Stephen StonefieldQ: The DLJ acquisition took a lot of people by surprise. What have been the synergies in Asia?

A: In Asia, the synergies have been about the ability to attract some good people – mainly in banking and equity research and sales. It's been a good fit for our business. Some people we wanted to hire previously were there and it filled some holes we needed to fill. It was a serendipitous event as far as Asia was concerned. In the US it had a much bigger impact.

Q: How many people did DLJ have in Asia?

A: Excluding DLJ Direct – which I will talk about separately – about 150. Whereas we have 2,700.

Q: But they were in a pretty active expansion mode?

A: Yes, they were investing, particularly in the equity area and starting up an investment banking practice. Obviously, DLJ was hiring a lot of people.

Q: Did it hire any of your people, who subsequently became your people again?

A: You mean, someone's worst nightmare? Yes, there were a couple of people. But in fact there was very little overlap. The other positive aspect of this merger was our ability to create an online brokerage business. DLJ Direct is doing very well in Japan and is poised to roll out in other countries in the region. DLJ was way ahead of us in this respect.

Q: Is it still going to be called DLJ Direct?

A: No, it'll be converted to CSFB Direct. Timing may differ from market to market.

Q: How many people have stayed, post-merger [DLJ becoming CSFB, not including DLJ Direct]?

A: Close to 100.

Q: Do you define that as successful?

A: We were able to retain nearly 100% of the people we wanted to keep. So we are very pleased with the result.

Q: Are the two cultures similar?

A: There were a number of similarities. DLJ was a very entrepreneurial organization, lacking in bureaucracy and quite aggressive in its pursuit of business. In that sense it was very much like CSFB. The difference is that we tend to be more of an email culture and they're more of a voicemail culture – if that means anything.

Q: You mean, they were more like Goldman Sachs, which is very voicemail-orientated?

A: Yes. In part, it is a reflection of the relative difference in the firms' size. The fact is that we operate in 30 countries and one has to formalize communications links more with that dispersed architecture and avoidance of centralization.

Q: Clearly, there is an Asian bulge bracket developing at the moment. Does this merger put you in it?

A: It helps, incrementally, to make us one of the top three. That is among our goals. Obviously we want to be number one, but if you are in the top three, the number one position tends to rotate. We commenced building investment banking later than Morgan Stanley and Goldman Sachs, and we were rebuilding our effort. But I can modestly state that I think our equity and fixed income architecture is better than theirs and the ratings will eventually show that. The gap is narrowing and hopefully next year we'll close it.

Q: Who else do you see as competition in Asia?

A: The focus is on Goldman, Morgan Stanley and Merrill Lynch.

Q: And the new Chase JP Morgan?

A: It looks very good on paper but it will be enormously difficult to realize the benefit of the sum of those parts.

Q: You've grown your corporate finance team quite phenomenally?

A: It's now 130 people in non-Japan Asia. Previously it was 30-40 people. We think the opportunities are big and we think you have to invest throughout the cycle. Unlike a retail brokerage business, you can't operate a commission structure where you say when times are good we'll have a lot of you and when times are poor less of you. You have to have a plan and say what do we want to be in three years and how do we get there. That's the plan, and we're going to stick to it.

Q: For people working at investment banks in Asia there is a lot of uncertainty. There are a host of mergers, and some European banks appear to be closing operations. How do you convey, to your team, a sense of security and permanence?

A: You just have to look at what we've been doing over the past four years. We've seen a couple of killer crises out here and the markets melting down. Meanwhile, we've been consistent in the application of our plan. We think the fact that a number of other people are closing down is fine. We know where we want to be, and that we have to invest to get there. In the equity business we've experienced that if you do invest, and are consistent, it works. When I moved here with CSFB in 1996, we had 1,600 people. Now that number is 2,700.

Q: What will be the biggest Asian business for CSFB going forward – ECM or M&A?

A: It's really hard to tell. Next year, we may have a good volume in primary equity markets, although I anticipate it won't be as big as this year – which was phenomenal thanks to China. However, there is a profound increase in strategic M&A deals.

Q: How is CSFB benefiting from your being in Singapore, which is a strong market right now? Does it make a difference in face-conscious Singapore that the boss of CSFB is there?

A: It has allowed me to do a lot more direct business with the CEOs in Singapore. I would agree with you that there is a tremendous amount of activity in Singapore – more than we've ever seen – and we would expect that to continue as the economy goes through a form of restructuring as the next stage in its spectacular development – a process of moving from government ownership to private ownership.

Q: Could Singapore be one of the biggest M&A and ECM markets next year?

A: It will be up there with the big ones – although there is no reason to assume next year will be much different to the fee trend of past years. The biggest fee-paying markets will continue to be Korea, Taiwan and Hong Kong – and China will be the wild card again.

Q: Will you get more involved in the Singapore local bond market?

A: We are planning to do that, and we have been given a license to be an underwriter in Singapore.

Q: What are the management/time issues for you being in Singapore and managing a business with lots of people in Hong Kong?

A: For me life hasn't changed much. I continue to be on a plane all the time and away from home – wherever that may be – four or more days a week, visiting clients and our offices. With the ability to communicate electronically, one has a lot of flexibility in where he's based. Having said that, it was also important to make additional management commitments in Singapore. Our office in Singapore contains 600 people and is about the same size as the Hong Kong office.

Q: Is it fair to say you run a more British structure than a US one – because thanks to your BZW acquisition, you have a strong presence on the ground in each country.

A: No. But it's fair to say we have more local presence than most American firms. Having said that, we don't have the lack of industry depth you will find in British firms. But we do believe you have to be in the country to know what's going on. This structure was derided by the major US bulge bracket firms when I arrived and it's now the one they are emulating.

Q: What's the view of Asia's prospects when you go back to New York for Executive Committee meetings?

A: People are enthusiastic. In the more advanced Asian economies, the Firm sees a lot of opportunities. And, longer term, with China too. In our business the critical element is change. And the constant theme in Asia, is that things are always changing – so it's very fertile ground for our business.