Josef Ackermann takes over as president of Credit Suisse at a critical moment. Credit Suisse and Switzerland's other big banks have been faced with having to strengthen operations at home while expanding globally. In the United States, Credit Suisse, like other foreign banks, has had to reevaluate a strategy based on lending to Fortune 500 companies. This business has become less profitable, but Mr. Ackermann, in a recent interview, said lending remains a key to generating other business opportunities in the United States.

At the age of 45, Mr. Ackermann is one of the youngest bankers to be named president of Credit Suisse and a member of the executive board of its parent company, CS Holding.

Mr. Ackermann completed his undergraduate and graduate studies at St. Gallen University in Switzerland. He joined Credit Suisse in 1978. He subsequently headed corporate banking in New York, funds transfer and documentation in Zurich, and foreign exchange, treasury, and controlling in Lausanne.

Q.: What are the plans for Credit Suisse in the U.S. and how do you plan to position yourself in that market?

ACKERMANN: Credit Suisse has to be seen within the context of the Credit Suisse Holding group and its entities in the United States. These include Credit Suisse, First Boston Group, and our joint venture, Credit Suisse Financial Products. Combined, all of these entities contribute roughly 80% of the overall profit of Credit Suisse Holding.

We have been there for more than 50 years and in the last 10 have gained sufficient momentum to provide us with a solid base on which to capitalize even further. We are particularly strong in the United States in traditional commercial banking activities, and we consider the United States to be almost our second home market.

Because of our ties with our affiliates in the U.S., we have special expertise here that we do not have in any other market.

In order to capitalize on this expertise, our next thrust will be to continue to strengthen those ties and to centralize specific activities in the U.S., where the market is bigger.

To give you one example, we have centralized project finance activities in the United States, set up a center of excellence in the Credit Suisse treasury currency options business. Our derivatives vehicle. Credit Suisse Financial Products, also plays a pivotal role.

Q.: How do you see the U.S. banking market evolving?

ACKERMANN: It's obvious that U.S. banks have gone through a difficult period. Still, they have benefited from interest rates and are gaining strength once again, causing an increase in competition for foreign banks. Because our wholesale banking focuses solely on the Fortune 500 international companies, we are acutely aware that plain-vanilla or commodity products won't keep us in the game. To maintain our leadership position, therefore, Credit Suisse develops products that are tailored for each specific client's needs.

Q.: You mentioned that competition has been increasing from U.S. banks. Could you be more specific about the areas in which competition is increasing?

ACKERMANN: I would have to say competition is increasing through the entire range of banking products. However, it is first recognizable by the fact that margins have come under pressure again. Everyone, including Swiss universal banks, are trying to improve asset quality. And a increasing number of banks are concentrating on the bigger companies. While competition may be focused on these area now, it will probably expand to other areas as well.

A significant influence on this expansion in competition is the globalization of many U.S. banks -- a movement that has enabled them to develop outstanding capabilities in sophisticated, innovative financial products like derivatives. The fact that Credit Suisse has a diversified revenue structure -- with approximately 40% of our total revenues coming from interest income, 30% from trading, and 30% from fee income - makes us less vulnerable to fluctuations in the different markets.

Q.: How will you deal with increasing competition? Are you trying to increase your own capabilities in areas such as derivatives?

ACKERMANN: We have recently acquired Swiss Volksbank, the fourth-largest bank in Switzerland.

This was a source of some controversy initially as it brought up the possibility of refocusing our strategy on the domestic and retail markets. In fact, to some extent, this is a sine qua non because if we are not strong enough in our home market -- if we fail to develop a strong balance sheet and capital base -- we cannot expect to be successful abroad.

With Swiss Volksbank fully consolidated since the end of the second quarter, our capital base will be even more solid. In addition, our legal lending limit has improved, resulting in increased strength as a counterparty in different areas.

In the long term, this is the type of expansion that will differentiate us from most of our global competitors. It will serve us well in general trading, in the area of derivatives, and in being --lead manager in huge transactions.

We also want to increase our quality in terms of service and more innovative products. Remember, banking is above all a relationship business. So we take great care in finding the best people possible to build our financial engineering capabilities and to develop tailor-made products to which our competitors are not yet exposed.

Q.: Do you believe that for banks like your own there is a future in lending money to large U.S. corporations or do you believe the future lies in off-balance-sheet activities?

ACKERMANN: The balance sheet and the capital of a bank are very important because those are what finally give you the strength to become more competitive in many other areas. We would not like to see our off-balance-sheet commitments expand much more than our total assets.

Of course, an organization needs a certain equilibrium even if it appears obvious that lending is not the most profitable business and there will not be a maximum return on equity.

However, lending opens doors to other business and fosters client relationships. We are still prepared to extend lines of credit and committed facilities, even for longer maturities, because its builds relationships. Once confidence is established, it eventually results in additional, more profitable business.

Of course, in the U.S. there are more developed markets than in Switzerland. The U.S. has commercial paper in short-term maturities, and the bigger companies tapping this market are not as dependent on lending.

But for longer maturities, for acquisition finance, and for project finance, lending capabilities remain crucial. It would be regrettable if we did not develop that area and instead concentrated only on more profitable, but more volatile products.

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