brady W. Dougan as new Chief Executive Officer of Credit Suisse Group and Credit Suisse, effective May 5, 2007. He will succeed Oswald J. Grübel who will retire at the AGM in 2007. Brady W. Dougan is currently the Chief Executive Officer Investment Banking. Paul L. Calello, the current Chief Executive Officer Asia-Pacific, will replace Brady W. Dougan as the Chief Executive Officer Investment Banking. Robert Shafir will join as Chief Executive Officer Americas and become a member of the Executive Board of the Bank. With the closing of the sale of the Winterthur Group to AXA S.A. Leonhard H. Fischer stepped down from the Group Executive Board effective December 22, 2006. At the same time the Group announced that Mr. Fischer has been appointed Chief Executive Officer Credit Suisse Europe, Middle East and Africa and member of the Executive Board of the Bank effective March 1, 2007. Michael G. Philipp has been appointed Chairman of Europe, Middle East and Africa effective March 1, 2007.


Credit Suisse Group’s corporate governance policies and procedures comply with high international standards. We are committed to safeguarding the interests of our stakeholders and recognize the importance of corporate governance in achieving this. Transparent disclosure helps stakeholders to assess the quality of our business and management and assists our investors in their investment decisions.

Abiding by the RulesWe adhere to the principles set out in the Swiss Code of Best Practice. In connection with our primary listing on the SWX Swiss Exchange, we are subject to the SWX Directive governing the disclosure of information on corporate governance. Our shares are also listed on the New York Stock Exchange (NYSE) in the form of American Depositary Shares. As a result, we are subject to certain US rules and regulations. Moreover, we adhere to the NYSE Corporate Governance rules, with a few minor exceptions where the rules are not applicable to foreign private issuers.

Our GuidelinesOur corporate governance policies and procedures are defined in a series of documents governing the organization and management of the company. Our Board of Directors has adopted a set of Corporate Governance Guidelines, designed to explain and promote an understanding of our governance structures. Other important corporate governance documents include the Articles of Association, the Board of Directors Committee Charters, and the Code of Conduct.

Code of ConductOur Code of Conduct focuses on 12 core ethical and performance values which are applicable to all of our employees and guide them in their activities. We are present in over 50 countries and employ individuals from over 100 different nations. The Code is, therefore, intended to promote a sense of unity and to help our employees to identify with our shared values, methods and objectives. It also plays an important role in guiding our efforts to inspire and maintain the trust and confidence of all our stakeholders.

Involving our ShareholdersAs investors and bearers of risk, our shareholders have the right to decide on key issues within our Group at the Annual General Meeting. We want our investors to know that they can depend on the accuracy and transparency of our reporting publications. We are, therefore, committed to producing precise, reliable and comprehensible financial reports that clearly explain our performance, our mis-sion and our strategic rationale.

Corporate Governance

The way we interact with our stakeholders has a fundamental impact on our business and, ultimately, on our reputation. We, therefore, strive to act with integrity, responsibility, fairness, transparency and discretion at all times in order to secure the trust of our shareholders, clients and employees and other members of the financial community, as well as the broader public.


Our Board of DirectorsOur Board of Directors is responsible for the overall direction, supervision and control of the Group. It regularly assesses our competitive position and approves our strategic and financial plans. The Board is actively involved in significant Group projects. The Board consists solely of directors who have no executive function within the Group and includes a majority of independent directors. The Board holds at least six ordinary meetings per year and, in addition, convenes as often as required to discuss any urgent matters. It has established four committees that support the Board in appropriately discharging its responsibilities: the Chairman’s and Governance Committee, the Audit Committee, the Compensation Committee, and the Risk Committee.

Our ManagementThe Board of Directors delegates management authority and the power to implement its resolutions to executive management bodies or executive officers. The most senior executive body is the Group Executive Board, which – under the lead of the Group Chief Executive Officer – is responsible for the operational management of the Group.

Managing RiskOur Risk Management function contributes to our company’s success by promoting a disciplined risk culture and creating the appropriate transparency. It also ensures that we adopt a prudent and intelligent approach to risk taking that appropriately balances risk and return and optimizes the allocation of capital throughout the Group to benefit shareholders and other stakeholders. A significant number of employees and considerable technological resources are focused on ensuring that Credit Suisse Group remains a leader in the field of risk management. Moreover, through our proactive risk management culture and the appropriate qualitative and quantitative tools, we strive to minimize the potential for undesired risk exposure in our operations.

Committed to ComplianceOur employees are committed to maintaining the highest standards of compliance with all legal, regulatory and internal requirements, and they observe strict standards of professional conduct at all times. The implementation of compliance begins when selecting employees and ranges from training, detailed processes and rules to effective supervisory and control systems.

Rewarding ExcellenceWe are committed to employing a compensation philosophy that rewards excellence, encourages personal contribution and professional growth and aligns the employees’ values with the Group’s core ethical and performance values and thus motivates the creation of shareholder value. Long-term corporate success depends on the strength of human capital, and our goal is to be the employer of choice in the markets and business segments in which we operate.

Further information on corporate governance can be found in the Credit Suisse Group Annual Report 2006.

Protecting and Enhancing Value

London – The CFO division plays a key role in the formulation and implementation of Credit Suisse’s strategic plans. The division performs key financial management and reporting functions such as investor relations, controlling, financial accounting, product control, tax, treasury, new business, and insurance.

Credit Suisse’s financial management and reporting professionals are focused on protecting and enhancing shareholder value by safeguarding the bank’s financial franchise, delivering reliable and transparent information to stakeholders and optimizing the use of financial resources.

A group of financial professionals from the CFO division in London are pictured here in one of the bank’s offices in Canary Wharf, where around 7,000 staff (or more than 15% of the bank’s workforce) are based. Once one of the world’s busiest docks, Canary Wharf has since been transformed into London’s newest financial district. The area today rivals the capital’s traditional financial center, known simply as “the City”. Credit Suisse relocated to Canary Wharf in 1993 and occupies a building designed by Pei Cobb Freed.

From left to right:

Amin HaqueControlling for CIO, CFO division, New York

Melanie RobinsonTax, CFO division,London

Samantha WallisFinancial Accounting, CFO division, London

Khalid RafiqGroup Controlling, CFO division,London

Parminder GosalNew Business Europe, CFO division,London

Jason PretoriusProduct Control, CFO division,London



Credit Suisse has defined three strategic priorities in order to accelerate the expansion of our business going forward.

We will continue to capitalize on our integrated banking model by building on a series of targeted internal initiatives that drive revenue growth and reduce costs. We believe that the integrated organization has the necessary flexibility and resources to provide innovative financial solutions and compelling advice. Credit Suisse is one of the few truly integrated global banks with a business model designed to enable it to meet the sophisticated requirements of institutional and private clients throughout the world, rapidly and effectively. Credit Suisse’s business model is the response to constantly changing client needs in an industry that is driven by globalization and rapid technological developments. These two trends are transforming the expectations and conduct of clients, who are demanding an even broader range of offerings, improved performance, greater transparency and continuous access to global execution capabilities.

Based on the strongest capital base in its history, Credit Suisse will use its capital resources to grow its business, while, at the same time, returning capital to its shareholders. We will deploy our capital as efficiently as possible. The target for our annual return on equity is above 20% across business cycles over a three to five year period. Credit Suisse will expand its operations primarily through organic growth, as well as through select smaller acquisitions, joint ventures and similar alliances. Credit Suisse is committed to deploying its capital as efficiently as possible. Credit Suisse has set aside CHF 4 billion of capital for organic growth and CHF 3.5 billion for these targeted acquisitions.

We will continue to expand our activities in highgrowth markets and products. The announcement of an agreement to acquire the Brazilian asset manager Hedging Griffo in December 2006 is an example of the strategic steps that we intend to take to leverage our integrated banking model in our growth markets. We also aim to realize our third priority through measures such as the expansion of activities in dynamic emerging markets and the growth of leading businesses and products, including alternative investments and structured products. Our objective is to generate longterm, sustainable returns. We will therefore focus on and invest in businesses which fit our model and are in line with that objective.

Strategic Plans in Our Three Divisions

Investment BankingInvestment Banking has made significant progress across businesses and is targeting substantial opportunities as part of its ongoing strategic initiatives.

We are building on existing strengths that are well matched against market trends. These trends include the growth of the emerging markets, further growth in structured products, the role of financial sponsors and the move toward electronic execution. We are well positioned to benefit from these trends by further capitalizing on our industryleading emerging markets platform, our leading

The Strategy of Credit Suisse

Credit Suisse’s strategy builds on its integrated structure and clientcentric business model and ensures that the Group can deliver its full range of products and services to clients from across its three divisions, Investment Banking, Private Banking and Asset Management.


commercial mortgagebacked securities (CMBS) and residential mortgagebacked securities (RMBS) businesses, our leading franchise in leveraged finance and financial sponsors and our Advanced Execution Services (AES®) electronic trading platform. We are also targeting areas where we see additional potential to close business gaps such as prime services, commodities and derivatives.

Private BankingIn Private Banking, we aim to establish Credit Suisse as the premier global private bank worldwide and in Switzerland. We are improving our wealth management offering by anticipating the key trends that shape the wealth management industry. We will focus on total client wealth, including all asset classes as well as liabilities. We will look at our clients from three different angles: source of wealth, investment behavior and lifecycle phase. These three dimensions allow us to advise and serve our clients according to their needs. Our integrated business model offers our clients consistent access to comprehensive solutions by combining private, asset management and investment banking skills. We plan to further expand our global presence by offering onshore and offshore capabilities in all major regions.

Asset ManagementAsset Management has made significant progress in realigning the various businesses that came together to create the new division over the course of the past year, putting its business on a sound platform for future growth. The Asset Management division is now focused on growing its business by aligning its business model to reflect shifts in client demand and to be positioned to provide more comprehensive services to its clients. Its business model reflects client demand for services along a more complex and integrated value chain that include solutionsbased advisory services such as asset and liability management, pension consulting, risk management and technology solutions, for both institutional and private clients.

The Asset Management growth strategy includes expansion into new geographic markets in line with the integrated bank and expansion into new asset classes and investment capabilities through strategic alliances, particularly in the area of alternative investments. Asset Management is also focused on strengthening its single strategy hedge fund business.

Asset Management is applying a more disciplined approach to managing its business as part of its overall strategy. Its portfolio of investment strategies and products is regularly reevaluated to ensure they are in line with client demand, appropriately managed and profitable. Asset Management is focused on increasing both the stability and the diversification of its revenues by expanding into new areas. Its alternatives products are increasingly welldiversified and include real estate, quantitative products, funds of hedge funds and other products with recurring fees.

Asset Management believes that its realignment and the capabilities of the integrated bank provide it with a platform that will enable it to grow and make the most of the opportunities presented by the changing market environment.


The Future Growth of Credit Suisse: Five Key Initiatives for Profitability

Credit Suisse continued to strengthen its operational structure and activities. Its efforts are based on five key initiatives that are designed to improve the use of its resources, increase focus on clients and improve productivity. In addition, the initiatives are expected to increase cost awareness as a foundation for sustained and profitable growth.

One Bank DeliveryThe full potential of the integrated organization, including the generation of reve-nue synergies, can only be realized if cooperation is maximized and the combined execution and distribution capabilities are utilized. Credit Suisse implemented its One Bank Delivery initiative, which centers on the systematic identification of business opportunities that enable it to deliver its entire expertise to clients, includ-ing, but not limited to: Providing ultra-high-net-worth clients in Private Banking with customized solu-

tions and access to Investment Banking and Asset Management; Leveraging Investment Banking relationships for referrals to Private Banking

and Asset Management; Leveraging Investment Banking relationships to market cross-divisional solu-

tions to pension funds globally; Growing sales of Asset Management’s alternative investment products and ser-

vices to Private Banking clients; and Offering Investment Banking prime services and execution to hedge and mutual

funds.

Client CentricityCredit Suisse has a long tradition of providing innovative solutions to its clients. The Client Centricity initiative is designed to ensure that Credit Suisse delivers its full capability to clients in a scalable and profitable manner, by adopting an in-creasingly client-oriented perspective rather than a product-driven approach. By applying Client Centricity, Credit Suisse is pursuing client-driven innovation. Using sophisticated segmentation analysis, as well as extensive client interviews, which consider aspects of client conduct such as behavior and buying patterns, Credit Suisse is able to identify the needs of existing and potential clients. Credit Suisse then draws on these insights to deliver comprehensive financial solutions using the capability of the entire organization.

Centers of ExcellenceIn a competitive global marketplace, it is important for Credit Suisse to manage its resources and to expand its global infrastructure and footprint to meet the re-quirements of clients. Credit Suisse has responded to this need by establishing Centers of Excellence that leverage its global talent pool and resources in order to supply high-quality internal services at competitive costs. In November 2006, Credit Suisse announced plans to open a Center of Excellence in India as part of its global sourcing initiative. The new Credit Suisse branded facility in Pune com-menced operations in January 2007. The Pune site complements Credit Suisse’s existing Centers of Excellence in Singapore and Raleigh, North Carolina. In Feb-ruary 2007, Credit Suisse announced the launch of a new Center of Excellence in Wroclaw, Poland, which is expected to be operational in the third quarter of 2007. The new site will support Credit Suisse’s global businesses and highlights


Credit Suisse’s commitment to the Eastern European region. In March 2007, Credit Suisse further expanded its already established Center of Excellence in Singapore by increasing office capacity to meet the increased demand.

Operational ExcellenceOperational Excellence is an initiative based on principles and methodologies such as Lean Sigma, which provides the tools and processes needed to deliver sub-stantial and sustained improvements in service quality, control, productivity and revenues. Operational Excellence was first introduced in Private Banking in 2004 and was extended to the rest of Credit Suisse in 2006. The initiative is based on three basic principles: The creation of a cultural mindset for continuous improvement; The implementation of a standardized problem-solving methodology through-

out the organization; and The creation of a management culture that is increasingly driven by client per-

spectives and focuses on data relating to client needs and process perfor-mance.

Examples of successful Operational Excellence projects in 2006 include: an im-proved real estate appraisal project resulting in faster mortgage application processing in Switzerland; a plan to reduce the administrative workload of rela-tionship managers in Wealth Management, enabling them to devote more time to their clients; and a fund access project, providing financial institutions with funds trading services, such as settlement, execution and custody, allowing them to save internal resources and staffing costs. At the end of 2006, Credit Suisse had various Operational Excellence projects in its global project portfolio, generating significant benefits across all areas of the organization.

Cost ManagementCredit Suisse can only make optimal use of the growth and synergies resulting from the integration of the business if it maintains a disciplined approach to costs. It therefore rolled out a Cost Management initiative with the aim of further devel-oping a cost-conscious culture, more actively managing costs and increasing the flexibility of the cost structure and the efficiency of business processes. The cost savings generated by this initiative are expected to make a noticeable contribu-tion towards sustained, long-term profitability.

Revenue growth

Operational efficiency/costmanagement

Offer products andservices from across

the bank

Sustainably improve cost structure

Increase clientfocus and improve

processes

Pursue client-driven innovation

Implement global business architecture

One Bank Delivery (OBD)

Client Centricity (CC)

Cost Management

Initiative (CMI)

Operational Excellence

(OE)

Centers of Excellence

(CoE)


Operating Review

2006 was a record year for Credit Suisse Group. The new integrated banking model proved successful and provided an effective platform to capture the growth opportunities arising from high levels of client activity, while significantly improving profitability. Credit Suisse Group’s financial results underscore the progress made during 2006. Net income for the full year increased 94% to CHF 11.3 billion, including a net capital gain of CHF 1.8 billion from the sale of Winterthur. Basic earnings per share were CHF 10.30. Income from continuing operations was CHF 8.3 billion or CHF 7.53 per share. Return on equity improved significantly to 27.5%, from 15.4% in 2005. Credit Suisse generated net new assets of CHF 95.4 billion in 2006.

Credit Suisse Group recorded Net income of CHF 11,327 million, an increase of CHF 5,477 million, or 94%, compared to full year 2005. 2006 Net income included a net capital gain of CHF 1,817 million from the sale of Winterthur. Income from continuing operations before extraordinary items and cumulative effect of account-ing changes in 2006 was CHF 8,281 million, an increase of 83% compared to 2005. Investment Banking’s results improved significantly as a result of favorable market conditions and increased client and deal activity and include credits from insurance settlements for litigation and related costs of CHF 508 million. Private Banking also reported good results as higher revenues associated with client activity were partially offset by higher compensation expenses, including strategic in-vestments in Wealth Management’s global franchise. Asset Management’s re-sults declined reflecting lower Private equity and other investment-related gains and higher Compensation and benefits and Other expenses, partly due to the business realignment.

Investment BankingThrough its Investment Banking division, Credit Suisse supplies investment banking and securities products and services to corporate, institutional and government clients around the world. Its products and services include debt and equity underwriting, sales and trading, mergers and acquisitions, divestitures, corporate sales, restructuring and investment research.

Investment Banking reported Income from continuing operations before taxes of CHF 5,951 million, an increase of 272%, compared to 2005. Excluding the credits from insurance settlements for litigation and related costs in 2006 and the charge to increase the reserve for certain private litigation matters in 2005, Income from continuing operations before taxes increased 113%, compared to 2005. These record results in 2006 reflected strong performance in all key businesses and regions amid favorable market conditions, high levels of deal activity and improved market share in certain products.

Investment Banking generated record revenues in advisory and debt and equity underwriting and significantly increased trading revenues, and reported an

Credit Suisse Groupin CHF m, except where indicated 2006 2005

Net revenues 38,603 30,489

Total operating expenses 24,414 23,232

Net income 11,327 5,850

Return on equity 27.5 % 15.4 %

Basic earnings per share in CHF 10.30 5.17

BIS Tier 1 ratio 13.9 % 11.3 %


Assets under management in CHF bn 1,485.1 1,319.4

Investment Bankingin CHF m, except where indicated 2006 2005


of which underwriting revenues 3,476 2,415

of which advisory and other fees 1,900 1,475

of which total trading revenues 15,479 11,344

Provision for credit losses (38) (73)

Total operating expenses 14,556 1 14,021 2

Income from continuing operations before taxes 5,951 1,599

Pre-tax income margin 29.1 % 10.3 %

Pre-tax return on average economic risk capital 40.3 % 15.4 %

1

2

Includes credits from insurance settlements for litigation and related costs of CHF 508 million.Includes a CHF 960 million charge to increase the reserve for certain private litigation matters.


increase in Net revenues of 32% versus 2005. Significantly higher Total investment banking and Total trading revenues demonstrated Investment Banking’s strength and leadership position in key business areas, including the emerging markets, leveraged finance, and mortgage businesses.

Excluding the 2006 insurance settlements and the 2005 litigation charge, Total operating expenses increased 15% due primarily to higher compensation expenses in line with higher revenues. The Compensation/revenue ratio of 50.1% in 2006 was below the targeted level of 53.5% and declined from 55.5% for 2005. Excluding the insurance settlements and the litigation charge, other expenses were up due primarily to higher commissions in line with higher business activity, higher professional fees due to increased deal activity and the Centers of Excellence start-up initiatives and higher premises and equipment expenses.

Highlights in Investment Banking in 2006 included a continued leadership position in some of the world’s fastest growing emerging markets, such as China, Russia, Brazil and Mexico. This was demonstrated, among other things, by Credit Suisse’s number one market share ranking in equity issuance and announced mergers and acquisitions in Latin America and the recognition as the

“China Equity House” in International Financing Review’s Asia Awards 2006. Credit Suisse was presented with the “European IPO House of the Year” award in the annual Financial News Awards for Excellence in Investment Banking for 2006. In addition The Banker magazine’s annual Investment Banking Awards 2006 recognized Credit Suisse as the “Best Bank of the Year for IPOs.” Credit Suisse also maintained a leadership position in other important growth areas such as commercial mortgage-backed securities, leveraged finance and financial sponsors. Credit Suisse advised on a number of notable transactions that were announced in the fourth quarter of the year, including Google Inc.’s acquisition of YouTube, the sale of Raytheon Aircraft Company to Hawker Beechcraft Corporation and the acquisition of Corus Group plc by Tata Steel.

The pre-tax income margin was 29.1%, compared to 10.3% in 2005.

Private BankingThrough its Private Banking division, Credit Suisse offers comprehensive advice and a broad range of wealth management solutions, including pension planning, life insurance products, tax planning and wealth and inheritance advice, which is tailored to the needs of high-net-worth individuals worldwide. In Switzerland, it supplies banking products and services to high-net-worth, corporate and retail clients.

Private Banking continued to make considerable progress in the international expansion of its global franchise in 2006, building on its momentum in 2005, when it opened six new offices in high-growth markets in the Middle East, Asia and Russia. During 2006, Private Banking invested in additional onshore operations in Doha, Beirut, California, Moscow, Sydney and São Paulo in order to strengthen its presence in these strategic growth markets.

The Private Banking segment, which comprises the Wealth Management and Corporate & Retail Banking businesses, reported Income from continuing operations before taxes of CHF 4,596 million, 16% higher than in 2005.

Growth in Net revenues was 11% and outpaced an 8% increase in Total operating expenses driven partly by ongoing strategic investments in the Wealth Management global franchise.

Assets under management as of December 31, 2006 increased 12.3% to CHF 940.3 billion compared to December 31, 2005, including record Net new assets of CHF 52.2 billion, up 3.6% from 2005.

Private Banking reported a Pre-tax income margin of 39.4% for 2006, an increase of 1.6 percentage points compared to 2005, primarily reflecting the strong increase in Net revenues.

Private Banking’s Wealth Management business reported Income from continuing operations before taxes of CHF 3,237 million for 2006, up 22% from 2005.

Private Bankingin CHF m, except where indicated 2006 2005


Provision for credit losses (73) (71)


Income from continuing operations before taxes 4,596 3,966

of which Wealth Management 3,237 2,661

of which Corporate & Retail Banking 1,359 1,305


Net new assets, in CHF bn 52.2 50.4

Assets under management, in CHF bn 940.3 837.6


Net revenues increased 15% in 2006, primarily due to higher commissions and fees from brokerage volume and product issuances, reflecting stronger client activity, increased asset-based commissions and fees due to the increased Assets under management, and higher Net interest income, largely due to an increase in liability volumes and margins. Net interest income also benefited from higher dividend income from the equity portfolio of the Independent Private Banks.

Total operating expenses for 2006 in Wealth Management were up 12%, primarily due to higher Compensation and benefits primarily reflecting higher performance-related compensation expenses in line with the better results and strategic investments in the global franchise. Other expenses increased 5% compared to 2005.

Net new asset inflows in Wealth Management were CHF 50.5 billion, an annual growth rate of 7.3% in 2006, exceeding the 6% mid-term target and showing continued momentum in asset gathering. Asset inflows were strongest in Europe and the United States. The slower asset inflows in Asia in the first half of 2006 improved in the second half.

Private Banking’s Corporate & Retail Banking business reported Income from continuing operations before taxes of CHF 1,359 million for 2006, an increase of 4% compared to 2005.

Net revenues increased 4% in 2006, due to increased Net interest income, reflecting higher liability volumes and margins, partially offset by asset margin pressure, and higher asset-based commissions and fees.

Total operating expenses were up 1% compared to 2005, reflecting slightly higher personnel costs and flat other expenses.

Asset ManagementThrough its Asset Management division, Credit Suisse supplies products from the full range of investment classes – money market, fixed income, equities, balanced and alternative investments – to meet the needs of institutional, government and private clients globally.

Credit Suisse achieved progress in the realignment of Asset Management in the second half of the year, as part of the previously announced strategy to reposition businesses with low profitability, reshape the product offering, improve investment and sales processes, and reduce the overall cost base.

Asset Management Income from continuing operations before taxes was CHF 508 million, a decrease of 50%, compared to 2005. The decrease reflected lower private equity and other investment-related gains and higher Total operating expenses, partly due to CHF 225 million of realignment costs in 2006.

Net revenues increased 2% in 2006, reflecting an increase in Asset Management revenues and higher private equity commissions and fees. This was partially offset by lower private equity and other investment-related gains, which are cyclical in nature and in 2005, were considered to be at the high end of the private equity cycle for Asset Management.

Total operating expenses for 2006 increased 31%, primarily due to expenses related to the realignment.

Assets under management of CHF 669.9 billion as of December 31, 2006 increased 13.7% from CHF 589.4 billion as of December 31, 2005, including net new assets of CHF 50.8 billion. These substantial net asset inflows demonstrate Asset Management’s asset gathering capabilities despite the realignment. Net new assets for 2006 included CHF 32.5 billion of money market assets, CHF 15.3 billion of alternative investment assets and CHF 9.4 billion of Balanced assets.

Pre-tax income margin for 2006 was 17.8%, an 18.1 percentage point decrease compared to 2005.

Asset Management continued to focus on strengthening its presence in key markets and building its investment platform in attractive, high-margin businesses. In addition, as part of the strategy to expand Asset Management’s alternative investments business, Credit Suisse launched several growth initiatives through

Asset Managementin CHF m, except where indicated 2006 2005


of which asset management revenues 2,106 1,909

of which private equity commissions and fees 253 194

of which private equity and other investment-related gains 502 698


Income from continuing operations before taxes 508 1,006


Net new assets, in CHF bn 50.8 19.6

Assets under management, in CHF bn 669.9 589.4


close collaboration with other firms with investment expertise in a variety of different asset classes and investment styles. These initiatives will enable Asset Management to grow its leading alternative investments business across a variety of new products, sectors and regions. This included a joint initiative with Ospraie Management, an investment partnership with Abu Dhabi Future Energy Company and joint ventures with China Renaissance Capital Group and General Electric Infrastructure (Global Infrastructure Partners (GIP)). GIP had its first important and high profile deal to acquire London City Airport together with AIG Financial Products Corporation, each owning 50%. As part of its strategy to develop its presence in Asia, Credit Suisse announced a joint venture in South Korea with Woori Asset Management, in which Credit Suisse acquired a 30% stake.

Detailed information on the financial results of Credit Suisse Group can be found in the Credit Suisse Group Annual Report 2006 and the Supplemental Information 2006.


Consolidated Statements of Income

Detailed information on the financial results of Credit Suisse Group can be found in the Annual Report 2006 and the Supplemental Information 2006.

Consolidated financial statements


Year ended December 31, in CHF m 2006 2005 2004

Interest and dividend income 50,269 36,116 26,312

Interest expense (43,703) (29,198) (18,796)

Net interest income 6,566 6,918 7,516

Commissions and fees 17,647 14,323 13,323

Trading revenues 9,428 5,634 3,675

Other revenues 4,962 3,614 2,519

Total noninterest revenues 32,037 23,571 19,517

Net revenues 38,603 30,489 27,033

Provision for credit losses (111) (144) 83

Compensation and benefits 15,697 13,974 11,951

Other expenses 8,717 9,258 7,630

Total operating expenses 24,414 23,232 19,581

Income from continuing operations before taxes, minority interests,extraordinary items and cumulative effect of accounting changes 14,300 7,401 7,369

Income tax expense 2,389 927 1,293

Minority interests 3,630 1,948 1,080

Income from continuing operations before extraordinary itemsand cumulative effect of accounting changes 8,281 4,526 4,996

Income from discontinued operations, net of tax 3,070 1,310 639

Extraordinary items, net of tax (24) 0 0

Cumulative effect of accounting changes, net of tax 0 14 (7)

Net income 11,327 5,850 5,628

Basic earnings per share, in CHF

Income from continuing operations before extraordinary items and cumulative effect of accounting changes 7.53 3.98 4.25

Income from discontinued operations, net of tax 2.79 1.18 0.56

Extraordinary items, net of tax (0.02) 0.00 0.00

Cumulative effect of accounting changes, net of tax 0.00 0.01 (0.01)

Net income available for common shares 10.30 5.17 4.80

Diluted earnings per share, in CHF

Income from continuing operations before extraordinary items and cumulative effect of accounting changes 7.19 3.90 4.23

Income from discontinued operations, net of tax 2.66 1.11 0.53

Extraordinary items, net of tax (0.02) 0.00 0.00

Cumulative effect of accounting changes, net of tax 0.00 0.01 (0.01)

Net income available for common shares 9.83 5.02 4.75

136 Credit Suisse Group Annual Report 2006

The accompanying notes to the consolidated financial statements are an integral part of these statements.

doc_090154fa80087ac3_10044 23.03.2007 21:08 Page 136


Consolidated Balance Sheets

Detailed information on the financial results of Credit Suisse Group can be found in the Annual Report 2006 and the Supplemental Information 2006.

Consolidated balance sheets

December 31, in CHF m 2006 2005

Assets

Cash and due from banks 29,040 27,577

Interest-bearing deposits with banks 8,128 6,143

Central bank funds sold, securities purchased under resale agreements and securities borrowing transactions 319,048 352,281

Securities received as collateral 32,385 23,950

Trading assets 450,780 435,250

of which encumbered 141,404 151,793

Investment securities 21,394 121,565

of which encumbered 54 2,456

Other investments 20,478 20,736

Loans, net 208,127 205,671

Allowances for loan losses 1,484 2,241

Premises and equipment 5,990 7,427

Goodwill 11,023 12,932

Other intangible assets 476 3,091

Other assets 149,087 122,429

of which encumbered 26,426 4,860

Total assets 1,255,956 1,339,052

Liabilities and shareholders’ equity

Deposits 388,378 364,238

Central bank funds purchased, securities sold under repurchase agreements and securities lending transactions 288,444 309,803

Obligation to return securities received as collateral 32,385 23,950

Trading liabilities 198,422 194,225

Short-term borrowings 21,556 19,472

of which reported at fair value 2,764 –

Provisions from the insurance business – 145,039

Long-term debt 147,832 132,975

of which reported at fair value 44,709 –

Other liabilities 120,035 99,385

Minority interests 15,318 7,847

Total liabilities 1,212,370 1,296,934

Share capital 607 624

Additional paid-in capital 24,817 24,639

Retained earnings 32,306 24,584

Treasury shares, at cost (9,111) (5,823)

Accumulated other comprehensive income/(loss) (5,033) (1,906)

Total shareholders’ equity 43,586 42,118

Total liabilities and shareholders’ equity 1,255,956 1,339,052

2006 2005

Additional share information

Par value, in CHF 0.50 0.50

Shares issued 1,214,862,013 1,247,752,166

Treasury shares (152,394,952) (122,391,983)

Shares outstanding 1,062,467,061 1,125,360,183

Consolidated financial statements

Credit Suisse Group Annual Report 2006 137

The accompanying notes to the consolidated financial statements are an integral part of these statements.

doc_090154fa80087ac3_10044 23.03.2007 21:08 Page 137


Ticker symbols / Stock exchange listings

Bloomberg Reuters Telekurs

SWX Swiss Exchange/virt-x CSGN VX CSGN.VX CSGN,380

New York Stock Exchange (ADS) 1) CS US CS.N CS,065

CSG share ADS 1)

Swiss security number 1213853 570660

ISIN number CH0012138530 US2254011081

CUSIP number 225 401 108

1) One ADS represents one common share.

Ratings

Standard & FitchMoody’s Poor’s Ratings

Credit Suisse Group Short term – A-1 F1+

Long term Aa3 A+ AA-

Outlook Stable Stable Stable

Credit Suisse Short term P-1 A-1+ F1+

Long term Aa3 AA- AA-

Outlook Stable Stable Stable

Share data

December 31 2006 2005

Shares issued 1,214,862,013 1,247,752,166

Treasury shares (152,394,952) (122,391,983)

Shares outstanding 1,062,467,061 1,125,360,183

Share price

in CHF 2006 2005 2004

High (closing price) 85.35 68.50 49.50

Low (closing price) 62.70 46.85 37.35

The following table shows principal Swiss franc foreign exchange rates:

Closing rate Average rate

in CHF 31.12.06 31.12.05 2006 2005 2004

1 US dollar (USD) 1.2208 1.3137 1.25 1.24 1.24

1 Euro (EUR) 1.6085 1.5572 1.57 1.55 1.54

1 British pound sterling (GBP) 2.3987 2.2692 2.31 2.26 2.28

100 Japanese yen (JPY) 1.0260 1.1190 1.08 1.13 1.15

66_67_BR_e_5g_Symbole_02.indd 66 29.3.2007 16:30:23 Uhr




Consolidated income statement

Net revenues 38,603 30,489 27,033

Income from continuing operations before taxes, minority interests, extraordinary itemsand cumulative effect of accounting changes 14,300 7,401 7,369

Income from continuing operations before extraordinary items and cumulative effect of accounting changes 8,281 4,526 4,996

Income from discontinued operations, net of tax 3,070 1,310 639

Net income 11,327 5,850 5,628



Basic earnings per share from continuing operations before cumulative effect of accounting changes 7.53 3.98 4.25


Diluted earnings per share from continuing operations before cumulative effect of accounting changes 7.19 3.90 4.23








Total assets 1,255,956 2)1,339,052




Tier 1 ratio 13.9% 11.3%


Number of employees





Stock market data







Cash dividends per registered share, in CHF 2.24 3) 2.00

1) Excludes minority interest revenues of CHF 3,663 million, CHF 2,074 million and CHF 1,088 million and minority interest expenses of CHF 103 million, CHF 32 million and CHF 16million in 2006, 2005 and 2004, respectively, from the consolidation of certain private equity funds and other entities in which the Group does not have a significant economic interest insuch revenues and expenses. 2) The Group completed the sale of Winterthur to AXA S.A. on December 22, 2006. 3) Proposal of the Board of Directors to the Annual GeneralMeeting on May 4, 2007.

Financial calendar




Par value reduction Wednesday, July 18, 2007



Proof 3 as of12.03.2007

66_67_BR_e_5g_Symbole_02.indd 67 29.3.2007 16:30:23 Uhr

68_68_BR_e_Vakat.indd 1 29.3.2007 16:30:45 Uhr

Credit Suisse Group Financial Highlights




Net revenues 38,603 30,489 27,033

Income from continuing operations 8,281 4,526 4,996

Income from discontinued operations, net of tax 1) 3,070 1,310 639

Net income 11,327 5,850 5,628



Basic earnings per share from continuing operations 1) 7.53 3.98 4.25


Diluted earnings per share from continuing operations 1) 7.19 3.90 4.23








Total assets 1,255,956 3)1,339,052




Tier 1 ratio 13.9% 11.3%


Number of employees





Stock market data







Dividend per registered share, in CHF 2.24 4) 2.00

1) Before extraordinary items and cumulative effect of accounting changes. 2) Excludes minority interest revenues of CHF 3,663 million, CHF 2,074 million and CHF 1,088 million andminority interest expenses of CHF 103 million, CHF 32 million and CHF 16 million in 2006, 2005 and 2004, respectively, from the consolidation of certain private equity funds and otherentities in which the Group does not have a significant economic interest in such revenues and expenses. 3) Impacted by the sale of Winterthur on December 22, 2006. 4) Proposalof the Board of Directors to the Annual General Meeting on May 4, 2007.

Financial calendar




Par value reduction payment Wednesday, July 18, 2007



doc_090154fa8008800c_10008 26.03.2007 11:33 Page 2

Cautionary statement regarding forward-looking informationThis Business Review contains statements that constitute forward-looking statements within the meaning of the Private Securities Litigation Reform Act. In addition, in the future we, and others on our behalf, may make state-ments that constitute forward-looking statements. Such forward-looking state-ments may include, without limitation, statements relating to the following:– Our plans, objectives or goals; – Our future economic performance or prospects; – The potential effect on our future performance of certain contingencies; and – Assumptions underlying any such statements.

Words such as “believes,” “anticipates,” “expects,” “intends” and “plans” and similar expressions are intended to identify forward-looking statements but are not the exclusive means of identifying such statements. We do not intend to update these forward-looking statements except as may be required by applicable securities laws. By their very nature, forward-looking statements involve inherent risks and uncertainties, both general and specific, and risks exist that predictions, fore-casts, projections and other outcomes described or implied in forward-looking statements will not be achieved. We caution you that a number of important factors could cause results to differ materially from the plans, objectives, ex-pectations, estimates and intentions expressed in such forward-looking statements. These factors include:– Market and interest rate fluctuations; – The strength of the global economy in general and the strength of the economies of the countries in which we conduct our operations in particular; – The ability of counterparties to meet their obligations to us; – The effects of, and changes in, fiscal, monetary, trade and tax policies, and currency fluctuations; – Political and social developments, including war, civil unrest or terrorist activity; – The possibility of foreign exchange controls, expropriation, nationalization or confiscation of assets in countries in which we conduct our operations; – The ability to maintain sufficient liquidity and access capital markets; – Operational factors such as systems failure, human error, or the failure to implement procedures properly; – Actions taken by regulators with respect to our business and practices in one or more of the countries in which we conduct our operations; – The effects of changes in laws, regulations or accounting policies or practices; – Competition in geographic and business areas in which we conduct our operations; – The ability to retain and recruit qualified personnel; – The ability to maintain our reputation and promote our brand; – The ability to increase market share and control expenses; – Technological changes; – The timely development and acceptance of our new products and services and the perceived overall value of these products and services by users; – Acquisitions, including the ability to integrate acquired businesses successfully, and divestitures, including the ability to sell non-core assets;– The adverse resolution of litigation and other contingencies; and – Our success at managing the risks involved in the foregoing. We caution you that the foregoing list of important factors is not exclusive. When evaluating forward-looking statements, you should carefully consider the foregoing factors and other uncertainties and events, as well as the in-formation set forth in our Form 20-F Item 3 – Key Information – Risk factors.

For purposes of the Business Review, unless the context otherwise requires, the terms “Credit Suisse”, “the Group”, “we”, “us” and “our” mean Credit Suisse Group and its consolidated subsidiaries and the term “the Bank” means Credit Suisse, the Swiss bank subsidiary of the Group, and its consolidated subsidiaries.

Enquiries

Credit Suisse GroupInvestor RelationsIan Roundell, +41 44 333 17 48Marc Buchheister, +41 44 333 31 69Fax +41 44 333 25 87

Credit Suisse GroupMedia RelationsCharles Naylor, Andrés LutherTel. + 41 44 333 88 44Fax +41 44 333 88 77

Editorial: Credit Suisse Group, Corporate CommunicationsPhotography: Thomas Eugster, Berlin andMarc Wetli, Zurich (pages 7 and 10)Design: www.arnolddesign.chProduction: Management Digital Data AG, ZurichPrinter: NZZ Fretz AG, Zurich

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Bankingin Progress

Business Review 2006

CREDIT SUISSE GROUPParadeplatz 88070 ZurichSwitzerlandTel. +41 44 212 16 16Fax +41 44 333 25 87

www.credit-suisse.com 5520

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Highlights 2006

CHF 38,603 millionCredit Suisse Group’s net revenues amounted to CHF 38,603 million in 2006, an increase of 27% compared to 2005.

CHF 11,327 millionNet income for 2006 totaled CHF 11,327 million, up 94% compared to 2005.

CHF 8,281 millionIncome from continuing operations was CHF 8,281 million, up 83% compared to 2005.

CHF 95.4 billionIn 2006, Credit Suisse Group recorded net new assets of CHF 95.4 billion, compared to CHF 57.4 billion in 2005.

CHF 1,485.1 billionAssets under management stood at CHF 1,485.1 billion as of December 31, 2006, up 12.6% from December 31, 2005.

44,871At year end 2006, Credit Suisse Group employed 44,871 people, of which 20,353 were in Switzerland and 24,518 were in more than 50 countries around the globe.

From left to right:

CoverStephen PakCustomized Solution ManagementAsset Management Division, Hong Kong

Christina KimEquity Capital MarketsInvestment Banking Division, Hong Kong

Jennifer TheunissenProject Services Asia-Pacifi cAsset Management Division, Hong Kong

Gerard BichonPhilippinesPrivate Banking Division, Hong Kong

Back CoverGary KwokNon-Japan Asia Corporate FinanceInvestment Banking Division, Hong Kong

Karen LeungGreater ChinaPrivate Banking Division, Hong Kong

A Longstanding Commitment to AsiaHong Kong – More than seven million people live and work in Hong Kong. Now the second largest financial center in Asia, Hong Kong is strategically positioned as the gateway to China and is, therefore, of key importance to globally ac-tive companies such as Credit Suisse that are eager to par-ticipate in this dynamic growth market. Credit Suisse began operating in Hong Kong in 1955 but its presence in the Chinese market dates back to 1784, when the forerunner of Credit Suisse First Boston – the Massachusetts Bank – financed the very first trading mission from America to China. Some 220 years later, Credit Suisse was part of a consor-tium that successfully executed the USD 21.9 billion IPO of the Industrial and Commercial Bank of China (ICBC) in the largest transaction of this type to date.

More than 1,000 people work for Credit Suisse in Hong Kong in the two tallest skyscrapers pictured on the left and right in the photo. The Asia-Pacific region has played a pivotal role in the establishment of the integrated bank. With its Investment Banking, Private Banking and Asset Management businesses, Credit Suisse is ideally placed to meet the growing needs of clients in Asia and in particular to capitalize on the attractive business opportunities created by China’s economic success.

credit-suisse Business Review 2006

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