20-F

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As filed with the Securities and Exchange Commission on March 27, 2003

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 20-F

/ /	REGISTRATION STATEMENT PURSUANT TO SECTION 12(b) OR (g) OF THE SECURITIES EXCHANGE ACT OF 1934
or
/X/	ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the fiscal year ended December 31, 2002
or
/ /	TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the transition period from                            to

(Commission file number 001-15244)

Credit Suisse Group

(Exact name of Registrant as specified in its charter)

N/A
(Translation of Registrant's name into English)

Canton of Zurich, Switzerland
(Jurisdiction of incorporation or organization)

Paradeplatz 8, P.O. Box 1, CH 8070 Zurich, Switzerland
(Address of principal executive offices)

Securities registered or to be registered pursuant to Section 12(b) of the Act:

Title of each class	Name of each exchange on which registered
American Depositary Shares representing Shares with a par value of CHF 1	New York Stock Exchange

Securities registered or to be registered pursuant to Section 12(g) of the Act:

None
(Title of Class)

Securities for which there is a reporting obligation pursuant to Section 15(d) of the Act:

None
(Title of Class)

The number of outstanding shares of each of the issuer's classes of capital or common stock as of December 31, 2002:
1,189,891,720 shares, par value CHF 1 per share

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.

Yes /x/ No / /

Indicate by check mark which financial statement item the registrant has elected to follow.

Item 17 / / Item 18 /x/

TABLE OF CONTENTS

		Page
Definitions		ii
Sources		ii
Accounting basis and reporting currency		ii
Incoporation by reference		ii
Cautionary statement regarding forward-looking information		iii
ITEM 1:	IDENTITY OF DIRECTORS, SENIOR MANAGEMENT AND ADVISORS	N/A
ITEM 2:	OFFER, STATISTICS AND EXPECTED TIMETABLE	N/A
ITEM 3:	KEY INFORMATION	1
	Selected financial data	1
	Risk factors	2
ITEM 4:	INFORMATION ON THE COMPANY	19
	Regulation and supervision	19
	Property and equipment	36
ITEM 5:	OPERATING AND FINANCIAL REVIEW AND PROSPECTS	37
	Critical accounting policies and estimates	37
	Off-balance sheet arrangements	49
	US GAAP reporting related to pension plans	51
	Derivatives	52
	Swiss GAAP compared with US GAAP	53
	Related party transactions	53
	Recently issued accounting standards	54
	Liquidity and capital resources	54
	Selected statistical information	69
ITEM 6:	DIRECTORS, SENIOR MANAGEMENT AND EMPLOYEES	85
ITEM 7:	MAJOR SHAREHOLDERS AND RELATED PARTY TRANSACTIONS	85
ITEM 8:	FINANCIAL INFORMATION	86
	Consolidated financial statements	86
	Legal proceedings	86
	Dividends policy	92
ITEM 9:	THE OFFER AND LISTING	93
	Listing details	93
	Trading in our own shares	94
ITEM 10:	ADDITIONAL INFORMATION	95
	Articles of Association	95
	Registration and business purpose	95
	Directors	95
	Shareholder rights	96
	Pre-emptive subscription rights	96
	Repurchase of shares	96
	Notices	96
	Liquidation and merger	97
	Disclosure of principal shareholders	97
	Material contracts	97
	Exchange controls	97
	Indemnification	98
	American Depositary Shares	98
	Taxation	98
ITEM 11:	QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK	103
ITEM 12:	DESCRIPTION OF SECURITIES OTHER THAN EQUITY SECURITIES	N/A
PART II
ITEM 13:	DEFAULTS, DIVIDEND ARREARAGES AND DELINQUENCIES	N/A
ITEM 14:	MATERIAL MODIFICATIONS TO THE RIGHTS OF SECURITY HOLDERS AND USE OF PROCEEDS	N/A
ITEM 15:	CONTROLS AND PROCEDURES	104
	Disclosure Controls and Procedures	104
ITEM 16:	RESERVED	N/A
PART III
ITEM 17:	FINANCIAL STATEMENTS	N/A
ITEM 18:	FINANCIAL STATEMENTS	105
ITEM 19:	EXHIBITS	106

i

Definitions

For the purposes of this Form 20-F, unless the context otherwise requires, the terms "we," "us," "our" and "the Group" mean the Credit Suisse Group and its consolidated subsidiaries.

Sources

Throughout this Form 20-F, we describe the position and ranking of our various businesses in certain industry and geographic markets. The sources for such descriptions come from a variety of conventional publications generally accepted as relevant business indicators by members of the financial services industry. These sources include: Standard & Poor's, Standard & Poor's Europe Insurance Market Profile, Thomson Financial, Institutional Investor, Lipper, Moody's Investors Service and Fitch Ratings.

Accounting basis and reporting currency

Our consolidated financial statements are prepared in accordance with the accounting rules of the Swiss Federal Law on Banks and Savings Banks and the respective Implementing Ordinance, the Federal Banking Commission guidelines and Swiss GAAP FER Financial Reporting Standards for the insurance businesses of the Group, which collectively are the generally accepted accounting principles for banks and insurance companies, respectively, in Switzerland and which we refer to in this Form 20-F as Swiss GAAP.

Our consolidated financial statements are denominated in Swiss francs, or CHF. For your convenience, we have translated certain amounts referred to in this Form 20-F from Swiss francs into US dollars, or USD, at the rate of CHF 1.3833 = USD 1.00, which was the noon buying rate for Swiss francs on December 31, 2002 in New York City as certified by the Federal Reserve Bank of New York. You should not construe this convenience translation as a representation that the Swiss franc amounts actually denote the corresponding US dollar amounts or could be converted into US dollars at the indicated rate. The assumed rate also differs from the rates used in the preparation of the consolidated financial statements as of and for the years ended December 31, 2002, 2001 and 2000. For further information on foreign currency translation rates, please refer to note 45 of the notes to the consolidated financial statements.

Incorporation by reference

Portions of Credit Suisse Group's Annual Report 2002 are incorporated by reference in this Form 20-F in response to Items 3, 4, 5, 6, 7, 11 and 18. Such Annual Report, except for those portions thereof which are expressly incorporated by reference herein, is furnished for the information of the United States Securities and Exchange Commission, or SEC, and is not to be deemed "filed" as part of the filing of this Form 20-F.

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Cautionary statement regarding forward-looking information

This Form 20-F 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 statements that constitute forward-looking statements. Such forward-looking statements 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, forecasts, 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, expectations, 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 properly to implement procedures;

•

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 brands;

•

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 successfully acquired businesses;

•

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 information set forth in "Item 3 — Risk factors."

iii

ITEM 3: KEY INFORMATION

Selected financial data

We are a global financial services company domiciled in Switzerland. In the area of financial services, we offer investment products, wealth management and financial advisory services, including insurance and pension solutions, for private and corporate clients. In the area of global investment banking, we provide financial advisory and capital raising services, sales and trading for users and suppliers of capital as well as asset management products and services.

Effective January 1, 2002, we divided our existing operations into two business units, Credit Suisse Financial Services, or CSFS, and Credit Suisse First Boston, or CSFB, containing separate operating segments. CSFS includes the Private Banking, Corporate & Retail Banking, Life & Pensions and Insurance segments. CSFB includes the Institutional Securities (formerly Investment Banking) and CSFB Financial Services segments. For further information, please refer to "Information on the Company" in the attached Annual Report 2002.

The audited consolidated financial statements have been prepared in accordance with Swiss GAAP, which differ from US generally accepted accounting principles, or US GAAP, in certain material respects. For a discussion of the differences between Swiss GAAP and US GAAP material to our financial statements and a reconciliation of certain financial information to US GAAP, please refer to note 48 of the notes to the consolidated financial statements.

This data should be read in conjunction with the audited consolidated financial statements and related notes included elsewhere in this Form 20-F and the attached Annual Report 2002.

Information related to selected financial data is set forth under the caption "Five-Year Summary of Selected Financial Data" in the Annual Report 2002 on pages 204 to 205 and such information is incorporated herein by reference.

US GAAP consolidated income statement data 1)	2002 in USD m	2)	2002 in CHF m	2001 in CHF m	2000 in CHF m
Revenues, net of interest expenses	39,153		54,161	66,503	66,055
(Loss)/profit from continuing operations before taxes, extraordinary items and minority interests	(3,286)		(4,546)	(576)	6,251
(Loss)/profit from discontinued operations, net of tax	(468)		(648)	(101)	(10)
Net (loss)/profit	(3,383)		(4,680)	(687)	4,487
Total comprehensive income	(5,764)		(7,974)	(4,430)	4,790

US GAAP consolidated balance sheet data 1)	31.12.02 in USD m	2)	31.12.02 in CHF m	31.12.01 in CHF m	31.12.00 in CHF m
Total assets	742,593		1,027,229	1,134,972	1,057,455
Shareholders' equity	26,959		37,293	48,051	53,832
Minority interests in shareholders' equity	2,083		2,881	3,155	3,926

US GAAP ratios	2002	2001	2000
Return on equity	(11.8%)	(1.4%)	9.9%

US GAAP earnings per share 3) 4)	2002	2001	2000
US GAAP basic
Earnings from continuing operations	(3.56)	(0.62)	4.25
Earnings from discontinued operations	(0.56)	(0.09)	(0.01)
Cumulative effect of changes in accounting principles	0.05	0.11	0.00
Extraordinary items	0.02	(0.01)	0.03
US GAAP — basic	(4.05)	(0.61)	4.27
US GAAP diluted
Earnings from continuing operations	(3.56)	(0.62)	4.10
Earnings from discontinued operations	(0.56)	(0.09)	(0.01)
Cumulative effect of changes in accounting principles	0.05	0.11	0.00
Extraordinary items	0.02	(0.01)	0.03
US GAAP — diluted	(4.05)	(0.61)	4.12

¹⁾

For more detailed US GAAP information, please refer to note 48 of the notes to the consolidated financial statements.

²⁾

Translated for convenience purposes only using the period-end exchange rate information below.

³⁾

Share and per share information has been adjusted retroactively to reflect the 4-for-1 share split effective as of August 15, 2001.

⁴⁾

Our American Depositary Shares each represent one registered Group share.

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Exchange rate information

The following table sets forth, for the periods and dates indicated, certain information concerning the noon buying rate for the Swiss franc expressed as USD per CHF 1.00.

Year	Period end	Average1)	High	Low
1998	0.7281	0.6894	0.7731	0.6485
1999	0.6277	0.6605	0.7361	0.6244
2000	0.6172	0.5912	0.6441	0.5479
2001	0.6025	0.5910	0.6331	0.5495
2002	0.7229	0.6481	0.6953	0.5892

Month	High	Low
September 2002	0.6789	0.6578
October 2002	0.6760	0.6605
November 2002	0.6941	0.6714
December 2002	0.7229	0.6736
January 2003	0.7401	0.7135
February 2003	0.7411	0.7275
March 2003 (through March 19, 2003)	0.7549	0.7193

¹⁾

The average of the noon buying rates on the last business day of each month during the relevant period.

On March 19, 2003, the noon buying rate for Swiss francs was CHF 1.00 = USD 0.7193.

Risk factors

Our businesses are exposed to a variety of risks that could adversely affect our results of operations or financial condition, including, among others, those described below.

Market risk

We may incur significant losses on our trading and investment activities due to market fluctuations and volatility

We maintain large trading and investment (other than trading) positions in the debt, currency, commodity and equity markets, and in private equity, real estate and other assets. These substantial positions can be adversely affected by volatility in financial markets, that is, the degree to which prices fluctuate over a particular period in a particular market, regardless of market levels. At December 31, 2002, our trading and other than trading portfolios represented approximately 18.1% and 16.9% of our total assets, respectively. For further information on market risk exposures in our trading and other than trading portfolios, please refer to "Risk Management — Market risk — Overview of market risk exposures —Trading portfolios" and "— Non-trading portfolios" in the attached Annual Report 2002. We also use a broad range of trading and hedging products including swaps, futures, options and structured products.

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To the extent that we own assets, or have long positions, in any of those markets, a downturn in those markets could result in losses from a decline in the value of our long positions. Conversely, to the extent that we have sold assets that we do not own, or have net short positions, in any of those markets, an upturn in those markets could expose us to potentially unlimited losses as we attempt to cover our net short positions by acquiring assets in a rising market. We may from time to time have a trading strategy of holding a long position in one asset and a short position in another, from which we expect to earn income based on changes in the relative value of the two assets. If, however, the relative value of the two assets changes in a direction or manner that we did not anticipate or against which we are not hedged, we might realize a loss in those paired positions. Such losses, if significant, could adversely affect our results of operations and financial condition.

Adverse market or economic conditions may cause a decrease in operating income

As a global financial services company, our businesses are materially affected by conditions in the financial markets and economic conditions generally in Europe, the United States and around the world. The slowdown in global economic growth, which commenced in the second half of 2000, persisted in 2002. The continued negative economic conditions in the United States, Europe and Japan and weak global equity markets created an adverse operating environment for financial services companies. Terrorism, military action and the threat of future military action and a global recession caused stock markets around the world to drop to their lowest levels in years. The poor market conditions were also adversely affected by a continued worsening in the credit environment and investor concerns about actual and perceived accounting irregularities, which resulted in proposals and adoptions of corporate governance reforms, and corporate earnings. Investor fears and uncertainty from these events continue to have a negative effect on financial markets.

While fixed income markets benefited from lower interest rates, lower valuations and declining volatility affected the equity markets. There was a large decline in merger and acquisition activity and capital markets transactions in virtually all sectors and the new issue market was severely impacted, especially in the technology area. The poor market conditions have persisted in 2003 notwithstanding some indications that the economy may be recovering.

Financial markets in Europe, the United States and elsewhere may decline further or experience volatility. Our operating income would likely decline in such circumstances, and if we were unable to reduce expenses at the same pace, our results of operations and financial condition would be adversely affected. In addition, further deterioration in economic conditions may negatively affect our banking and insurance businesses and the estimates and assumptions used to determine the fair value of our reporting segments, which could cause us to record a goodwill impairment charge in the future.

Terrorist attacks, military conflicts and economic or political sanctions could in the future have a material adverse effect on economic and market conditions, market volatility and financial activity, including in businesses in which we operate.

Private banking and asset management businesses

Further unfavorable market or economic conditions could affect our private banking and asset management businesses by reducing sales of our investment products, such as mutual funds, and by reducing the volume of our asset management activities. In addition, because the fees we charge for managing our clients' portfolios are in many cases based on the value of those portfolios, a market downturn that reduces the value of those portfolios or increases the amount of withdrawals would reduce our commission and fee income. Even in the absence of a market downturn, below-market

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performance by our mutual funds and managed portfolios may result in increased withdrawals and reduced inflows, which would reduce the operating income we receive from the asset management activities of our private banking and asset management businesses.

Insurance businesses

In our insurance businesses, continued adverse market or economic conditions could result in customers reducing their rate of investment, investing in different types of instruments, or ceasing to invest altogether, which would adversely affect the sales of insurance products such as unit-linked life insurance and individual pension products. For certain types of life and pension products we charge a fee based on the market value of the assets managed; a market downturn that reduces the value of these assets would reduce the amount of fee income earned. Additionally, continued unfavorable economic conditions could cause an increase in the frequency or severity of non-life insurance claims, which would produce increased claim settlement costs.

Non-life insurance companies frequently experience losses from catastrophes. Catastrophes include windstorms, hurricanes, earthquakes, tornadoes, severe hail, severe winter weather, floods, fires and terrorist attacks. The incidence and severity of these catastrophes are inherently unpredictable. The extent of our losses from catastrophe is a function of the terms of the relevant insurance contracts, total amount of losses our policyholders incur, number of policyholders affected, the frequency of events and the severity of the particular catastrophe. Our efforts to protect ourselves against catastrophe losses, such as the use of selective underwriting practices, the purchasing of reinsurance and the monitoring of risk accumulations, may not be adequate.

In 2002, our insurance businesses reported substantial losses due in large part to the fact that a significant amount of their investments were in the volatile and declining equity market. Although the insurance businesses have reduced the equity exposure of their investment portfolios, movements in the debt and equity markets could adversely affect the results of operations and financial condition of our insurance businesses. Please refer to "Operating and Financial Review" in the attached Annual Report 2002.

Investment banking business

The slowdown in global economic growth persisted throughout 2002; difficult market and economic conditions had a negative impact on our investment banking business in 2002, particularly capital markets and financial advisory services. Continuing adverse market or economic conditions are likely to continue to reduce the number and size of investment banking transactions in which we provide underwriting, mergers and acquisitions advice and other services. Our financial advisory fees and underwriting fees are directly related to the number and size of the transactions in which we participate and would therefore continue to be adversely affected by a sustained market downturn. Continuing market declines are also likely to continue to lead to a decline in the volume of securities trades that we execute for customers and, therefore, to continue to have an adverse effect on operating income we receive from commissions and spreads. In the past two years, we implemented significant cost cutting initiatives at CSFB in an effort to align more closely the size of our investment banking business with changing market conditions and to begin to bring its cost structure in line with its major competitors. Our investment banking business also continued its strategy to exit non-core businesses to concentrate on increasing its market share and improving its results in those areas where it already has a significant leadership position. Continued economic weakness and market volatility would likely have a negative impact on the results of operations and financial condition of our investment banking business. In

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addition, these adverse market or economic conditions could negatively affect our private equity investments since, if a private equity investment substantially declines in value, we could lose some or all of any management or similar fees, may not receive any increased share of the income and gains from such investment, may lose our pro rata share of the capital invested and it could become more difficult to dispose of the investment, particularly if private companies delay or decide against initial public offerings in light of the significant corporate governance, disclosure and accounting requirements imposed under the Sarbanes-Oxley Act of 2002 and similar legislation, directives or rules proposed or implemented in the jurisdictions in which we operate. For further information, please refer to "Information on the Company — Credit Suisse First Boston — Institutional Securities — Investment Banking division" in the attached Annual Report 2002.

We may incur significant losses in the real estate sector

Our banking and investment banking businesses could be adversely affected by a downturn in the real estate sector. We finance and acquire real estate and real estate-related products and originate loans secured by commercial, residential and multi-family properties. We also securitize and trade in a wide range of commercial and residential real estate and real estate-related whole loans, mortgages, and other real estate and commercial assets and products, including mortgage-backed and commercial mortgage-backed securities. Future unfavorable conditions in real estate markets and further potential writedowns on our legacy real estate portfolios would adversely affect our results of operations and financial condition.

Our revenues may decline in line with declines in certain sectors

Decreasing economic growth has reduced the operating income of our investment banking business. We have made a significant commitment to providing investment banking advisory and underwriting services in certain sectors such as technology and telecommunications. Downturn in these sectors has negatively affected the operating income of our investment banking business and may continue to do so.

Holding large and concentrated positions may expose us to large losses

Concentration of risk could increase losses at our private banking, banking, insurance and investment banking businesses. These businesses have sizeable loans and securities holdings and we face additional risk from concentrations of loans in our banking business to certain customers. Our loans due from banks and due from customers and mortgages amounted to CHF 195.8 billion, or 20.5%, of total assets and to CHF 277.0 billion, or 29.0%, of total assets, respectively, as of December 31, 2002. Excluding loans due from banks, our three largest industry concentrations were: financial services, real estate companies and other services, including technology companies, which represented, 18.0%, 7.7%, and 7.2%, respectively, of total loans due from customers and mortgages before professional securities transactions and securitized loans at December 31, 2002. A downturn in these sectors has had and in the future may have an adverse effect on our results of operations and financial condition. For information relating to our loans by economic sector, please refer to "Risk Management — Credit risk for the banking businesses — Loan portfolio" in the attached Annual Report 2002.

Furthermore, our investment banking business could be exposed to increased losses in activities such as arbitrage, market making, block and proprietary trading, merchant banking, underwriting and lending. We have committed substantial amounts of capital to these businesses, which may require us to take large positions in the loans or securities of a particular company or companies in a particular industry, country or region. The trend in all major capital markets is toward larger and more frequent commitments of capital. Such concentration of risk could increase our losses due to our sizeable securities holdings.

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Significant interest rate changes could affect our results of operations and financial condition

Banking businesses

The level of our net interest income significantly affects the results of operations of our banking businesses. Changes in market interest rates could affect the interest rates charged on interest earning assets differently than the interest rates paid on interest-bearing liabilities. This exposes our banks to risk due to potential mismatches of interest-bearing liabilities and interest-earning assets. Interest rates are highly sensitive to many factors beyond our control. Increases in the interest rate at which short-term funding is available and maturity mismatches may adversely affect the banking businesses' results.

Insurance businesses

Certain of the products offered by our insurance businesses provide for payment at guaranteed rates of interest. In particular, Swiss group pension plans that are part of the "second pillar" of the Swiss retirement savings program are subject to a minimum return set by the Swiss federal law on occupational benefit plans (second pillar). These products expose our insurance businesses to interest rate risk related to market prices and variability in cash flows associated with changes in market interest rates. Interest rate volatility could expose us to disintermediation risk and a reduction in net interest rate spread, adversely impacting our results. During periods of declining interest rates, our investment income will be lower because the interest earnings on our fixed-income investments likely will have declined in line with market interest rates. In addition, borrowers may prepay or redeem mortgages and debt securities in our investment portfolio as they seek to borrow at lower market rates, and we might have to reinvest those funds in lower interest-bearing investments. Accordingly, during periods of declining interest rates, a decrease in the spread between interest rates credited to policyholders and returns on our investment portfolio may adversely affect our results. In the current environment, characterized by enduring low interest rates and weak equity markets, although the Swiss government's reduction of the Swiss guaranteed rate from 4% to 3.25%, as of January 1, 2003, may contribute towards alleviating the adverse business environment for group life insurers, the Swiss guaranteed return continues to represent a constraint on profitability of the insurance businesses.

In periods of increasing interest rates, insurance policy surrenders and withdrawals may tend to increase as policyholders seek investments with higher perceived returns. This process may result in cash outflows requiring that our insurance businesses sell invested assets at a time when the prices of those assets are adversely affected by the increase in market interest rates, which may result in realized investment losses.

Our hedging strategies may not prevent losses

If any of the variety of instruments and strategies we use to hedge our exposure to various types of risk in our businesses is not effective, we may incur losses. Many of our strategies are based on historical trading patterns and correlations. For example, if we hold a long position in an asset, we may hedge this position by taking a short position in an asset where the short position has historically moved in a direction that would offset a change in the value of the long position. However, we may only be partially hedged, or these strategies may not be fully effective in mitigating our risk exposure in all market environments or against all types of risk. For instance, our insurance businesses reported substantial losses in 2002 due in part to the fact that their exposure to the declining equity markets was not fully hedged. Unexpected market developments may also affect our hedging strategies.

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Market risk may increase the other risks that we face

In addition to the potentially adverse effects on our businesses described above, market risk could exacerbate the other risks that we face. For example, if we were to incur substantial trading losses, our need for liquidity could rise sharply while access to liquidity could be impaired. In conjunction with a market downturn, our customers and counterparties could also incur substantial losses of their own, thereby weakening their financial condition and increasing our credit risk to them.

Credit risk

We may suffer significant losses from our credit exposures

Our businesses are subject to the risk that borrowers and other counterparties are unable to meet their obligations to us. Credit exposures exist within lending relationships, commitments and letters of credit, as well as derivative, foreign exchange and other transactions.

Banking businesses

Our banking businesses establish provisions for loan losses, which are charged to operations, in order to maintain the allowance for loan losses at a level which is deemed to be appropriate by management based upon an assessment of prior loss experience, the volume and type of lending being conducted by each bank, industry standards, past due loans, economic conditions and other factors related to the collectability of each entity's loan portfolio. For further information on potential problem loans, please refer to "Risk Management — Credit risk for the banking businesses — Risk element lendings" in the attached Annual Report 2002. Although management uses its best judgment in providing for loan losses, our banks may have to increase their provisions for loan losses in the future as a result of increases in non-performing assets or for other reasons. In 2002, we established a credit provision for a change in the estimate of the risk of loss inherent in the portfolio of non-impaired loans. Any increase in the banks' provisions for loan losses, any loan losses in excess of the banks' provisions with respect thereto or changes in the estimate of the risk of loss inherent in the portfolio of non-impaired loans could have an adverse effect on our results of operations and financial condition.

Insurance businesses

We transfer a portion of our exposure to insurance risks through reinsurance arrangements. Under these arrangements, other insurers assume a portion of our losses and expenses associated with reported and unreported losses in exchange for a portion of policy premiums. When we obtain reinsurance, we are not discharged from our legal duty to pay claims on reinsured policies. Therefore, the inability of our reinsurers to meet their financial obligations could materially affect our results of operations and financial condition. For further information relating to our reinsurance arrangements, please refer to "Risk management — Insurance Risk — Reinsurance" in the attached Annual Report 2002.

Investment banking business

We are exposed to the risk that third parties that owe our investment bank money, securities or other assets will not perform their obligations. This risk may arise, for example, from:

•

A decrease in the value of securities of third parties held by us as collateral;

•

Entering into swap or other derivative contracts under which counterparties have long-term obligations to make payments to us;

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•

Executing securities, futures or currency trades that fail to settle at the required time due to non-delivery by the counterparty or systems failure by clearing agents, exchanges, clearinghouses or other financial intermediaries;

•

Extending credit to our clients through bridge or margin loans or other arrangements; and

•

Economic and political conditions beyond our control.

In recent years, our investment banking business has significantly expanded its use of swaps and other derivatives. As a result, our credit exposures have increased in amount and duration. In addition, we have experienced, due to competitive factors, pressure to assume longer-term credit risk, to extend credit against less liquid collateral and to price derivative instruments more aggressively based on the credit risks that we take. We have had an increase in our investment bank's provisions for credit losses and further increases, or any credit losses in excess of related provisions, could have an adverse effect on our results of operations and financial condition.

Defaults by a large financial institution could adversely affect financial markets generally and us specifically

The credit environment in 2002 was among the most difficult in recent history, with default rates substantially higher and recoveries substantially lower than historic levels. In 2002, there were seven of the 12 largest US bankruptcies ever, and we expect that the number of bankruptcies could increase. The credit environment was also adversely affected by significant instances of fraud. The commercial soundness of many financial institutions may be closely interrelated as a result of credit, trading, clearing or other relationships between institutions. As a result, concerns about, or a default by, one institution could lead to significant liquidity problems, losses or defaults by other institutions. This risk is sometimes referred to as "systemic risk" and may adversely affect financial intermediaries, such as clearing agencies, clearinghouses, banks, securities firms and exchanges with which we interact on a daily basis, and could adversely affect us.

The information that we use to manage our credit risk may be inaccurate or incomplete

Although we regularly review our credit exposure to specific clients and counterparties and to specific industries, countries and regions that we believe may present credit concerns, default risk may arise from events or circumstances that are difficult to foresee or detect, such as fraud. We may also fail to receive full information with respect to the trading risks of a counterparty. In addition, in cases where we have extended credit against collateral, we may find that we are under-secured, for example, as a result of sudden declines in market values that reduce the value of collateral. For an analysis of our loan portfolio by collateral amount, please refer to "Risk Management — Credit Risk for the banking businesses — Loan portfolio" in the attached Annual Report 2002.

Cross border and foreign exchange risk

Cross border risks may increase market and credit risks we face

Country, regional and political risks are components of market risk as well as credit risk. Financial markets and economic conditions generally in the United States and around the world have in the past been, and in the future may continue to be, materially affected by such risks. Economic or political pressures in a country or region, including those arising from local market disruptions, currency crises and monetary controls, may adversely affect the ability of clients or counterparties located in that country

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or region to obtain foreign exchange or credit and, therefore, to perform their obligations to us. The political, economic or other circumstances of the countries in which we operate may have an adverse impact on our results of operations and financial condition.

We may face significant losses in emerging markets

As a global financial services company, we are exposed to economic instability in emerging market countries. We have adopted a lower risk profile for our emerging market operations. This strategy includes improved risk monitoring, greater diversity in the sectors in which we invest and greater emphasis on customer driven business. Our efforts at containing emerging market risk, however, may not succeed.

Currency fluctuations may adversely affect our results of operations and financial condition

We are exposed to risk from fluctuations in exchange rates for currencies. In particular, a substantial portion of our assets and liabilities in our insurance, investment banking and asset management businesses are denominated in currencies other than the Swiss franc, which is the primary currency of our financial reporting. Exchange rate volatility may have an adverse impact on our results of operations and financial condition.

Insurance underwriting risk

Underwriting risk represents the exposure to loss resulting from actual policy experience differing from the assumptions made in product pricing associated with mortality, morbidity, surrender rates and expenses on life insurance products and claim frequency and severity on non-life insurance products. Earnings in our insurance businesses depend significantly on the assumptions made in pricing insurance products and establishing the liabilities for future benefits and claims to be paid. For information relating to insurance underwriting risk, please refer to "Risk Management — Insurance Risk" in the attached Annual Report 2002.

For information relating to our non-life insurance liabilities, please refer to "Item 5 — Selected statistical information — Non-life insurance reserves." To the extent that actual claims experience is less favorable than our underlying assumptions used in establishing such liabilities, we would be required to increase our liabilities, which could have a material adverse impact on our results of operations and financial condition.

Liquidity risk

Our banking businesses may face asset liability mismatches

Our banking businesses face potential asset and liability mismatches that could lead to an inability to meet deposit withdrawals on demand or at their contractual maturity, to repay borrowings as they mature or to fund new loans and investments as they arise. Most of the funding requirements of our banking businesses are met through short-term funding sources, primarily in the form of deposits, inter-bank loans, time deposits and cash bonds. However, a portion of our assets has medium- or long-term maturities, creating a potential for funding mismatches. For further information relating to the assets and liabilities of our banking businesses, please refer to "Item 5 — Selected statistical information — Investments portfolio," "— Deposits" and "— Short-term borrowings." In the past, a substantial portion of

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our customer deposits has rolled over upon maturity and has been, over time, a stable source of funding. However, no assurance can be given that this experience will continue. If a substantial number of depositors do not roll over deposited funds upon maturity, our liquidity position could be adversely affected.

Our insurance businesses may face liquidity problems

Our insurance businesses could experience liquidity difficulties under certain circumstances. The insurance operation's short-term cash needs consist primarily of paying claims, as well as day-to-day operating expenses. Those needs are met through cash receipts from operations, which may be insufficient to cover our actual amount of claims and benefits experience particularly with regard to catastrophe losses caused by various events, such as hurricanes, windstorms, earthquakes, hail, tornadoes, explosions, fires and extreme winter weather, which by their nature cannot be predicted. Furthermore, our insurance businesses face a risk of asset and liability mismatches arising from our investment activities. For information relating to the investments of our insurance businesses, please refer to "Operating and Financial Review — Investments for insurance business" in the attached Annual Report 2002. We accumulate assets because premiums are paid earlier than claims are settled. These funds must be invested in a manner that allows cash outflows at the appropriate time to meet liabilities, or we could face liquidity difficulties that could adversely affect our results of operations and financial condition.

An inability to access capital markets could impair our liquidity

All of our businesses, particularly our investment banking business, depend on continuous access to the capital markets to finance day-to-day operations. An inability to raise money in the long-term or short-term debt capital markets, or an inability to access the repurchase and securities lending markets, could have a substantial negative effect on our liquidity. Our ability to borrow in the debt markets could be impaired by factors that are not specific to us, such as severe disruption of the financial markets or negative views about the financial services industry generally. In addition, lenders could develop a negative perception of our long-term or short-term financial prospects if:

•

We incurred large trading or loan losses;

•

We incurred unexpected large insurance claims;

•

The level of our business activity continued to decrease due to a continuing market downturn;

•

Regulatory authorities took significant action against us; or

•

We discovered serious employee misconduct or illegal activity.

Our liquidity may be adversely affected if we cannot sell assets

If we were unable to borrow in the debt capital markets, or access the repurchase and securities lending markets, our businesses would need to liquidate assets to meet our maturing liabilities. Our investment and trading portfolios are a source of liquidity, through the sale of readily marketable debt securities, equity securities, short-term investments and longer-term investments. A market downturn could also adversely affect our ability to liquidate portfolios. In certain market environments, such as when there is market volatility or uncertainty, overall market liquidity may decline. In a time of reduced liquidity, we may be unable to sell some of our assets, or we may have to sell assets at depressed prices, which in either case could adversely affect our results of operations and financial condition. In addition, our ability to sell our assets may be impaired if other market participants are seeking to sell similar assets at the same time.

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Changes in our ratings may adversely affect our business

Our borrowing costs and our access to the debt capital markets depend significantly on our credit ratings. These ratings are assigned by rating agencies, which may reduce or withdraw their ratings or place us on "credit watch" with negative implications at any time. Credit ratings are important to us when competing in certain markets and when seeking to engage in longer-term transactions, including over-the-counter derivatives transactions. In 2002, Moody's Investors Service, or Moody's, Standard & Poor's, or S&P, and Fitch Ratings, or Fitch, each downgraded our credit ratings and/or outlook. Moody's lowered the financial strength rating of Winterthur Insurance to A1 and the senior debt rating of Winterthur Capital Ltd. to A2, with a negative outlook. Moody's changed the ratings outlook for the senior debt ratings of each of Credit Suisse Group, Credit Suisse First Boston, Credit Suisse First Boston (USA), Inc., or CSFB (USA), Inc., and Credit Suisse to negative. S&P lowered Credit Suisse Group's long-term debt rating to A but affirmed it's A-1 short-term debt rating and lowered Credit Suisse First Boston's long-term debt rating to A+ and its short-term debt rating to A-1. S&P lowered CSFB (USA), Inc. 's long-term debt rating to A+ and its short-term debt rating to A-1, and lowered Credit Suisse's long-term debt rating to A+ and its short-term debt rating to A-1. S&P, however, revised its ratings outlook for Credit Suisse Group, Credit Suisse First Boston, CSFB (USA), Inc. and Credit Suisse from negative to stable. Fitch lowered Credit Suisse First Boston's long-term debt rating to AA- and changed the ratings outlook for Credit Suisse Group's, Credit Suisse First Boston's, CSFB (USA), Inc. 's and Credit Suisse's long-term debt rating to negative.

Further reductions in our credit ratings could increase our borrowing costs, limit our access to capital markets and adversely affect the ability of certain of our businesses, including our insurance and private banking businesses, to sell or market their products, compete for attractive acquisition opportunities and retain their current customers. This, in turn, could reduce our liquidity and negatively impact our operating results and financial condition.

For more information relating to our credit ratings and the credit ratings of our principal banks and insurance company, please refer to "Item 5 — Liquidity and capital resources."

Operational risk

We are exposed to a variety of operational risks

Operational risk is the risk of adverse impacts to our business as a consequence of conducting operations in an improper or inadequate manner, or as a result of external factors. In general, our businesses face a wide variety of operational risks. We face risk arising from organizational factors such as change of management and other personnel, data flow, communication, co-ordination and allocation of responsibilities. Policy and process risk arises from weakness in or non-compliance with policies and critical processes involving documentation, due diligence, adherence to credit limits, settlement and payment. Technology risk stems from dependencies on information technology and the telecommunications infrastructure and risks arising from e-commerce activities. We face risks arising from human error and external factors such as fraud. Finally, we face risks from physical threats to our and third-party suppliers' facilities or employees and business disruption; in particular, if there is a disruption in the infrastructure supporting our businesses and/or the areas where they or third-party suppliers are situated, such as interruptions in electrical, communications, transportation or other services, our ability to conduct our operations may be negatively impacted. Any of such risks, if they actually materialize, could have an adverse effect on our results of operation and financial condition.

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We may suffer losses due to employee misconduct

Our businesses are in particular exposed to risk from potential non-compliance with policies on loans, selling of insurance, credit limits, securities transactions and settlements and payment processes. There have been a number of highly publicized cases involving fraud or other misconduct by employees in the financial services industry in recent years, and we run the risk that employee misconduct could occur. Misconduct by employees could include engaging in unauthorized activities or binding us to transactions that exceed authorized limits or present unacceptable risks, which, in either case, may result in unknown and unmanaged risks or losses. Employee misconduct could also involve the improper use or disclosure of confidential information, which could result in regulatory sanction and serious reputational or financial harm. It is not always possible to deter employee misconduct, and the precautions we take to prevent and detect this activity may not be effective in all cases.

Our dependence on systems could expose us to losses

We also face operational risk from potential losses caused by a breakdown in information, communication, transaction settlement, clearance and processing procedures. As a global financial services company, we rely heavily on our financial, accounting and other data processing systems, which are varied and complex. If any of these systems does not operate properly or is disabled, including as a result of terrorist attacks or other unforseeable events, we could suffer financial loss, a disruption of our businesses, liability to our clients, regulatory intervention or reputational damage. The inability of our systems to accommodate an increasing volume of transactions could also constrain our ability to expand our businesses.

Legal and regulatory risks

Our exposure to legal liability is significant

We face significant legal risks in our businesses, and the volume and amount of damages claimed in litigation and other adversarial proceedings against financial services firms are increasing. These risks involve disputes over the terms of transactions in which we act as principal, disputes concerning the adequacy or enforceability of documents relating to our transactions, potential liability under securities or other laws for materially false or misleading statements made in connection with securities and other transactions in which we act as underwriter, placement agent or financial advisor, potential liability for the "fairness opinions" and other advice we provide to participants in corporate transactions, disputes over the terms and conditions of complex trading arrangements, disputes over the independence of our research and misselling insurance. We also face the possibility that counterparties in complex or risky trading transactions will claim that we improperly failed to tell them of the risks or that they were not authorized or permitted to enter into these transactions with us and that their obligations to us are not enforceable. Companies in our industry are increasingly exposed to claims for recommending investments that are not consistent with a client's investment objectives or engaging in unauthorized or excessive trading. During a prolonged market downturn, these claims have increased and we would expect them in the future to increase.

It is inherently difficult to predict the outcome of many of the litigations, regulatory proceedings and other adversarial proceedings involving the Group's businesses, particularly those cases in which the matters are brought on behalf of various classes of claimants, seek damages of unspecified or indeterminate amounts or involve novel legal claims. In presenting our consolidated financial statements, management makes estimates regarding the outcome of legal, regulatory and arbitration matters and takes a charge to

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income when losses with respect to such matters are probable and can be reasonably estimated. Charges, other than those taken periodically for costs of defense, are not established for matters when losses cannot be reasonably estimated. Estimates, by their nature, are based on judgment and currently available information and involve a variety of factors, including but not limited to the type and nature of the litigation, claim or proceeding, the progress of the matter, the advice of legal counsel and other advisers, our defenses and our experience in similar cases or proceedings. We also refer you to "Item 5 — Operating and financial review and prospects — Critical accounting policies and estimates" and "Item 8 — Financial information — Legal proceedings."

We are exposed to actions by employees

We are also subject to claims arising from disputes with employees for, among other things, alleged discrimination or harassment. These risks often may be difficult to assess or quantify and their existence and magnitude often remain unknown for substantial periods of time. We have incurred significant legal expenses in defending against employee litigation and other adversarial proceedings, and we expect to continue to do so in the future. Actions by employees could have a negative impact on our results of operations and financial condition.

Extensive regulation of our businesses limits our activities and may subject us to significant penalties

As a participant in the financial services industry, we are subject to extensive regulation by governmental agencies, supervisory authorities, and self-regulatory organizations in Switzerland, Europe, the United States and virtually all other jurisdictions in which we operate around the world. The requirements imposed by our regulators are designed to ensure the integrity of the financial markets and to protect customers and other third parties who deal with us. These regulations often serve to limit our activities, including through net capital, customer protection and market conduct requirements, and restrictions on the businesses in which we may operate or invest. Despite our best efforts to comply with applicable regulations, there are a number of risks, particularly in areas where applicable regulations may be unclear or where regulators revise their previous guidance or courts overturn previous rulings. The authorities have the power to bring administrative or judicial proceedings against us, which could result, among other things, in suspension or revocation of our licenses, cease and desist orders, fines, civil penalties, criminal penalties or other disciplinary action which could materially harm our results of operations and financial condition. For a more complete description of our regulatory regime, please refer to "Item 4 — Regulation and supervision."

International regulation of banking practices is increasing

In recent years, we have experienced increased regulation of our activities as a result of anti-money laundering initiatives in a number of jurisdictions. These measures may accelerate. For example, in 2001, the US Congress enacted the USA Patriot Act, which imposed significant new record keeping and customer identity requirements, expanded the government's powers to freeze or confiscate assets and increased the available penalties that may be assessed against financial institutions. Certain specific requirements under the USA Patriot Act involve new compliance obligations. Final regulations pursuant to the USA Patriot Act have not been adopted in all of these areas. Switzerland and other jurisdictions in which we operate have proposed or adopted regulations to strengthen prohibitions on money laundering and terrorist financing.

The European Union has adopted a directive on financial conglomerates, defined as groups that include regulated entities active in the banking/investment services sector, on the one hand, and the insurance

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sector, on the other hand, and that meet certain criteria, which will impose (from 2005) additional prudential requirements on the regulated entities comprising the financial conglomerate including, to a certain extent, any mixed financial holding company. In addition to the directive on financial conglomerates, the European Union has adopted a number of other directives and measures within the scope of a comprehensive Financial Services Action Plan, or FSAP, designed to increase internal market integration and harmonization. As part of the FSAP, the European Union adopted a Market Abuse Directive in 2002. This directive covers both insider trading and market manipulation and applies to transactions, including off-market transactions, in financial instruments that are traded on any EU-regulated market. It emphasizes enforcement through administrative procedures and sanctions. Furthermore, the EU Commission submitted its proposed new Investment Services Directive to the European Parliament and the Council in November 2002. As currently drafted, this directive would impose certain pre-trade transparency requirements on dealers and broker-dealers that engage in in-house matching of orders. Although Switzerland is not a member of the European Union, such regulation may have an impact on our operations in the European Union and, indirectly, in Switzerland. The impact of these and other regulations on our operations will depend on how the regulations and requirements are implemented. See "Item 4 — Information on the Company — Regulation and supervision —Banking."

Furthermore, Switzerland and the Swiss banking industry have in the past come under criticism for their laws and guidelines protecting the privacy of the customer, and such criticism may continue in the future.

Our investment banking business in particular is exposed to risk of loss from legal and regulatory proceedings

Our subsidiaries, in particular Credit Suisse First Boston, are subject to a number of legal proceedings, regulatory actions and investigations.

For example, in early 2002, in connection with industry-wide investigations into research analyst practices and certain initial public offering, or IPO, allocation practices, CSFB received subpoenas and/or requests for information from the following governmental and regulatory bodies: (1) the New York State Attorney General, or the NYAG; (2) the Massachusetts Secretary of the Commonwealth Securities Division, or the MSD; (3) the SEC; (4) the National Association of Securities Dealers Regulation, Inc., or the NASDR; (5) the New York Stock Exchange, or the NYSE; and (6) the United States Attorney's Office for the Southern District of New York. (The SEC, NASDR and NYSE have conducted a joint investigation.) The investigations have focused on equity research independence and the allocation of certain IPO shares to senior executives of the firm's clients (a practice that regulators have referred to as "spinning"). On December 20, 2002, CSFB and several other Wall Street firms reached agreements in principle with a coalition of state and federal regulators and self-regulatory organizations, including the above governmental and regulatory bodies, to settle certain pending investigations.

In addition, since January 2001, Credit Suisse First Boston Corporation, or CSFB Corp. (now known as CSFB LLC), an affiliate of CSFB LLC and several other investment banks have been named as defendants in several putative class action complaints filed in the US District Court for the Southern District of New York concerning IPO allocation practices. In 2002, actions have been filed in various US federal and state courts against, among others, CSFB LLC and/or certain CSFB-related affiliates relating to Enron Corp. or its affiliates. The actions allege, inter alia, violations of the US federal securities laws, the Employee Retirement Income Security Act, the Racketeer Influenced and Corrupt Organizations Act, state law negligence and/or civil conspiracy.

For information relating to these and other legal and regulatory proceedings involving our investment banking and other businesses, please refer to "Item 8 — Legal proceedings."

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Changes in our regulatory regime may affect our results of operations and capital requirements

Changes in laws, rules or regulations affecting the private banking, banking, insurance, investment banking and asset management businesses, or in the interpretation or enforcement of such laws, rules and regulations, may adversely affect our results. For example, the Basle Committee on Banking Supervision of the Bank for International Settlements, or Basle Committee, is currently considering significant changes to existing international capital adequacy standards. Under a timetable announced by the Basle Committee in July 2002, a revised version of these proposals is expected to be released later this year and finalized thereafter. Participating countries would then be expected to modify their bank capital and regulatory standards as necessary to implement the new standards effective at year-end 2006. If and when the proposed capital adequacy standards become effective, we may need to maintain higher levels of capital for bank regulatory purposes, which could increase our financing costs and adversely affect our results of operations. We cannot predict at this time whether, or in what form, the new standards will be adopted, or the effect that they would have on us or on our subsidiaries' capital ratios, financial condition or results of operations.

Legal restrictions on our clients may reduce the demand for our services

We may be materially affected not only by regulations applicable to us as a financial services company, but also by regulations of general application. For example, the volume of our businesses in any one year could be affected by, among other things, existing and proposed tax legislation, antitrust and competition policies, corporate governance initiatives and other governmental regulations and polices and changes in the interpretation or enforcement of existing laws and rules that affect the business and financial communities. In 2002, the US Congress passed the Sarbanes-Oxley Act, and the SEC, the NYSE and NASDAQ have proposed or adopted rules that significantly alter the duties and obligations relating to, among other things, corporate governance and financial disclosure. Most of these requirements are applicable to SEC-registered companies. To the extent private companies elect not to engage in IPOs in order to avoid being subject to these provisions, our equity new issuances business and our potential for exiting certain private equity investments may be adversely affected. In addition, the provisions of these requirements, coupled with the current state of the economy, have diverted many companies' focus from capital markets transactions, such as securities offerings and acquisition or disposition transactions, and as long as such diversion exists our investment banking businesses may be adversely affected.

Competition

We face increased competition due to consolidation and new entrants

We face intense competition in all financial services markets and for the products and services we offer. Consolidation, both in the form of mergers and acquisitions and by way of alliances and cooperation, is increasing competition. New competitors, including Internet-based financial services providers and non-financial companies, are entering the market, many of which are not subject to capital or regulatory requirements and, therefore, may be able to offer their products and services on more favorable terms. The European and American financial services markets are relatively mature, and the demand for financial services products is, to some extent, related to overall economic development. Competition in this environment is based on many factors, including the products and services offered, pricing, distribution systems, customer service, brand recognition and perceived financial strength. Consolidation has created a number of firms that, like us, have the ability to offer a wide range of products, from insurance, loans

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and deposit taking to brokerage, investment banking and asset management services. Some of these firms may be able to offer a broader range of products than we do, or offer such products at more competitive prices. Recently enacted US federal financial reform legislation significantly expands the activities permissible for financial services firms in the United States. For further information relating to the regulation of our businesses, please refer to "Item 4 — Information on the Company — Regulation and supervision." This legislation may accelerate consolidation, increase the capital base and geographic reach of our competitors and increase competition in the financial services industry, which could adversely affect our results of operations and financial condition.

Our competitive position could be harmed if our reputation is damaged

In the highly competitive environment arising from globalization and convergence in the financial services industry, a reputation for financial strength and integrity is critical to our ability to attract and maintain customers. Our reputation could be harmed if we fail adequately to promote and market our brand. Our reputation could be damaged if, as we increase our client base and the scale of our businesses, our comprehensive procedures and controls dealing with conflicts of interest fail or appear to fail to address conflicts of interest properly. Our reputation could in the future be damaged by, among other things, employee misconduct, a decline in results, adverse legal or regulatory action against us or a downturn in financial markets or the financial services industry in general. The loss of business that could result from damage to our reputation could affect our results of operations and financial condition.

We must recruit and retain highly skilled employees

Our performance is largely dependent on the talents and efforts of highly skilled individuals. Competition in the financial services industry for qualified employees is intense. We also compete for employees with companies outside the financial services industry; such competition with non-financial services companies in particular is intensifying due to the fact that average compensation within our industry is decreasing, reflecting the current economic environment. We have devoted considerable resources to recruiting, training and compensating employees. Our continued ability to compete effectively in our businesses depends on our ability to attract new employees and to retain and motivate our existing employees.

Intense competition in all business segments could harm our results

Private banking and banking businesses

Competition in the private banking and banking markets is based on a number of factors including products, pricing, distribution systems, customer service, brand recognition and perceived financial strength. Our private bank faces growing competition from the private banking units of other global financial services companies and from investment banks. There is increasing pressure due to competition from online banking and financial services and substantial consolidation in recent years. We also face intense competition in the banking business, where the Swiss retail market is mature and demand for banking services depends, to a large extent, on the overall development of the Swiss economy. To compete effectively, our private banking and banking businesses must develop new products and distribution channels.

Insurance businesses

Competition in the insurance market is intense and increasing as a result of continuing performance pressure. This pressure stems from declining financial returns from reinvestment at lower yields, low margins on traditional products, insufficient solvency capital, and customer demand for greater

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transparency of products and pricing. We face increased competition in distribution and also face competition from many new entrants to the market who have been able to reduce cost barriers to entry through the use of new technology. In particular, we face growing competition in the mass market customer segment due to a trend towards more standardization of products. In addition, competition is high in the affluent customer segment, which is targeted by insurance companies, banks, investment management firms, brokers and independent financial advisers. These areas of competition will likely require further development of our own brands, customer service and product capabilities. These strategies will require significant expenditures of resources, and our results of operations and financial condition could be harmed if our strategies are not as successful as our competitors' strategies.

Investment banking business

Our investment banking operation competes with brokers and dealers in securities and commodities, investment banking firms, commercial banks and other firms offering financial services. Investment banking has experienced significant price competition in certain of its businesses, which has reduced profit margins on certain products or in certain markets. Competition from alternative trading systems is reducing fees and commissions. In addition, as private equity funds grow and proliferate, competition to raise private capital and to find and secure attractive investments is accelerating. The principal competitive pressures on our investment banking business are its ability to attract and retain highly skilled employees, its reputation in the market place, its client relationships and its mix of market and product capabilities.

Asset management business

The asset management business faces competition from the asset management subsidiaries of major financial services companies, mutual fund managers and institutional fund managers in the United States and Europe. Despite the trend towards globalization in the industry, competition is most significant in individual geographic locations. To compete effectively, our asset management business must continue to develop a broad range of products aimed at both global and local markets and to improve its marketing channels.

We face competition from new trading technologies

Our private banking, investment banking and asset management businesses face competitive challenges from new trading technologies. Securities and futures transactions are now being conducted through the Internet and other alternative, non-traditional trading systems, and it appears that the trend toward alternative trading systems will continue and probably accelerate. A dramatic increase in computer-based or other electronic trading may adversely affect our commission and trading revenues, exclude our businesses from certain transaction flows, reduce our participation in the trading markets and the associated access to market information and lead to the creation of new and stronger competitors. We may also be required to make additional expenditures to develop or invest in new trading systems or otherwise to invest in technology to maintain our competitive position.

Acquisition risk

Acquisition of financial services businesses has been an important element of our strategy, and when appropriate we expect to consider additional acquisitions in the future. Even though we review the records of companies we plan to acquire, such reviews are inherently incomplete and it is generally not

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feasible for us to review in detail all such records. Even an in-depth review of records may not reveal existing or potential problems or permit us to become familiar enough with a business to assess fully its capabilities and deficiencies. As a result, we may assume unanticipated liabilities, or an acquisition may not perform as well as expected. We face the risk that the returns on acquisitions will not support the expenditures or indebtedness incurred to acquire such businesses, or the capital expenditures needed to develop such businesses.

Integration risk

We face the risk that we will not be able to integrate acquisitions into our existing operations effectively. Integration may be hindered by, among other things, differing procedures, business practices and technology systems, as well as difficulties in adapting an acquired company into our organizational structure. If we are unable to address these challenges effectively, our results of operations and financial condition could be adversely affected.

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ITEM 4: INFORMATION ON THE COMPANY

Information on the Company

We are registered as a corporation in the commercial register of, and have registered offices in, Zurich, Switzerland. The address of our principal executive offices is Paradeplatz 8, P.O. Box 1, CH-8070, Zurich, Switzerland, and our telephone number is +41 1 212 1616. For the purposes of this Item 4 of the Form 20-F, our authorized representative in the United States is Credit Suisse First Boston (USA), Inc., 11 Madison Avenue, New York, New York, 10010, USA.

Information related to the description of the business of Credit Suisse Group, the Credit Suisse Financial Services business unit and the Credit Suisse First Boston business unit are set forth under the caption "Information on the Company" in the Annual Report 2002 on pages 8 to 33 and such information is incorporated herein by reference.

Regulation and supervision

Overview

Our operations throughout the world are regulated and supervised as applicable by authorities in each of the jurisdictions in which we have offices, branches and subsidiaries. Central banks and other bank regulators, insurance regulators, financial services agencies, securities agencies and self-regulatory organizations are among the regulatory authorities that oversee our banking, insurance, investment banking and asset management businesses. Changes in the supervisory and regulatory regimes of the countries in which we operate will determine to some degree our ability to expand into new markets, the services and products that we will be able to offer in those markets and how we structure specific operations. For example, a number of countries in which we operate impose limitations on foreign or foreign-owned financial services companies including:

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Restrictions on the opening of local offices, branches or subsidiaries and restrictions on the types of banking and non-banking activities that may be conducted by these local offices, branches or subsidiaries;



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Restrictions on the acquisition of local banks or restrictions requiring a specific percentage of local ownership; and



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Restrictions on investment and other financial flows entering or leaving the country.

Our structure is based on several legal entities, which comprise two business units: Credit Suisse Financial Services and Credit Suisse First Boston. These business units contain separate operating segments. Our legal entities include two principal Swiss banks, Credit Suisse and Credit Suisse First Boston, and their respective subsidiaries, and a Swiss insurance company, "Winterthur" Swiss Insurance Company and its subsidiaries. The Credit Suisse legal entity encompasses the Private Banking and Corporate & Retail Banking segments. Winterthur is comprised of the Life & Pensions and Insurance segments. The Credit Suisse First Boston legal entity consists of the Institutional Securities and CSFB Financial Services segments. In general, we are subject to regulation at the legal entity, rather than the business unit or operating segment level.

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Central banks and other bank regulators, financial services agencies and self-regulatory organizations are responsible for the regulation and supervision of our banking businesses in each of the jurisdictions in which we operate. These authorities impose a wide variety of requirements, including those relating to:

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Reporting obligations;


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Reserves;


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Capital adequacy;


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Depositor protection;


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Prudential supervision;


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Risk concentration;


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Prevention and detection of money laundering and terrorist financing; and


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Liquidity requirements.

Some of the more important regulatory requirements affecting our insurance businesses in various jurisdictions include:

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Maintenance of minimum solvency margins;


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Restrictions on the type of business that insurance companies can undertake;


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Restrictions on the types of assets and investments that can be used to support the insurance operations;


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Limits in some countries on premium rates and commission rates that can be charged to customers;


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Guaranteed rates of return for certain lines of insurance;


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Control of actuarial and claim reserves of the regulated insurer; and



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Allocation of profits to policyholders on participating life policies.

In addition, some of the principal jurisdictions in which we have insurance operations have change of control requirements that may deter, delay or prevent certain transactions affecting the control of the ownership of our insurance businesses.

Our investment banking business is also subject to oversight by securities authorities and self-regulatory organizations in various jurisdictions, including regulation as a broker-dealer under US securities laws. Regulations affecting this business include, among others, those relating to:

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Capital requirements;



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Limitations on extensions of credit;



•

Customer sales practice rules;



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Prevention and detection of money laundering and terrorist financing;



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Research analyst independence; and



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Trading rules.

In addition, the investment banking and asset management businesses are regulated as investment advisers under the securities laws of the United States and certain other jurisdictions.

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The regulatory regime in the United Kingdom applicable to our banking, insurance, investment banking and asset management businesses has undergone a significant change under the Financial Services and Markets Act 2000, or FSMA, most of the provisions of which came into force on or before December 1, 2001. Under this act, regulation of the entire financial services industry has been almost entirely consolidated in the Financial Services Authority, or FSA. Although the new regulatory regime is similar to the old structure, the UK regulatory regime is still subject to change and the FSA intends to harmonize rules across the various segments of the industry. Adapting to the FSMA and its subsidiary rules and regulations has represented, and we believe will continue to represent, a significant challenge, in terms of management time and resources, for our businesses in the United Kingdom.

The regulatory structure that applies to our operations in certain key countries is discussed more fully below.

Banking

Switzerland

The Credit Suisse Group legal entity is not a bank according to the Swiss Federal Law on Banks and Savings Banks of November 8, 1934, as amended, or the Bank Law, and its Implementing Ordinance of May 17, 1972, as amended, or the Implementing Ordinance. However, the Swiss Federal Banking Commission, or FBC, issued a decree, the Decree, in 1998 pursuant to which the Credit Suisse Group legal entity is required to comply with Switzerland's requirements for banks with respect to capital adequacy, solvency and risk concentration on a consolidated basis, subject to specific stipulations required by the FBC. We are also subject to certain of the reporting obligations of Swiss banks. Furthermore, our banking operations in Switzerland, the Credit Suisse and Credit Suisse First Boston legal entities, are regulated on an individual as well as on a consolidated basis.

The Credit Suisse and Credit Suisse First Boston legal entities operate under banking licenses granted by the FBC pursuant to the Bank Law and the Implementing Ordinance. In addition, both banks hold securities dealer licenses granted by the FBC pursuant to the Swiss Federal Act on Stock Exchanges and Securities Trading of March 24, 1995, or the Stock Exchange Act. Banks and securities dealers must comply with certain reporting and filing requirements of the Swiss National Bank, or the National Bank, particularly in connection with capital export regulations. In addition, banks and securities dealers must file an annual statement of condition and detailed monthly interim balance sheets with the National Bank and the FBC.

As a member of the Financial Action Task Force on Money Laundering from its inception, in August 1990 Switzerland adopted its first legislative measures aimed at the prevention of money laundering. This initiative was followed in 1991 by the issuance of the FBC guidelines for the combat and prevention of money laundering, the adoption in 1992 of the fourth version (the first version was issued in 1977) of the Code of Conduct of the Swiss Bankers' Association, or the SBA, a self-regulatory organization, with regard to the exercise of due diligence on business relationships and the implementation of the Federal Statute concerning the Combat of Money Laundering in the Financial Sector on April 1, 1998. In January 2003, the FBC issued an anti-money laundering ordinance which contains more stringent due diligence requirements for banks and securities dealers with respect to business relationships and transactions that entail higher legal or reputational risks. This ordinance will take effect on July 1, 2003 and replace earlier FBC anti-money laundering guidelines. In addition, the

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SBA issued a revised Code of Conduct that applies to business relationships in general. In the aggregate, these provisions, which also aim at the prevention of the financing of terrorism, impose on banks, securities dealers and other financial intermediaries strict duties of diligence when entering into business relationships with clients, including the duty to identify the business partner and to establish the beneficial owner of funds, and in transacting business with clients or correspondent banks, such as special duties to monitor and clarify the background of unusual transactions. The provisions also include a duty to freeze assets and to notify Swiss authorities in the case of well-founded suspicions relating to money laundering activities, and a duty of special care in dealing with politically exposed persons.

Under the Bank Law and the Stock Exchange Act, Swiss banks and securities dealers are obligated to keep confidential the existence and all aspects of their relationships with customers. These customer secrecy laws do not, however, provide protection with respect to criminal offenses such as insider trading, money laundering or terrorist financing activities or tax fraud. In particular, Swiss customer secrecy laws generally do not prevent the disclosure of information to courts and administrative authorities when banks are asked to testify under applicable federal and cantonal rules of civil or criminal procedure.

The FBC is the highest bank supervisory authority in Switzerland and is independent from the National Bank. Under the Bank Law, the FBC is responsible for the supervision of the Swiss banking system through the issuance of ordinances and circular letters to the banks and securities dealers it oversees. Among other things, the FBC has the power to grant and withdraw banking and securities dealer licenses, to enforce the Bank Law and the Stock Exchange Act and to prescribe the content and format of audit reports. The National Bank is a limited liability company whose share capital is held by the Swiss cantons and cantonal banks, private shareholders and public authorities. It is responsible for the implementation of those parts of the government's monetary policy that relate to banks and securities dealers, particularly in the area of foreign exchange. It publishes extensive statistical data on a monthly basis.

In addition, the Swiss regulatory framework relies on self-regulation through the SBA. The SBA issues a variety of guidelines to banks, such as the Risk Management Guidelines for Trading and the Use of Derivatives, which set out standards based on the recommendations of the Group of Thirty, the Basle Committee and the International Organization of Securities Commissions; the Portfolio Management Guidelines, which set standards for banks when managing customers' funds and administering assets on their behalf; and the Code of Conduct for Securities Dealers, which sets standards for professional ethics in the execution of securities transactions for customers. On January 24, 2003, the SBA issued the Directives on the Independence of Financial Research. These Directives, which were previously ratified by the FBC, will become effective on July 1, 2003. The Directives have been issued with a view to ensuring the independence of financial research and cover sell-side and buy-side research of FBC-regulated financial institutions with respect to equity and debt securities.

Under the Bank Law, a bank's business is subject to inspection and supervision by an independent auditing firm that is licensed by the FBC. These Bank Law auditors, which are appointed by the bank's board of directors, are required to annually perform an audit of the bank's financial statements and assess whether the bank is in compliance with the provisions of the Bank Law, the Implementing Ordinance and FBC regulations, as well as guidelines for self-regulation. The audit report is submitted to the bank's board of directors and to the FBC. In the event that the audit reveals violations of the law or other irregularities, the auditors must inform the FBC if the violation or irregularity is not cured within a time limit designated by the auditors, or immediately in the case of serious violations or irregularities that may jeopardize the security of creditors.

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In 1999, the FBC established the Large Banking Groups Department, or the FBC Department, which at present is responsible solely for supervising us and UBS AG, the other large banking group in Switzerland. The FBC Department, which oversees all of the main businesses in which we operate, supervises us directly through regular review of accounting, risk and structural information, regular meetings with management and periodic on-site visits. The FBC Department also coordinates the activities of the FBC with our external auditors and with our principal foreign regulators.

In November 2001, the Swiss Federal Council appointed a group of experts with the task of formulating a concept for the integrated supervision of the financial markets in Switzerland. In February 2003, the group of experts recommended establishing a federal financial market supervisory agency by consolidating the FBC and the Swiss Federal Office of Private Insurance, or FOPI. The group of experts intends to prepare a draft legislative act to be considered by the Swiss Parliament in 2004 at the earliest. The new act, if passed by the Swiss Parliament, would not be expected to enter into force before 2006.

Capital requirements

Under the Bank Law, a bank must maintain an adequate ratio between its capital resources and its total risk-weighted assets and, as noted above, this requirement applies to the Credit Suisse Group legal entity on a consolidated basis. For purposes of complying with Swiss capital requirements, bank capital is divided into three main categories:

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Tier 1 capital (core capital);


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Tier 2 capital (supplementary capital); and


•

Tier 3 capital (additional capital).

Tier 1 capital includes primarily paid-in share capital, reserves (defined to include, among other things, free reserves and the reserve for general banking risks), capital participations of minority shareholders in fully consolidated subsidiaries, retained earnings and audited current-year profits, less anticipated dividends. Among other items, this is reduced by the holding of our own shares outside the trading book and goodwill. Tier 1 capital is supplemented, for capital adequacy purposes, by Tier 2 capital, which consists primarily of hybrid capital and subordinated debt instruments. A further supplement is Tier 3 capital, which consists of certain unsecured subordinated debt obligations with payment restrictions. The sum of all three capital tiers, less non-consolidated participations in the industries of banking and finance, equals total bank or regulatory capital.

The Implementing Ordinance was amended in 1995 and 1998 to bring Swiss capital requirements more in line with those imposed elsewhere, to take into consideration the risks attached to off-balance sheet activities and to reflect more fairly the different levels of risk inherent in different levels of activity. The revised regulations include a number of the key elements of the existing Basle Committee international capital adequacy standards, many of which were already, in substance, part of Swiss requirements.

We are required to maintain a minimum capital ratio of 8%, calculated by dividing total eligible capital by aggregate risk-weighted assets, measured on a consolidated basis. Statements of required and existing regulatory capital must be completed semi-annually on a consolidated basis. We are required to submit our annual statement of condition to the National Bank. The National Bank may demand further disclosures from banks concerning their financial condition as well as other kinds of information relevant

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to regulatory oversight. For information on our capital ratios, please refer to "Item 5 — Liquidity and capital resources."

The Basle Committee is currently considering significant changes to existing international capital adequacy standards. Under a timetable announced by the Basle Committee in July 2002, a revised version of these proposals is expected to be released later this year and finalized thereafter. Participating countries would then be expected to modify their bank capital and regulatory standards as necessary to implement the new standards effective at year-end 2006. We cannot predict at this time whether, or in what form, the new standards will be adopted by the Basle Committee, or the effect that they would have on us or on our subsidiaries' capital ratios, financial condition or results of operations.

Liquidity requirements

Banks, such as the Credit Suisse and Credit Suisse First Boston legal entities, are required to maintain specified measures of primary and secondary liquidity under Swiss law. According to the Decree, the Credit Suisse Group legal entity is only required to maintain adequate levels of liquidity within the meaning of the Implementing Ordinance and it is not required to comply with the detailed calculations described below for banks.

Primary liquidity is measured by comparing Swiss franc-denominated liabilities to liquid assets in Swiss francs. For this purpose, liabilities are defined as balances due to banks and due to customers, due on demand or due within three months, and 20% of deposits in savings and similar accounts. Under current law, a bank's liquid assets must be maintained to a level of at least 2.5% of the sum of these kinds of liabilities.

Secondary liquidity is measured by comparing (i) the total of liquid assets and "easily realizable assets" with (ii) the total of "short-term liabilities." The total of the liquid and easily realizable assets of a bank must be equal to at least 33% of the short-term liabilities.

The Credit Suisse and Credit Suisse First Boston legal entities are required to file with the FBC and the National Bank monthly statements reflecting their primary liquidity position and quarterly statements reflecting their secondary liquidity position.

Risk concentration

Under Swiss law, banks and securities dealers are required to ensure diversification of risk. Credit granted to any single customer and an investment in any single undertaking must bear an adequate relationship to the bank's equity, taking into account counterparty risks and the nature of collateral held. A bank's overall weighted risk exposure to a single counterparty may not exceed a prudent level; risk exposures exceeding 10% of a bank's capital base, a so-called large exposure, must be reported to the Bank Law auditors. In addition, no single counterparty may account for more than 25% of a bank's capital base, and the aggregate of all large exposure positions may not exceed 800% of the capital base; risk exposures exceeding these thresholds must be reported, subject to certain exceptions, immediately to the Bank Law auditors and to the FBC, which may require corrective action and impose sanctions, if appropriate.

Pursuant to the Decree, we must adhere to these risk concentration rules on a consolidated level. However, the FBC has agreed that our Swiss banks and securities dealers are entitled to exclude from the 25% and 800% limits (i) the risk positions of any of our companies which are subject to adequate

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supervision and (ii) the risk positions in respect of the Credit Suisse Group legal entity. In addition, our banking sub-groups (including the Credit Suisse and Credit Suisse First Boston legal entities) are exempt from risk consolidation.

European Union

In November 2002, the European Union adopted a directive on financial conglomerates. Financial conglomerates are defined as groups that include regulated entities active in both the banking/investment services sectors, on the one hand, and the insurance sector, on the other hand, and that meet certain criteria. The aim of the directive is to impose (from 2005) additional prudential requirements in respect of the regulated entities that are part of financial conglomerates including, to a certain extent, any mixed financial holding company. The supplementary supervision will be organized at the level of the financial conglomerate and cover capital adequacy, risk concentration and intra-group transactions. The directive further requires non-EU headed groups that operate regulated entities in the European Union to be subject to equivalent consolidated supervision in their home country.

Furthermore, in 2002, the European Union adopted a number of other directives and measures within the scope of the FSAP, designed to increase internal market integration and harmonization. As part of the FSAP, the European Union adopted a Market Abuse Directive in 2002. This directive covers both insider trading and market manipulation and applies to transactions, including off-market transactions, in financial instruments that are traded on any EU-regulated market. It emphasizes enforcement through administrative procedures and sanctions. Futhermore, the EU Commission submitted its proposed new Investment Services Directive to the European Parliament and the Council in November 2002. As currently drafted, this directive would impose certain pre-trade transparency requirements on dealers and broker-dealers that engage in in-house matching of orders.

As of January 2003, the Council of the European Union has reached an agreement in principle on the taxation of cross-border interest payments to individuals within the European Union. Under the proposal, EU Member States would be required from 2004 to exchange information on fixed income derived from savings by natural persons who are resident in another Member State. Instead of exchanging information, Austria, Belgium and Luxembourg would, at least during a transitional period, apply a withholding tax on fixed income derived from savings held by residents of other Member States. The proposal would further require that sufficient assurances be obtained from certain key financial centers, including Switzerland, on the application of equivalent measures to those provided for in the proposal. The negotiations with Switzerland are ongoing.

United States

Our operations in the United States are subject to a variety of regulatory regimes. The Credit Suisse First Boston legal entity operates a bank branch in New York, or the New York Branch, and the Credit Suisse legal entity operates a US administrative office in Florida and representative offices in New York and Texas. We refer to these collectively as our US Banking Offices. Each of these offices is licensed by the state banking authority in the state in which it is located and is subject to regulation and examination by its licensing authority. Because the New York Branch does not engage in "retail" deposit taking, it is not required to be, and is not, a member of the Federal Deposit Insurance Corporation, or the FDIC. Accordingly, the FDIC does not insure its deposits.

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The New York Branch is licensed by the Superintendent of Banks of the State of New York, or the Superintendent, under the New York Banking Law, or the NYBL. The New York Branch is examined by the New York State Banking Department and the Federal Reserve Bank of New York and is subject to banking laws and regulations applicable to a foreign bank that operates a New York branch. Under the NYBL and regulations adopted at year-end 2002, the New York Branch must maintain, with banks in the State of New York, eligible assets (including U.S. treasuries, other obligations issued or guaranteed by the U.S. government or agencies or instrumentalities thereof, obligations of the New York State government and local governments within New York State, and numerous other assets meeting the criteria established in the NYBL and applicable regulations) in an amount generally equal, with certain exclusions, to 1% of the liabilities of the New York Branch (up to a maximum of USD 400 million as long as the Credit Suisse First Boston legal entity and the New York Branch meet specified supervisory criteria). The NYBL also empowers the Superintendent to require branches of foreign banks to maintain in New York specified assets equal to such percentage of the branches' liabilities as the Superintendent may designate. This percentage is currently set at 0%, although the Superintendent may impose specific asset maintenance requirements upon individual branches on a case-by-case basis. The Superintendent has not prescribed such a requirement for the New York Branch.

The NYBL authorizes the Superintendent to take possession of the business and property of a foreign bank's New York branch under circumstances similar to those that would permit the Superintendent to take possession of the business and property of a New York State-chartered bank. These circumstances include the following:

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Violation of any law;


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Conduct of business in an unauthorized or unsafe manner;


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Capital impairments;


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Suspension of payment of obligations;


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Liquidation of a foreign bank in the jurisdiction of its domicile; or


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Existence of reason to doubt a foreign bank's ability to pay in full certain claims of its creditors.

Pursuant to the NYBL, when the Superintendent takes possession of a New York branch, it succeeds to the branch's assets and the assets of the foreign bank located in New York. In liquidating or dealing with a branch's business after taking possession of the branch, the Superintendent shall accept for payment out of these assets only the claims of creditors (unaffiliated with the Credit Suisse First Boston legal entity) that arose out of transactions with the New York Branch. After such claims are paid, the Superintendent would turn over the remaining assets, if any, to the foreign bank or to its duly appointed liquidator or receiver.

The New York Branch is generally subject under the NYBL to the same single borrower lending limits applicable to a New York State-chartered bank, except that for the New York Branch such limits, which are expressed as a percentage of capital, are based on the capital of the Credit Suisse First Boston legal entity on a global basis.

In addition to being subject to various state laws and regulations, our operations are also subject to federal regulation, primarily under the International Banking Act of 1978, as amended, or the IBA, and the amendments to the IBA made pursuant to the Foreign Bank Supervision Enhancement Act of 1991, or FBSEA, and to examination by the Board of Governors of the Federal Reserve System, or the Board, in its capacity as our US "umbrella supervisor." Under the IBA, as amended by FBSEA, all branches and

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agencies of foreign banks in the United States are subject to reporting and examination requirements similar to those imposed on domestic banks that are owned or controlled by US bank holding companies, and most US branches and agencies of foreign banks, including the New York Branch, are subject to reserve requirements on deposits and to restrictions on the payment of interest on demand deposits pursuant to regulations of the Board.

Among other things, FBSEA provides that a state-licensed branch or agency of a foreign bank may not engage in any type of activity that is not permissible for a federally-licensed branch or agency of a foreign bank unless the Board has determined that such activity is consistent with sound banking practice. FBSEA also subjects a state branch or agency to the same single borrower lending limits applicable to national banks and these limits are based on the capital of the entire foreign bank. Furthermore, FBSEA authorizes the Board to terminate the activities of a US branch or agency of a foreign bank if it finds that:

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The foreign bank is not subject to comprehensive supervision on a consolidated basis in its home country; or


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There is reasonable cause to believe that such foreign bank, or an affiliate, has violated the law or engaged in an unsafe or unsound banking practice in the United States and, as a result, continued operation of the branch or agency would be inconsistent with the public interest and purposes of the banking laws.

If the Board were to use this authority to close the New York Branch, creditors of the New York Branch would have recourse only against the Credit Suisse First Boston legal entity, unless the Superintendent or other regulatory authorities were to make alternative arrangements for the payment of the liabilities of the New York Branch. In 2001, the US Congress enacted the USA Patriot Act, which imposed significant new record keeping and customer identity requirements, expanded the government's powers to freeze or confiscate assets and increased the available penalties that may be assessed against financial institutions. The USA Patriot Act also required the US Treasury Secretary to develop and adopt final regulations that impose anti-money laundering compliance obligations on financial institutions. The US Treasury Secretary delegated this authority to a bureau of the US Treasury Department known as the Financial Crimes Enforcement Network, or FinCEN.

Many of the new anti-money laundering compliance requirements of the USA Patriot Act, as implemented by FinCEN, are generally consistent with the anti-money laundering compliance obligations that applied to the New York Branch and the US subsidiaries of Credit Suisse Group under Board regulations before the USA Patriot Act was adopted. These include requirements to adopt and implement an anti-money laundering program, report suspicious transactions and implement due diligence procedures for certain correspondent and private banking accounts. Certain other specific requirements under the USA Patriot Act, such as procedures relating to correspondent accounts for non-US financial institutions and procedures relating to the verification of customers' identities, involve new compliance obligations. However, FinCEN has not adopted final regulations in all of these areas, and the impact on our US operations will depend on how FinCEN implements these requirements.

Non-banking activities

Pursuant to the IBA, the Bank Holding Company Act of 1956, as amended, or the BHCA, imposes significant restrictions on our US non-banking operations and on our worldwide holdings of equity in companies operating in the United States. Historically, our US non-banking activities were principally

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limited to activities that the Board found to be a proper incident to banking or managing or controlling banks or an exemption applied (such as certain "grandfather rights" accorded to certain segments within the Credit Suisse First Boston legal entity pursuant to the IBA). Moreover, prior Board approval was generally required to engage in new activities and to make non-banking acquisitions in the United States.

The Gramm-Leach-Bliley Act, or GLBA, which was signed into law in November 1999 and became effective in most respects in March 2000, significantly modified these restrictions. Once GLBA took effect in March 2000, qualifying bank holding companies and foreign banks qualifying as " financial holding companies" were permitted to engage in a substantially broader range of non-banking activities in the United States, including insurance, securities, merchant banking and other financial activities—in many cases without prior notice to, or approval from, the Board or any other US banking regulator. GLBA does not authorize banks or their affiliates to engage in commercial activities that are not financial in nature or incidental thereto without other specific legal authority or exemption.

Certain provisions of the BHCA governing the acquisition of US banks were not affected by the GLBA. Accordingly, as was the case prior to enactment of GLBA, we are required to obtain the prior approval of the Board before acquiring, directly or indirectly, the ownership or control of more than 5% of any class of voting shares of any US bank or bank holding company. Under the BHCA and regulations issued by the Board, the New York Branch is also restricted from engaging in certain "tying" arrangements involving products and services.

Under GLBA and related Board regulations, we became a financial holding company effective March 23, 2000. To qualify as a financial holding company, we were required to certify and demonstrate that the Credit Suisse First Boston legal entity was "well capitalized" and "well managed." These standards, as applied to us, are comparable to the standards US domestic banking organizations must satisfy to qualify as financial holding companies. In particular, the Credit Suisse First Boston legal entity is required to maintain capital equivalent to that of a US bank, including a Tier 1 risk-based capital ratio of at least 6% and a total risk-based capital ratio of at least 10%. If in the future we cease to be well capitalized or well managed, or otherwise fail to meet any of the requirements for financial holding company status, then, depending on which requirement we fail to meet, we may be required to discontinue newly authorized financial activities or terminate our New York Branch. Our ability to undertake acquisitions permitted by financial holding companies could also be adversely affected.

GLBA and the regulations issued thereunder contain a number of other provisions that could affect our operations and the operations of all financial institutions. One such provision relates to the financial privacy of consumers. In addition, the so-called "push-out" provisions of GLBA will narrow the exclusion of banks (including the New York Branch) from the definitions of "broker" and " dealer" under the Securities Exchange Act of 1934, or Exchange Act. The SEC has granted a series of temporary exemptions to delay the required implementation of these push-out provisions. The narrowed "dealer" definition is currently expected to take effect in September 2003, and the narrowed "broker" definition is currently expected to take effect in May 2003. As a result, it is likely that certain securities activities currently conducted by the New York Branch will need to be restructured or transferred to one or more US registered broker-dealer affiliates.

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United Kingdom

The London branch of the Credit Suisse First Boston legal entity, or the London Branch, and its affiliated entities, Credit Suisse First Boston International and Credit Suisse (UK) Limited, are authorized under the FSMA with respect to their deposit taking banking business and are regulated by the FSA. Certain aspects of our wholesale money markets activities are subject to regulation in the United Kingdom by the FSA. Wholesale money market activities, which fall outside the scope of the FSMA generally fall within the scope of a voluntary code of conduct called the Investment Products Code which is published by the Bank of England. The FSA is an independent quasi-governmental body given statutory regulatory powers by the FSMA to regulate the financial services industry in the UK. The FSA has wide investigatory and enforcement powers, including the power to require information and documents from financial services businesses, appoint investigators, apply to the court for injunctions in cases of breaches or likely breaches of rules, impose financial penalties, issue public statements or censures and vary, cancel or withdraw authorizations it has granted.

Subject to certain exemptions set out in the FSMA, only authorized companies may carry on deposit taking business. In deciding whether to grant authorization, the FSA must determine whether an applicant satisfies the threshold conditions for suitability stipulated in the FSMA, as further explained in the FSA Handbook, including a requirement to be a fit and proper person. Guidance on what constitutes a fit and proper person is set out in the FSA Handbook and includes consideration of its connection with any person, the nature of the regulated activity that it carries on or seeks to carry on and the need to ensure that its affairs are conducted soundly and prudently. The FSA may also take into account anything that could influence a firm's continuing ability to satisfy this condition, including the firm's position within a group and information provided by overseas regulators. In connection with its authorization the FSA may impose conditions relating to the operation of the bank and the conduct of banking business. The FSA retains the power to waive or modify the application of or compliance with certain of the rules promulgated by the FSA under FSMA.

The FSA has adopted a risk-based approach to the supervision of banks. Under this approach, the FSA performs a formal risk assessment of every bank or banking group in the United Kingdom during each supervisory period, which varies in length according to the risk profile of the bank. The FSA performs the risk assessment by analyzing information that it receives during the normal course of its supervision, such as regular prudential and statistical returns on the financial position of the bank, or that it acquires through a series of meetings with senior management of the bank. After each assessment, the FSA will inform the bank of its view on the bank's risk profile, including details of any remedial action the FSA requires the bank to take. The FSA can, for example, increase the bank's capital ratios or revoke the bank's authorization, either of which would adversely affect our results of operation and financial condition.

The FSA requires Credit Suisse First Boston International and Credit Suisse (UK) Limited to maintain a certain minimum capital adequacy ratio of total capital to risk-weighted assets and to report large exposures. The London Branch is also subject to Swiss Bank Law requirements in respect of capital adequacy and large exposures. The FSA generally requires banks operating in the United Kingdom to maintain adequate liquidity, taking into account the nature and scale of their business so that they are able to conduct business in a prudent manner and meet their obligations as they fall due.

Our investment banking activities, such as acting as an intermediary, adviser, arranger, dealer or underwriter in certain types of investments, are also subject to regulation and supervision by the FSA. This includes compliance with the FSA rules relating to the treatment of client money and customer

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assets. For more information on regulation of our investment banking business, please refer to "Investment banking and asset management."

The banking businesses that are subject to oversight by the FSA are regulated in accordance with EU directives requiring, among other things, compliance with certain capital adequacy standards, customer protection requirements, conduct of business rules and anti-money laundering rules. These standards, requirements and rules are similarly implemented, under the same directives, throughout the EU countries in which we operate and are broadly comparable in scope and purpose to the regulatory capital and customer protection requirements imposed under applicable US law.

Insurance

Switzerland

We conduct our insurance business under operating licenses that were granted by the Swiss Federal Department of Justice and Police, or the Department. Our Swiss insurance operations are subject to supervision by FOPI, an administrative unit of the Department, pursuant to the Swiss Insurance Supervisory Act of 1978, as amended. FOPI has supervisory power as well as the authority to make decisions to the extent that the law does not explicitly designate the Department as the governing regulatory body.

Under current regulations, Swiss insurance and reinsurance companies cannot operate in any field other than insurance and reinsurance. This requirement is subject to exceptions, which may be granted by FOPI. Generally, these exceptions apply if the nature and volume of the proposed non-insurance business are viewed as non-threatening to the solvency of the insurance company. Life insurance companies require approval by FOPI if their interest in a non-insurance company exceeds 10% of the capital of the company; for investments by non-life insurance companies the relevant threshold is 20%. If the acquisition of interests in non-insurance companies exceeds 10% of the equity of the acquiring insurance company, approval is also required. Approval may be granted if the investment is viewed as non-threatening to the solvency of the acquiring insurance company.

FOPI requires each insurance company to submit, together with its application for an operating license, a business plan that provides information on the purpose and organization of the insurance company, the nature and geographic scope of its activities, its articles of association, its financial statements, the portion of its tariffs that is subject to supervision and details about the calculations of its technical provisions (that is, the provisions to cover future liabilities for insurance contracts). Any change to these elements of the business plan requires the prior approval of FOPI.

Swiss insurance companies are required to allocate a portion of their assets to a "Safety Fund" (for life insurance companies) or to "Bound Assets" (for non-life insurance companies). The Safety Fund and the Bound Assets cover the technical provisions and provide a minimum basis for satisfying liabilities of the insurance business. For the Bound Assets and the Safety Fund special investment restrictions apply.

In addition, life insurance companies are subject to the requirements and procedures set forth in the Federal Statute concerning the Combat of Money Laundering in the Financial Sector. For further information about this statute and the possible consolidation of FOPI and the FBC, please refer to "Item 4 — Regulation and Supervision — Banking."

Insurance companies are required to submit to FOPI the statutory annual return, which includes a more detailed breakdown of certain balance sheet and income statement positions, the audited accounts on a

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stand-alone basis, management letters and the Board of Directors Report issued by external auditors. Furthermore, reports on the Safety Fund and Bound Assets, respectively, have to be submitted on a regular basis. FOPI can ask for ad-hoc reports if the situation requires this.

European Union

The European Union has established a regulatory framework for the insurance sector through the issuance of directives concerning both life and non-life insurance and on the supplementary supervision of financial conglomerates. The general objective of these directives is to achieve a single integrated financial services market and to improve standards of prudential supervision and safeguard for policyholders through harmonization of core regulatory standards and solvency requirements among EU member states. Individual EU member states, such as Germany and the United Kingdom, implement these directives through national legislation, the details of which may vary from country to country and which may set higher standards.

Under new rules, which will be implemented in the EU member states in 2004, each insurance company in an EU member state must maintain a solvency margin (shareholders' equity and quasi-equity) at a level that depends on the nature of the insurers' activity and that is calculated with reference to certain balance sheet and income statement items, subject to an absolute minimum (so-called minimum guaranteed fund) of EUR 3 million (EUR 2 million for some classes of non-life insurance).

The directives are part of the European Commission's efforts to achieve a single European market for financial services by 2005. The directives also will give regulators greater powers to intervene in the event of concerns regarding an insurance company's financial position.

Germany

German insurance companies are subject to a comprehensive system of regulation under the German Law of the Supervision of Insurance Undertakings of 1992, as amended, or the Insurance Supervision Law, which implements EU directives on insurance regulation. The Federal Financial Supervisory Authority, or Supervisory Authority, monitors and enforces compliance with German insurance laws, applicable accounting standards, investment and technical provisions and solvency margins. Insurance companies are required to submit to the Supervisory Authority statutory annual returns, audited annual accounts, quarterly interim reports and quarterly reports on certain investments.

Under the Insurance Supervision Law and related regulations and regulatory releases, German insurance companies are subject to detailed requirements with respect to investment of their assets and liabilities. In general, the actuarial and claims reserves of each insurer must be adequate to allow the insurer to fulfill its contractual commitments to pay upon receipt of claims. Therefore, insurers must maintain a minimum solvency margin, including a guarantee fund equal to one third of the solvency margin.

Under current regulations, German insurance companies may not carry out business that is not directly related to their insurance activities. Life insurance, and health insurance replacing the statutory health insurance, must be transacted by companies that do not write other kinds of insurance. Composite life and non-life businesses are not allowed in Germany, although different companies are permitted within the same group. Primary insurers may write reinsurance.

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United Kingdom

Insurance companies in the United Kingdom are now subject to the FSMA and are regulated by the FSA. For a description of the FSA's enforcement powers, please refer to "Item 4 — Regulation and Supervision — Banking."

Subject to certain exemptions set out in the FSMA, only authorized companies may carry on the insurance business. In deciding whether to grant authorization, the FSA must determine whether an applicant satisfies the threshold conditions for suitability stipulated in the FSMA, as further explained in the FSA Handbook, including a requirement to be a fit and proper person. For further information on this requirement, please refer to "Item 4 — Regulation and Supervision — Banking." In connection with its authorization, the FSA may impose conditions relating to the operation of the company and the writing of insurance business. In addition, the FSA retains the power to waive compliance with various provisions of the FSMA and underlying rules. The FSMA and underlying rules also regulate, among other matters, solvency requirements, segregation of assets, reporting requirements, declaration of dividends and change of control.

The FSA has announced plans for significant and far-reaching changes to the regulation of the UK insurance industry. According to the FSA, the changes aim to bolster consumer protection by, among other things, strengthening the disclosure regime and tightening existing requirements on solvency and on the responsibilities of insurers' senior management. By using the new powers that it received in December 2001, the FSA aims to develop a risk-based approach to insurance regulation, and all other financial business, that will integrate and simplify the approaches taken to different types of financial services business. Under the new approach, each firm's risk will be assessed on a common FSA-wide model covering the company's control environment and business and customer risks together with an assessment of the potential impact on consumer protection and market stability of financial or compliance failure of that firm. The FSA's objective is to create a single set of prudential requirements organized according to risk category with sections containing rules and guidance on credit, market, operational and insurance risks, as well as capital adequacy and consolidated supervision.

At this time, we are unable to predict the effect the intended changes of the FSA regulation may have on us or our subsidiaries' financial condition or results of operations.

United States

Insurance companies are also subject to risk-based capital, or RBC, guidelines, which provide a method to measure the adjusted capital that insurance companies are required to maintain for regulatory purposes, taking into account the risk characteristics of the company's investments and products. To facilitate a uniform regulation of insurer solvency across the United States, the National Association of Insurance Commissioners, or NAIC, has adopted a formula and model law to implement RBC requirements for life insurance companies and most non-life insurance companies. The RBC requirements are used as early warning tools by the NAIC and states to identify companies that merit further regulatory action. For these purposes, the insurer's surplus is measured in relation to its specific asset and liability profiles. A company's RBC is calculated by applying factors to various asset, premium and reserve items, where the factor is higher for those items with greater underlying risk and lower for less risky items.

Although the US federal government does not directly regulate the business of insurance, federal legislation and administrative policies in certain areas may significantly affect the insurance industry,

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including Winterthur. These areas include employee benefit plan regulation, financial services regulation, federal taxation and securities laws.

Insurance companies in the United States are also subject to comprehensive and detailed regulation and supervision of their activities under US state laws in the individual states in which they conduct business. The laws of the various states establish insurance departments with broad powers to regulate most aspects of the insurance business. In addition, many state insurance regulatory laws contain provisions that require pre-notification to state agencies of a change in control of a non-domestic admitted insurance company in that state. Furthermore, state insurance regulatory laws require pre-approval by state agencies of a change in control of an insurance company domiciled or commercially domiciled in that state.

Investment Banking and Asset Management

Switzerland

Effective February 1, 1997, the securities dealer activities of the Credit Suisse and Credit Suisse First Boston legal entities became subject to regulation under the Stock Exchange Act. The Stock Exchange Act regulates all aspects of the securities trading business in Switzerland, including regulatory capital, risk concentration, sales and trading practices, record-keeping requirements and procedures and periodic reporting procedures. The regulatory capital requirements and risk concentration limits for securities dealers are, subject to minor exceptions, the same as for banks. Securities dealers are supervised by the FBC. Recently, the FBC adopted guidelines relating to the independence of research analysts.

Our asset management activities in Switzerland include the establishment and administration of mutual funds registered for public distribution. In accordance with the Swiss law on mutual funds, this activity is conducted through Credit Suisse Asset Management Funds, which is under the supervision of the FBC.

United States

In the United States, the SEC is the federal agency primarily responsible for the regulation of broker-dealers, investment advisers and investment companies and the Commodity Futures Trading Commission, or the CFTC, is the federal agency primarily responsible for, among other things, the regulation of futures commission merchants and commodity trading advisors. In addition, the Department of the Treasury has the authority to promulgate rules relating to US Treasury and government agency securities and the Municipal Securities Rulemaking Board has the authority to promulgate rules relating to municipal securities. The Board of Governors of the Federal Reserve System promulgates regulations applicable to certain securities credit transactions. In addition, broker-dealers are subject to regulation by industry self-regulatory organizations, including the NASD and NYSE, and by state authorities. In addition, because they are also engaged in futures activities, the broker-dealers are subject to industry self-regulatory organizations such as the National Futures Association, or the NFA, and by state authorities.

Our investment banking business includes broker-dealers registered with the SEC, all 50 states of the United States, the District of Columbia and Puerto Rico, and with the CFTC as futures commission merchants and commodities trading advisers. As a result of these registrations, and memberships in self-regulatory organizations such as the NASD, the NYSE and the NFA, our investment banking

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business is subject to over-lapping schemes of regulation covering all aspects of its securities and futures activities. Such regulations cover matters including:

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Capital requirements;

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The use and safekeeping of customers' funds and securities;

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Recordkeeping and reporting requirements;

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Supervisory and organizational procedures intended to ensure compliance with securities and commodities laws and the rules of the self-regulatory organizations;

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Supervisory and organizational procedures intended to prevent improper trading on "material non-public" information;

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Employee-related matters;

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Limitations on extensions of credit in securities transactions;

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Required procedures for trading on securities exchanges and in the over-the-counter market;

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Anti-money laundering procedures;

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Procedures relating to research analyst independence; and

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Procedures for the clearance and settlement of trades.

A particular focus of the applicable regulations concerns the relationship between broker-dealers and their customers. As a result, US broker-dealers may be required in some instances to make "suitability" determinations as to certain customer transactions, are frequently limited in the amounts that they may charge customers, generally cannot trade ahead of their customers and cannot engage in fraudulent trading practices. US broker-dealers must make certain required disclosures to their customers.

The broker-dealers' operations are also subject to the SEC's net capital rule, Rule 15c3-1, or the Net Capital Rule, promulgated under the US Securities Exchange Act of 1934, which requires broker-dealers to maintain a specified level of minimum net capital in relatively liquid form. We also have a so-called "broker—dealer lite" entity which is subject to the Net Capital Rule but calculates its capital requirements under Appendix F to Rule 15c3-1. The Net Capital Rule also limits the ability of broker-dealers to transfer large amounts of capital to parent companies and other affiliates. Compliance with the Net Capital Rule could limit those of our operations that require intensive use of capital, such as underwriting and trading activities and the financing of customer account balances and also could restrict our ability to withdraw capital from our broker-dealer subsidiaries, which in turn could limit our ability to pay dividends and make payments on our debt.

As registered futures commission merchants, our broker-dealers are subject to the capital and other requirements of the CFTC under the Commodity Exchange Act. These requirements include the provision of certain disclosure documents, generally impose prohibitions against trading ahead of customers and other fraudulent trading practices, and include provisions as to the handling of customer funds and reporting and recordkeeping requirements.

The investment banking and asset management businesses include legal entities registered and regulated as investment advisers under the US Investment Advisers Act of 1940, as amended, and the SEC's rules and regulations thereunder. Our asset management business provides primarily discretionary asset management services to individuals, corporations, public pension funds and registered and unregistered mutual funds. The US-registered mutual funds that we advise are subject to various requirements of the Investment Company Act of 1940, as amended, and the SEC's rules and regulations thereunder. For pension fund clients, we are subject to the Employee Retirement Income Security Act of 1974, as amended, and similar state statutes. These regulations provide, among other things, for the

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way in which client assets should be managed from a portfolio philosophy, diversification and management perspective. In addition, these regulations impose limitations on the ability of investment advisors to charge performance-based or non-refundable fees to clients, record keeping and recording requirements, disclosure requirements and limitations on principal transactions between an adviser or its affiliates and advisory clients, as well as general anti-fraud prohibitions. Finally, because some of the investment vehicles we advise are commodity pools, we are subject to the Commodity Exchange Act for such clients.

Our investment banking and asset management operations may also be materially affected not only by regulations applicable to them as financial market intermediaries, but also by regulations of general application. For example, the volume of our underwriting, merger and acquisition and merchant banking businesses could be affected by, among other things, existing and proposed tax legislation, anti-trust policy and other governmental regulations and policies (including the interest rate policies of the Board) and changes in interpretation and enforcement of various laws that affect the business and financial communities. From time to time, various forms of anti-takeover legislation and legislation that could affect the benefits associated with financing leveraged transactions with high-yield securities have been proposed that, if enacted, could adversely affect the volume of merger and acquisition and merchant banking businesses, which in turn could aversely affect our underwriting, advisory and trading revenues.

Recently, the NASD, the NYSE and the SEC adopted rules or regulations relating to the independence of research and research analysts. CSFB LLC, as a member of the NASD and the NYSE and by virtue of having affiliated broker-dealers registered with the SEC, is subject to such rules and regulations. The rules adopted by the NASD and NYSE apply to research communications involving equity securities and, among other things, prohibit research analysts from being supervised by investment banking personnel, prohibit tying research analyst compensation to investment banking services, prohibit buying and selling of company securities by research analysts during specified periods, and require certain disclosures in research reports and public appearances. On February 6, 2003, the SEC adopted Regulation Analyst Certification, or Regulation AC, which applies to research reports involving equity or debt securities. Regulation AC requires research analysts to make specific certification in connection with both research report issuances and public appearances. We do not know what effects the changes will have on our businesses.

In 2002, as part of changing practices in the investment banking industry and CSFB's commitment to ensuring the independence of its research, CSFB made a number of changes in its equity securities research activities, including realigning its research department, including equity research, to report to the Vice Chairman of CSFB for Research and for Legal and Compliance, adopting new rules on securities ownership by analysts and implementing new procedures for communication between analysts and investment bankers. Further, pursuant to an agreement in principle with various US regulators regarding, among other things, research analyst independence, CSFB has agreed to adopt internal structural and operational reforms that will augment the steps it has already taken to ensure research analyst independence. Please refer to "Item 8—Legal Proceedings."

In 2001, the US Congress enacted the USA Patriot Act. For further information relating to the USA Patriot Act, please refer to "Item 4 — Regulation and Supervision — Banking."

United Kingdom

Our London broker-dealer subsidiaries and asset management companies are authorized under the FSMA and are subject to regulation by the FSA. For a description of the FSA's enforcement powers, please refer to "Item 4 — Regulation and Supervision — Banking."

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Subject to certain exemptions set out in the FSMA, only authorized companies may carry on investment business. In deciding whether to grant authorization, the FSA must determine whether an applicant satisfies the threshold conditions for suitability stipulated in the FSMA, as further explained in the FSA Handbook, including a requirement to be a fit and proper person. For further information on this requirement, please refer to "Item 4 — Regulation and Supervision — Banking." In connection with its authorization the FSA may impose conditions relating to the operation of the company and the conduct of investment business. The FSA retains the power to waive compliance with various provisions of the FSMA and underlying rules.

The FSA is responsible for regulating most aspects of an investment firm's business, for example, its regulatory capital, sales and trading practices, use and safekeeping of customer funds and securities, record-keeping, margin practices and procedures, registration standards for individuals, anti-money laundering systems and periodic reporting and settlement procedures. The FSA has stated that it intends to develop a risk-based approach to regulation of financial services that will integrate and simplify the approaches taken to different types of financial services business. Accordingly, requirements on capital and related systems and controls are proposed to be set as far as possible by risk factor rather than by the sector from which the firm comes.

Property and equipment

Our principal executive offices, which we own, are located at Paradeplatz 8, Zürich, Switzerland. At December 31, 2002, we maintained worldwide over 930 offices and branches, of which approximately half were located in Switzerland.

As of December 31, 2002, approximately 40% of our worldwide offices and branches were owned directly by us with the remainder being held under commercial leases, 55% of which expire after 2007. The book value of the ten largest owned properties exceeded CHF 2.2 billion at December 31, 2002. Some of our principal facilities are subject to mortgages and other security interests granted to secure indebtedness to certain financial institutions. As of December 31, 2002, the total amount of indebtedness secured by these facilities was not material to us.

We believe our current facilities are adequate for existing operations. Management regularly evaluates our operating facilities for suitability, market presence, renovation and maintenance.

Additional information

For additional information relating to our principal capital expenditures and divestitures at the present time and for the last three financial years, please refer to "Item 5 — Liquidity and capital resources."

For a breakdown of our total revenues by geographic market for each of the past three years, please refer to note 4.2 of the notes to the consolidated financial statements.

For a list of our principal participations, please refer to note 46 of the notes to the consolidated financial statements.

For selected statistical information relating to our banking and insurance businesses, please refer to "Item 5 — Selected statistical information" and "Risk Management" in the attached Annual Report 2002.

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ITEM 5: OPERATING AND FINANCIAL REVIEW AND PROSPECTS

Management's discussion and analysis of financial conditions and results of operations.

Management's Discussion and Analysis of Financial Condition and Results of Operations is set forth under the caption "Operating and Financial Review" in the Annual Report 2002 on pages 36 to 83 and such information, other than the tables under the heading "Operating and Financial Review — Supplemental Information" on pages 80 to 83, is incorporated herein by reference.

Critical accounting policies and estimates

The Group's accounting policies are integral to understanding our consolidated financial statements. Our consolidated financial statements are prepared in accordance with Swiss GAAP. In addition, as set forth in note 48 of the notes to the consolidated financial statements, we provide a reconciliation of our consolidated financial statements to US GAAP and describe the differences between Swiss GAAP and US GAAP.

In preparing our consolidated financial statements, we are required to make estimates and assumptions based on judgment and available information. The reported amounts of assets and liabilities, contingent assets and liabilities and revenues and expenses are affected by these estimates and assumptions. We caution that the best estimates routinely require adjustments. Accordingly, actual results could differ from those estimates, and those differences could be material and have an effect on the results of operations for any particular period. We believe that the estimates and judgments we have made are appropriate, and that our consolidated financial statements present our financial position and results fairly in all material respects. The discussion below is presented solely to assist the reader's understanding of our consolidated financial statements and is not intended to suggest that other estimates and assumptions would be more appropriate.

Our significant accounting policies are disclosed in note 1 to our consolidated financial statements. We believe that the critical accounting policies described below may involve the most complex judgments and estimates.

Fair value

The values we report in our consolidated financial statements with respect to financial instruments, excluding loans held to maturity, are based on either fair value or the lower of original cost or fair value.

Fair value may be objective, as is the case for exchange-traded instruments, for which quoted prices in price-efficient and liquid markets generally exist. Fair value may also be subject to varying degrees of judgment depending on liquidity, concentration, uncertainty of market factors and pricing assumptions and other risks affecting the specific instrument. Described below is how we determine fair value for the significant financial instruments by balance sheet category.

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ITEM 5: OPERATING AND FINANCIAL REVIEW AND PROSPECTS

Replacement values of derivatives

Our derivatives portfolio includes both exchange-traded and over-the-counter, or OTC, derivatives. The replacement values of all derivatives are reported as Other Assets or Other Liabilities in our consolidated balance sheet, and income from derivatives held for trading purposes is recorded in Trading Income. Income from derivatives held for hedging purposes is reported in the same income statement category as the hedged instrument and differences between the fair value of the derivatives and their hedge accounting values is reported in Other Assets or Other Liabilities.

The fair value of exchange-traded derivatives is typically derived from the observable exchange price and/or observable market parameters. Our primary exchange-traded derivatives include futures and certain option agreements.

OTC derivatives include forwards, swaps and options on foreign exchange, interest rates, equities and credit products. Fair values for OTC derivatives are determined on the basis of internally developed proprietary models using various input parameters. The input parameters include those characteristics of the derivative that have a bearing on the economics of the instrument and market parameters. In well established derivative markets, the use of a particular model may be widely accepted. For example, the Black-Scholes model is widely used to calculate the fair value of many types of options. These models are used to calculate the fair value of OTC derivatives and to facilitate the effective risk management of the portfolio.

The determination of the fair value of many derivatives involves only limited subjectivity, because the required input parameters are observable in the market place. The pricing of these instruments is referred to as "direct." For other, more complex derivatives, subjectivity relating to the determination of input parameters reduces price transparency. The pricing of these instruments is referred to as "indirect." Specific areas of subjectivity include long-dated volatilities on OTC options transactions and recovery rate assumptions for credit derivative transactions. Adjustments (e.g., liquidity or uncertainty reserves) may be adopted outside of the model to ensure that the fair value determined remains prudent. Beginning in November 2002, in cases where significant subjective input parameters used in the calculation of replacement values for indirectly priced instruments may not be validated through observable market data, reserves are established for unrealized gains evident at the inception of the contracts. As of December 31, 2002, the majority of replacement values of derivatives reported in our consolidated balance sheet was derived using direct pricing.

Trading assets

Securities held in our trading portfolio are carried at fair value. The financial instruments reported in our consolidated balance sheet as Securities and precious metals trading portfolios comprise primarily debt and equity securities, all of which must meet specific criteria to be classified as trading assets. Debt instruments comprised approximately 78% of our total trading assets as of December 31, 2002. The debt instruments we trade include government bonds, corporate bonds and mortgage-backed or other asset-backed securities issued in both developed and emerging market countries.

The large majority of the debt securities included in Securities and precious metals trading portfolios is comprised of federal government debt obligations of the United States or other sovereign countries and investment-grade corporate debt securities. Prices for these instruments are generally readily available through quoted market prices as the markets in these instruments are typically liquid. For the minority of trading portfolio debt securities for which market prices are not available, instruments are valued based

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on yields reflecting the perceived risk of the issuer or country rating and maturity of the security and therefore involve some judgment.

Values of residential and commercial mortgage-backed securities and other asset-backed securities are generally available through quoted market prices, which are often based on market information of the prices at which similarly structured and collateralized securities trade between dealers and to and from customers. For certain securities, pricing models employing prepayment scenarios and Monte Carlo simulations are also used.

Collateralized debt obligations, or CDOs, and collateralized bond obligations, or CBOs, are structured securities based on underlying portfolios of corporate bonds. These instruments are split into various subordinated-rated structured "tranches" and each tranche is priced based upon its individual rating and the value or cash flow of the underlying corporate bonds supporting the structure. Values are derived using pricing models by calculating the internal rate of return of the projected cash flows and involve judgment.

We also have a substantial portfolio of equity securities which are reported as Securities and precious metals trading portfolios. The large majority of our equity securities is traded on public stock exchanges, for which daily quoted market prices are available. Preferred shares are equity instruments that usually have a defined dividend and are traded publicly either OTC or on recognized exchanges. Fair values of preferred shares are determined by their yield and the subordination of the issuer's credit obligations.

Convertible bonds are generally traded in a manner consistent with cash equity positions and are valued using direct price sources in line with standard market practice. We also trade a small number of convertible bonds for which no direct prices are available or the liquidity and/or reliability of direct prices is in doubt. For these convertible bonds, a theoretical approach to pricing is typically used with internal models. The key inputs to these models include stock price, dividend rates, credit spread, foreign exchange rate, borrowing costs and equity market volatility. For the remainder of the corporate bonds, for which no appropriate models exist, valuations are based on recent disposals in the market, taking into account changes in the creditworthiness of the issuers.

Also included in the trading portfolio are positions in separately managed funds, which totaled approximately 4% of total Securities and precious metals trading portfolios as of December 31, 2002. The fair values of these funds, which include debt and equity securities, are determined on a regular basis by independent fund administrators. As valuations are not provided on a daily basis, models are used to approximate changes in fair value between the calculation dates.

Loans held for sale

Loans held for sale are reported within the line items Due from Banks, Due from Customers and Mortgages, and are valued at the lower of original cost or fair value. Our portfolio of loans held for sale includes primarily residential mortgage loans and commercial mortgage loans, which are normally purchased with the intent to securitize. For residential mortgage loans, fair values are generally based on value estimates of the underlying collateral and/or on net present value analyses of future expected loan cash flows at market yields. Commercial real estate loans are valued using origination spreads, loan-to-value ratios, debt service coverage ratios, geographic location, prepayment considerations and current yield curves. In addition, current written offers or contract prices are considered in the valuation process. Mortgage loans that may not be securitizable are valued on a similar basis to real estate held for sale.

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Money market papers and repurchase and reverse repurchase agreements

Financial instruments reported as Money market papers and held for trading purposes are accounted for in our consolidated balance sheet at fair value. These instruments typically comprise short-term federal government securities, including treasury bills, commercial paper and certificates of deposit. The determination of fair value of these money market instruments is generally based on market prices or market parameters, and therefore requires less judgment. Treasury bills are actively traded in the OTC US government bond market and are priced on a discount basis. Commercial paper is credit-based and priced on quoted market prices when available or, when not available, based on market yields. Certificates of deposit are valued using quoted market prices or, in cases where quotes are not readily available, values are derived from standard models.

Receivables and payables under reverse repurchase agreements and repurchase agreements which are held in the trading book are carried at fair value within the line items Due from banks and Due from customers. These assets are valued using yield curves (typically on a spread to the LIBOR curve or using models which extrapolate points on the yield curve for trades with longer-term maturities) to discount expected cash flows.

Financial investments from the banking business

Instruments which we report as Financial investments from the banking business in the consolidated balance sheet include debt and equity securities, which are held on either a medium-term or long-term basis, real estate held for sale and our private equity portfolio. Assets reported as Financial investments from the banking business are valued, for debt securities which are intended to be held until maturity, on an accrual basis, or, for the other assets, at the lower of original cost or fair value.

Similar to our trading assets, a substantial portion of securities held as Financial investments from the banking business is quoted on public exchanges or through liquid OTC markets and the determination of fair values involves less judgment. Such instruments include government and corporate bonds held for asset and liability management or other medium-term business strategies. Approximately 28% of Financial investments from the banking business as of December 31, 2002 comprised separately managed fund investments in unlisted securities, similar to those held in Securities and precious metals trading portfolios. The remainder of our Financial investments from the banking business involve debt and equity securities and real estate in which the determination of fair value is generally more subjective, particularly distressed assets and private equity. These positions comprised approximately 11% of total Financial Investments from the banking business as of December 31, 2002.

Real estate held for sale is valued using standard industry methodologies, including income capitalization and sales prices of comparable properties. Typically, values are determined based on income capitalization using a discounted cash flow analysis, but direct capitalization may also be used. Real estate held for sale constituted approximately 2% of Financial investments from the banking business as of December 31, 2002.

The valuation process used for investments held in our private equity portfolio, which comprised approximately 8% of Financial investments from the banking business as of December 31, 2002, is generally subject to considerable judgment as these investments, which are typically held for medium-term appreciation and are not readily marketable, are primarily in unlisted or illiquid equity or equity-related securities. The valuation process for private equity investments in publicly traded securities, which comprised approximately 4% of our private equity investments held as of December 31, 2002, is

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based upon readily available market quotes. The pricing of private equity investments differs depending on whether they are direct investments, investments in internally managed funds or investments in third-party funds. Direct investments are generally side-by-side investments in portfolio companies of our internally managed funds and are priced in accordance with the procedures for internally managed funds. Internally managed funds are funds for which we act as fund advisor and make the investment decisions. The investments in the funds are priced taking into account a number of factors, such as recent financing involving unrelated new investors, earnings multiple analyses using comparable companies and discounted cash flow analyses. Internally managed fund investments and direct investments comprised approximately 29% and 22%, respectively, of our total private equity holdings as of December 31, 2002. Third-party funds are limited partnership interests in funds managed by external fund managers. These funds are valued based on periodic statements received from the general partner of the fund. Fund of funds products are included in this category since the valuations are based on external fund manager reports.

Securities held in the distressed asset portfolio are typically issued by private companies under significant financial burden and/or near bankruptcy. Due to the less liquid nature of these investments, valuation techniques often include earnings-multiple analyses, similar market transactions and default recovery analyses. In addition, liquidity and credit concerns are also considered in the determination of fair value. All of these factors contribute to significant subjectivity in the valuation of these assets.

Investments from the insurance business

Investments which we report as Investments from the insurance business in the consolidated balance sheet include debt and equity securities, derivatives, mortgage and other loans, real estate and short-term investments.

Debt and equity securities contribute approximately 74% of our total investment portfolio for the insurance business, with the majority being in quoted securities on public exchanges or liquid OTC markets where the determination of fair value involves less judgment. Approximately 4% of the equity portfolio is invested in indirect private equity holdings. Fair value is determined based on net asset value information provided by the external fund managers. Generally, the determination of fair values for such a type of investment is more subjective than for traditional investments.

Derivatives are carried at fair value. For detailed information on the determination of fair value of derivatives, please refer to the discussion within Replacement values of derivatives.

Controls over fair valuation process

Control processes are applied to ensure that the fair values reported in our financial statements are appropriate and measured on a reliable basis. These control processes include price verification procedures and reviews of models used to price financial instruments by personnel with relevant expertise who are independent of the trading functions. For further discussion of our risk management policies and procedures, see "Risk Management — Market risk" in the attached Annual Report 2002.

Impairment losses on investment securities

For Investments from the insurance business, debt and equity securities held as available-for-sale are carried at fair value. Unrealized gains and losses are recorded in Revaluation reserves for the insurance business in shareholders' equity. Debt securities held-to-maturity are carried at amortized cost. A decline

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that is deemed to be other than temporary results in an impairment being charged to Investment income from the insurance business. Subsequent increases in fair value up to the original cost are recorded through Investment income from the insurance business.

Recognition of an impairment loss on debt securities from the insurance business is recorded if a decline in fair value below cost/amortized cost is considered other than temporary. The determination of other than temporary impairment is a matter of significant management judgment. A decline is considered other than temporary when all amounts due according to the contractual terms of the security are not considered collectible, typically due to a deterioration of creditworthiness of the issuer. Generally, no impairment is recognized if the decline is due to market interest rate movements to the extent we have the intent and ability to hold the debt security until maturity or recovery.

Recognition of an impairment loss on equity securities from the insurance business is recorded if a decline in fair value below the cost basis of an investment is considered other than temporary. Declines in fair value below cost that have continued for a period greater than six months or that exceed 20% are considered strong indicators of an other than temporary impairment.

Unrealized losses on Investments from the insurance business are also recognized as an impairment loss when we have decided to sell a security. Such impairment losses are recognized at the time of the decision to sell without regard to the cause of the decline in fair value.

During 2002, as a result of continuing weakness in the financial markets, we recognized significant other than temporary impairments in our insurance investment portfolios. For the year ended December 31, 2002, we recognized other than temporary impairments of CHF 3,887 million. Of this amount, CHF 3,852 million related to other than temporary impairments on equity securities. Although we follow a prudent impairment policy, which is regularly reviewed for appropriateness, further declines in capital markets worldwide could necessitate the recognition of further impairment losses on our insurance investment portfolios.

The risks inherent in the assessment methodology for impairments include the risk that market factors may differ from our expectations, that we may decide to sell a security for unforeseen liquidity needs, or that the credit assessment or equity characteristics may change from our original assessment.

Please refer to "Risk Management" in the attached Annual Report 2002 for a discussion of the Group's market risk exposure and risk management. Please refer to "Operating and Financial Review — Credit Suisse Financial Services—Investments for Life & Pensions and Insurance" in the attached Annual Report 2002 for information on the insurance investment portfolio, including information on unrealized losses and realized losses.

By contrast, for financial investments from the banking business, the accounting treatment differs with respect to declines in fair value of debt and equity securities held-for-sale, in that all unrealized losses are recorded in the income statement, whether or not deemed to be other than temporary, as these assets are valued at the lower of cost or market. Accordingly, determining the nature of the decline, although a matter of significant management judgment, does not carry the same degree of significance as with investments from the insurance business.

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Technical provisions from the insurance business

Future policyholder benefits

The provision for future policyholder benefits for traditional life and health products is computed using the net level premium method, which represents the present value of estimated future policy benefits to be paid less the present value of estimated future net premiums to be collected from policyholders. The method uses best estimate assumptions for mortality, morbidity, expected investment yields, lapses/surrenders and expenses at the policy inception date, which remain locked in thereafter. The reserve is adjusted for a provision for adverse deviation, which is used to provide a margin for fluctuation and uncertainty inherent in the assumption setting process.

The provision for future policyholder benefits for traditional participating life products is computed using the net level premium method. The method in this case uses best estimate assumptions for mortality, morbidity and interest rates that are guaranteed in the contract or are used in determining the dividends.

The provision for future policyholder benefits for non-traditional life products is equal to the account balance, which represents premiums received and allocated investment return credited to the policy less deductions for mortality costs and expense charges.

Best estimate assumptions include but are not limited to, interest, expenses, lapses/surrenders, mortality/morbidity and future bonuses. Current and historical client data and industry data are used to determine these assumptions. Assumptions for interest reflect expected earnings on assets, which back the future policyholder benefits. Economic assumptions such as the expected long-term earned investment rate are derived centrally based on current market yields of bonds adjusted for long-term asset allocation targets, which are set by the Investment Committee. The guidance used by our qualified actuaries in setting assumptions includes, but is not limited to, pricing assumptions, available experience studies, profitability analysis and embedded value assumptions. The level of conservatism built into the assumptions and estimates will impact the current earnings and emergence of future profits.

Claim reserves

A liability for unpaid claims, including estimates of costs for claims relating to reinsured events that have occurred but have not been reported, or IBNR, and a liability for claim adjustments expenses is accrued for when insured events occur. The liability for unpaid claims is derived from best estimate assumptions and appropriate actuarial methods. The liability for unpaid claims is based on the estimated ultimate cost of settling claims, using past experience adjusted for current trends such as changes in the pricing of the business and administrative practices, and any other factors that would modify past experience, such as a change in the amount of insurance in force, a change in the cut-off date and claims reported subsequent to the balance sheet date.

Generally, the methods rely on insurers' past experience in claims reporting and settlement to make assumptions regarding future claims activity. We continually evaluate the potential for changes in claim estimates with the support of qualified reserving actuaries and use the results of these evaluations to adjust recorded reserves. Both the methods used and the underlying assumptions are in line with historical experience and the nature of the business being written by the company. However, the claims reserve is only an estimate of future activity and is subject to variability. The assumptions underlying the reserve may not in fact materialize as expected, and even if future conditions do develop as anticipated, random events may occur which lead to different results than originally estimated.

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For further information on the non-life claims reserve, please refer to "Selected Statistical Information-Non-life insurance reserves."

Unearned premium

Loss recognition analysis is performed by line of business, in accordance with the company's manner of acquiring, servicing and measuring the profitability of its insurance contracts. At the end of each accounting period, net unearned premiums are tested to see whether they are sufficient to cover related expected claims, loss adjustment expenses, policyholder dividends, commission, amortization and maintenance expenses. If there is a premium deficiency, the deferred policy acquisition cost, or DAC, is written down by the amount of the deficiency. If after writing down all of the DAC for a line of business a premium deficiency still exists, a premium deficiency provision is made to provide for the deficiency in excess of the DAC written down.

Deferred policy acquisition costs

Deferred policy acquisition costs consist primarily of commissions, underwriting expenses and policy issuance costs, which vary with and are directly related to the acquisition of insurance contracts. They are deferred to the extent that they are recoverable and amortized.

Deferred policy acquisition costs on non-life products are amortized over the periods in which the related premiums are earned.

Deferred policy acquisition costs on traditional life and health products are amortized over the premium paying period of the related policies in proportion to the net level premium using assumptions consistent with those used in computing the provision for future policyholder benefits as described above. The methods use best estimate assumptions for mortality, morbidity, expected investment yields, terminations and expenses at the policy inception date and remain locked in thereafter.

Deferred policy acquisition costs on participating traditional products are amortized over the expected life of the contracts in proportion to the estimated gross margins. The present value of estimated gross margins is computed using the expected investment yield. Estimated gross margins include estimates of premiums to be received, expected earned investment income, benefits to be paid, administration costs, changes in reserve for death and other benefits, expected annual policyholder dividends and realized gains and losses. Estimates of expected gross margins are determined on a best estimate basis without provisions for adverse deviation and are re-evaluated on a regular basis where actual margins replace estimated margins when actual profits emerge.

Deferred policy acquisition costs on non-traditional life products are amortized over the expected life of the contracts as a constant percentage of estimated gross profits. The present value of estimated gross profits is computed using the interest that accrues to the policyholders, known as the contract rate. Estimated gross profits include estimates regarding mortality, administration costs, expected investment income to be earned less interest credited to policyholders, surrender charges and realized gains and losses.

The level of conservatism built into the assumptions and estimates used will impact the current earnings and the emergence of future profits. Management regularly reviews the potential for changes in the estimates (both positive and negative) and uses the results of these evaluations to adjust recorded

44

amortization expenses and to adjust underwriting criteria, which could be material to our insurance operations.

The recoverability of DAC and the adequacy of the net GAAP liability (premium deficiency/loss recognition analysis) are analyzed on a regular basis. The goal of recoverability testing is to demonstrate that the initial DAC established is recoverable from future margins of the business to which the deferred costs relate. The result of the recoverability testing is reflected in the change of DAC. The goal of loss recognition testing is to demonstrate that the net GAAP liability defined as the GAAP benefit reserve less DAC and PVFP, is adequate to cover all future policy committments. The net GAAP liability is compared to the present value of future benefits and expenses less the present value of future gross premiums known as the Gross Premiums Valuation, or GPV. The GPV is calculated using best estimate assumptions as of the issue date for initial recoverability and valuation for ongoing loss recognition testing. If the GPV is greater than the net GAAP liability, a recoverability issue exists or a loss recognition event is deemed to have occurred. The GPV then becomes the new net GAAP liability by first writing off DAC and secondly strengthening the benefit reserve once the DAC has been written-down to zero. The level of conservatism built into the assumptions and estimates used in the calculations will impact current and future earnings.

Present value of future profits

PVFP is the present value of anticipated profits embedded in each life and health portfolio purchased. Interest accrues based on the policy liability rate or contract rate. The PVFP asset is amortized over the years that such profits are, or are anticipated to be, received in proportion to the estimated gross margins or estimated gross profits for participating traditional products and non-traditional products, respectively, and over the premium-paying period in proportion to premiums for other traditional life products. Expected future profits used in determining PVFP are based on actuarial determinations of future premium collection, mortality, morbidity, surrenders, operating expenses and yields on assets supporting the policy liabilities. The discount rate used to determine the PVFP is the rate of return required to be able to invest in the portfolio being acquired. Additionally, the PVFP asset is adjusted for the impact of estimated gross margins or profits of net unrealized gains and losses on securities.

Establishing PVFP is an inherently uncertain process involving complex judgments and estimates, and currently established PVFP may be overstated. If the present value of future net cash flows is insufficient to recover PVFP, the difference is charged to the income statement as an additional PVFP write-off, which could be material to our insurance operations.

Contingencies and loss provisions

A contingency is an existing condition that involves a degree of uncertainty that will ultimately be resolved upon the occurrence of future events. Under Swiss GAAP, reserves for contingencies are recorded when economically necessary or legally required.

Litigation contingencies

From time to time, the Group and its subsidiaries are involved in a variety of legal, regulatory and arbitration matters in connection with the conduct of our businesses. It is inherently difficult to predict the outcome of many of these matters, particularly those cases in which the matters are brought on behalf of various classes of claimants, seek damages of unspecified or indeterminate amounts or involve

45

novel legal claims. In presenting our consolidated financial statements, management makes estimates regarding the outcome of legal, regulatory and arbitration matters and takes a charge to income when losses with respect to such matters are probable and can be reasonably estimated. Charges, other than those taken periodically for costs of defense, are not established for matters when losses cannot be reasonably estimated. Estimates, by their nature, are based on judgment and currently available information and involve a variety of factors, including but not limited to the type and nature of the litigation, claim or proceeding, the progress of the matter, the advice of legal counsel and other advisers, our defenses and our experience in similar cases or proceedings.

Allowances and provisions for credit losses

As a normal part of our business, we are exposed to credit risks through our lending relationships, commitments and letters of credit and as a result of counterparty risk on derivatives, foreign exchange and other transactions. Credit risk is the risk that a borrower or counterparty is unable to meet its financial obligations. In the event of a default, we generally incur a loss equal to the amount owed by the counterparty, less a recovery amount resulting from foreclosure, liquidation of collateral or restructuring of the counterparty. We maintain allowances for credit risk, discussed below, which we consider adequate to absorb credit losses existing at the balance sheet date. The allowances for credit risk are for probable credit losses inherent in existing exposures and credit exposures specifically identified as impaired.

Inherent loss allowance

The inherent loss allowance is for all credit exposures not specifically identified as impaired, which on a collective basis are considered to have probable inherent loss. In 2002, we adjusted our method of estimating inherent losses related to our credit exposures. This adjustment resulted from continued deterioration in the credit markets and was made to reflect better our estimate of probable credit losses.

Many factors are evaluated in estimating probable credit losses inherent in existing exposures. We consider the volatility of default probabilities; rating changes; the magnitude of the potential loss; internal risk ratings; geographic, industry and other environmental factors; and imprecision in the methodologies and models we use to estimate credit risk. We also consider overall credit risk indicators, such as trends in internal risk-rated exposures, classified exposure, cash-basis loans, recent loss experience and forecasted write-offs, as well as industry and geographic concentrations and current developments within those segments or locations. Our current business strategy and credit process, including credit approvals and limits, underwriting criteria and workout procedures are also important factors.

Significant judgment is exercised in our evaluation of these factors. For example, the estimation of the amount of the potential loss requires judgment in determining the period of data to include since data that does not capture a complete credit cycle may compromise the accuracy of loss estimates. Determining which external data on default probabilities should be used, and when they should be used, also requires judgment. The use of data that does not sufficiently reflect our specific exposure characteristics could affect loss estimates. Evaluating the impact of uncertainties regarding macroeconomic and political conditions, currency devaluations on cross-border exposures, changes in underwriting criteria, unexpected correlations among exposures and other factors all require significant judgment. Changes in our estimates of probable credit losses inherent in the portfolio could have a direct impact on the provision and could result in a change in the allowance.

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Specific loss allowances

We make provisions for specific credit losses on impaired loans based on regular and detailed analysis of each loan in the portfolio. Our analysis includes an estimate of the realizable value of any collateral, the costs associated with obtaining repayment and realization of any such collateral, the counterparty's overall financial condition, resources and payment record, the extent of the Group's other commitments to the same counterparty and prospects for support from any financially responsible guarantors. If uncertainty exists as to the repayment of either principal or interest, a specific provision is either established or adjusted. We consider a loan impaired when, based on current information and events, it is probable that we will be unable to collect all amounts due under the contractual terms of the loan agreement. A loan is classified as non-performing no later than when the contractual payments of principal and/or interest are more than 90 days past due. A loan can also be classified as non-performing if the contractual payments of principal and/or interest are less than 90 days past due, based on the judgment of management. At that time, and on a periodic basis thereafter, the remaining principal is evaluated for collectibility and a provision is established for the difference between the net recoverable amount and the remaining principal balance.

The methodology for calculating specific allowances involves judgments at many levels. First, it involves the early identification of deteriorating credits. Extensive judgment is required in order to evaluate properly the various indicators of financial condition of a counterparty and likelihood of repayment. The failure to identify certain indicators or give them proper weight could lead to a different conclusion about the credit risk. The assessment of credit risk is subject to inherent limitations with respect to the completeness and accuracy of relevant information (for example, relating to the counterparty, collateral or guarantee) that is available at the time of our assessment. Significant judgment is exercised in determining the amount of the provision. Wherever possible, we use independent, verifiable data or our own historical loss experience in our models for estimating loan losses. However, a significant degree of uncertainty remains when applying such valuation techniques.

The classification of loan status has a significant impact on the subsequent accounting for interest accruals. We continue to accrue interest on loans classified as non-performing for collection purposes; however, a corresponding provision is set up against interest income. In addition, for any accrued but unpaid interest at the date the loan is placed on non-performing status, a corresponding provision is recorded against the interest income accrual through the income statement. As highlighted in the table on page 103 in "Risk Management" in the attached Annual Report 2002, the classification of certain loans as non-performing resulted in provisions against interest income of CHF 235 million for the year ended December 31, 2002.

For loan portfolio disclosures, valuation adjustment disclosures and certain other information relevant to the evaluation of credit risk and credit risk management, please refer to "Risk Management" in the attached Annual Report 2002.

Goodwill impairment

As a result of acquisitions, the Group has recorded goodwill as an asset on its consolidated balance sheet, the most significant amount of which relates to the acquisition of DLJ. At December 31, 2002, goodwill was CHF 11.0 billion. The Group amortizes goodwill under Swiss GAAP over its useful life, generally 20 years, and tests goodwill for impairment on an annual basis.

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For the purpose of testing goodwill for impairment, we view the operations of the Group on a disaggregated basis, whereby each element, referred to as a reporting unit, is assessed individually. If the fair value of each respective reporting unit exceeds its respective carrying value, there is no goodwill impairment.

Factors considered in determining fair value of reporting units include, among other things, an evaluation of:

•

Recent acquisitions of similar entities in the market place;



•

Current share values in the market place for similar publicly traded entities, including price multiples;



•

Recent trends in our share price and that of our competitors;



•

Estimates of our future earnings potential; and



•

The level of interest rates.

Estimates of our future earnings potential and that of our reporting units involves considerable judgment, including our view on future changes in market cycles, the anticipated result of the implementation of business strategies, competitive factors and assumptions concerning the retention of key employees. Adverse changes in the estimates and assumptions used to determine the fair value of the Group's reporting units could cause us to record a goodwill impairment charge in the future.

Deferred tax assets

Deferred tax assets and liabilities are recognized for the estimated future tax effects of operating loss carry-forwards and temporary differences between the carrying amounts of existing assets and liabilities and their respective tax bases at the balance sheet date.

The realization of deferred tax assets on temporary differences is dependent upon the generation of taxable income during the periods in which those temporary differences become deductible. The realization of such deferred tax assets on net operating losses is dependent upon the generation of taxable income during the periods prior to their expiration, if applicable. Periodically, management evaluates whether deferred tax assets can be realized. If management considers it more likely than not that all or a portion of a deferred tax asset will not be realized, a corresponding valuation allowance is established. In evaluating whether deferred tax assets can be realized, management considers projected future taxable income, the scheduled reversal of deferred tax liabilities and tax planning strategies.

This evaluation requires significant management judgment, primarily with respect to projected taxable income. The estimate of future taxable income can never be predicted with certainty. It is derived from budgets and strategic business plans but is dependent on numerous factors, some of which are beyond our control. Substantial variance of actual results from estimated future taxable profits, or changes in our estimate of future taxable profits, could lead to changes in deferred tax assets being realizable or considered realizable, and would require a corresponding adjustment to the valuation allowance.

As of December 31, 2002, we had deferred tax assets resulting from temporary differences and from net operating losses that could reduce taxable income in future periods. The consolidated balance sheet at December 31, 2002 includes a deferred tax asset of CHF 8.0 billion, which is presented net of a valuation allowance of CHF 2.0 billion, and a deferred tax liability of CHF 6.6 billion.

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As described in note 2 of the notes to the consolidated financial statements, during 2002 we changed our accounting policy for recognition of deferred tax assets related to net operating losses.

For further information on deferred tax assets, please refer to note 49.11 of the notes to the consolidated financial statements.

Off-balance sheet arrangements

Retained or contingent interests in assets transferred to unconsolidated entities

We are involved with several types of off-balance sheet arrangements, including those involving special purpose entities, or SPEs. There are two key accounting determinations that must be made relating to securitizations. In the case where we originated or previously owned the financial assets transferred to the SPE, a decision must be made as to whether that transfer would be considered a sale under generally accepted accounting principles. The second key determination to be made is whether the SPE should be considered a subsidiary and be consolidated into our financial statements, or whether the entity is sufficiently independent that consolidation is not warranted. If the SPE's activities are sufficiently restricted and also meet certain accounting requirements, the SPE is not consolidated by the seller of the transferred assets.

SPEs may be established for a variety of reasons including to facilitate securitizations or other forms of financing. Under Swiss GAAP, consolidation of a SPE is required if we hold more than 50% of the voting rights of the entity, or where we have the ability to exercise control of the SPE. Also, consolidation would be required if we have a legal or de facto obligation to support the entity or the SPE is dependent on us for funding. Consolidation may also be required by application of the principle of substance over form.

Mortgage securitizations

We originate and purchase commercial mortgages and purchase residential mortgages and sell these assets directly or through affiliates to SPEs. These SPEs issue securities that are backed by, and which pay a return based on, the assets transferred to the SPEs. Investors in these asset-backed securities typically have recourse to the assets in the SPE. The investors and the SPEs have no recourse to our assets.

We establish these SPEs and underwrite and make a market in these asset-backed securities. We may retain interests in these securitized assets if we hold asset-backed securities in connection with our underwriting and market-making activities. Retained interests in securitized financial assets are included in the consolidated balance sheet at fair value. Any changes in fair value of these retained interests are recognized in the consolidated income statement. We engage in these securitization activities to meet the needs of clients as part of our fixed-income activities and to sell financial assets. These securitization activities do not provide a material source of our funding.

Collateralized debt obligations

We purchase loans and other debt obligations from clients for the purpose of securitization. The loans and other debt obligations are transferred by us directly, or indirectly through affiliates, to SPEs that issue collateralized debt obligations, or CDOs. We structure, underwrite and make a market in these

49

CDOs, and we may have retained interests in these CDOs in connection with our underwriting and market-making activities. We also have significant investments, including equity (less than a majority) and debt securities, in CDO SPEs. These interests are included in trading assets and carried at fair value.

We engage in CDO SPE transactions to meet the needs of clients and to sell financial assets. These CDO SPE activities do not provide a material source of our funding.

Commercial paper conduits

We administer several multi-seller asset-backed commercial paper conduits, or ABCP conduits. Our ABCP conduits purchase financial assets, primarily receivables, from third parties, funded by the issuance of commercial paper. Since the funding costs are based primarily on the quality rating of the assets sold, rather than the rating of the seller, and the liquidity and credit enhancement, this often provides the seller with funding at advantageous levels. The Group provides the majority of the liquidity support and all of the program-wide credit enhancement to facilitate the conduits' activities.

Financial intermediary

In our role as a financial intermediary, SPEs are used to create investment opportunities that meet the demands of our clients. For example, SPEs are used in the process of modifying the characteristics of financial assets or to sell credit risk in a form that is not readily available in the markets. These transactions are commonly referred to as "repackage" SPEs. We are typically the derivative counterparty in these transactions. Our derivative transactions with SPEs are a component of our overall trading business and are carried at fair value.

Further, SPEs are used in our fund-linked products business. In this capacity, we manage a selection of alternative investments held in a SPE and pass on the majority of the return to investors. When requested, the Group will provide investors with protection from downside risk, primarily in the form of a put option.

Guarantees

In the ordinary course of our business, we also provide guarantees and indemnifications that contingently obligate us to make payments to the guaranteed or indemnified party based on changes in an asset, liability or equity security of the guaranteed or indemnified party. We may also be contingently obligated to make payments to a guaranteed party based on another entity's failure to perform, or we may have an indirect guarantee of the indebtedness of others. We have provided customary indemnifications to purchasers in conjunction with: the sale of assets or businesses; to investors in private equity funds sponsored by the Group regarding potential obligations of its employees to return amounts previously paid as carried interest; and to investors in our securities and other arrangements to provide "gross up" payments if there is a withholding or deduction because of a tax, assessment or other governmental charge.

Other commitments

We have commitments under a variety of commercial arrangements that are not recorded as liabilities in our consolidated balance sheet. These commitments are in addition to guarantees and other arrangements discussed in this Off-Balance Sheet Arrangements section. These commitments include standby letters of credit, standby repurchase agreement facilities that commit us to enter into reverse

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repurchase agreements with customers at market rates, commitments to invest in various partnerships that make private equity and related investments in various portfolio companies and in other private equity funds and commitments to enter into resale agreements.

Adoption of US GAAP

We anticipate changing to US GAAP as our primary basis of accounting in 2004. This change will result in the requirement to comply with different recognition and consolidation obligations relating to off-balance sheet arrangements in our primary reporting basis.

For further information on the above arrangements and their impact under US GAAP, please refer to Consolidated Off-Balance Sheet and Fiduciary Business and notes 49.4 and 49.10 in the consolidated financial statements.

US GAAP reporting related to pension plans

This section comments on the disclosures made in accordance with SFAS No. 87, "Employer's Accounting for Pensions" (see note 49.23 to the consolidated financial statements).

Credit Suisse Group has a number of defined benefit pension plans covering certain domestic and international employees. The four largest of our defined benefit pension plans (two in Switzerland, one in the United Kingdom and one in the United States) provide pension benefits for 45% of the total workforce worldwide. As of December 31, 2002, these four plans accounted for 88% of the projected benefit obligations of the consolidated defined benefit pension plans and 93% of the related plan assets.

At the end of 2002, all of our defined benefit pension plans met or exceeded the statutory minimum funding requirements of the country in which they are based. We contribute to our pension plans on an annual basis. With respect to the four largest defined benefit plans mentioned above, over the last four years the annual amount contributed to these plans averaged CHF 530 million per annum. In 2002, we made pension contributions of CHF 657 million to these four plans. We expect our 2003 contributions for these four plans not to exceed our contributions in 2002.

In 2002, global capital market developments resulted in poor returns on these plans' assets and a decline in the discount rate used to estimate the related pension obligation. In connection with our US GAAP disclosures in accordance with SFAS No. 87, "Employer's Accounting for Pensions" (see note 49.23), our defined benefit pension plans (including the four plans mentioned above) had an under funded status for 2002 in the amount of CHF 2.4 billion. This amount represents the difference between the projected benefit obligations of the consolidated defined benefit pension plans and the fair value of plan assets.

The projected benefit obligations of the consolidated defined benefit pension plans include an amount related to salary increases projected to occur in the future of CHF 1.4 billion. On the basis of the accumulated benefit obligation of the consolidated defined benefit pension plans (defined as the projected benefit obligation less the amount related to future salary increases), the under funded status of the plans amounted to CHF 0.9 billion for 2002.

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The increase in the under funded status from 2001 to 2002 is primarily a result of the following factors:

•

A decrease of the weighted average discount rate from 4.39% in 2001 to 4.12% in 2002, which had the effect of increasing the projected benefit obligations by CHF 0.7 billion;



•

Increasing life expectancy leading to an increase in the projected benefit obligations; and



•

Poor returns on investments in 2002.

For further information with respect to our pension benefits, please refer to note 49.23 of the notes to the consolidated financial statements.

Derivatives

Under Swiss GAAP, derivatives are carried at fair value on the balance sheet at positive and negative replacement values. The replacement values correspond to the fair values of derivative financial instruments which are open on the balance sheet date and which arise from transactions for the account of customers and our own accounts. Positive replacement values constitute a receivable and thus an asset of the Group. Negative replacement values constitute a payable and thus a liability. The fair value of a derivative is the amount for which that derivative could be exchanged between knowledgeable, willing parties in an arms' length transaction. Fair value does not indicate future gains or losses, but rather the unrealized gains and losses from marking to market all derivatives at a particular point in time. The fair values of derivatives are determined using various methodologies including quoted market prices, where available, prevailing market rates for instruments with similar characteristics and maturities, net present value analysis or other pricing models, as appropriate.

The credit equivalent amounts represent the potential credit risk with counterparties arising from open derivatives contracts. The credit equivalent amount for a counterparty is computed on the basis of the current positive replacement values of the respective contracts plus regulatory security margins, or add-ons, to cover the future potential credit risk during the remaining duration of the contracts. The add-ons correspond to the factors used for BIS capital adequacy calculation purposes.

For further information on derivatives, please refer to note 49.17 of the notes to the consolidated financial statements.

The following table sets forth, as of December 31, 2002, the distributions, by maturity, of substantially all of our exposure with respect to over-the-counter derivatives. Replacement values were determined on the basis of net present value analysis or other pricing models as appropriate.

in CHF bn	Less than 1 year	1 - 5 years	Greater than 5 years	Positive replacement value
Interest rate	16.5	67.8	101.0	185.3
Foreign exchange	23.5	8.4	2.9	34.8
Precious metals	0.4	0.4	0.1	0.9
Equity/index related	4.4	5.5	1.2	11.1
Other	0.4	2.6	1.3	4.3
Total derivative instruments	45.2	84.7	106.5	236.4
Netting agreements 1)				(182.2	)
Total derivative instruments, net positive replacement value 1)				54.2

¹⁾

Taking into account legally enforceable netting agreements.

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The following table sets forth, as of December 31, 2002, substantially all of our exposure with respect to over-the-counter derivatives by counterparty credit rating. Credit ratings are determined by external rating agencies or by equivalent ratings used by the relevant internal credit department.

in CHF bn	Net positive replacement value
AAA	4.8
AA	23.4
A	14.6
BBB	5.9
BB or lower	5.5
Total derivative instruments, net positive replacement value	54.2

Swiss GAAP compared with US GAAP

Under US GAAP we had a net loss of CHF 4,680 million, a net loss of CHF 687 million and a net profit of CHF 4,487 million in 2002, 2001 and 2000, respectively, compared with a net loss of CHF 3,309 million, a net profit of CHF 1,587 million and a net profit of CHF 5,785 million for the same periods under Swiss GAAP. Under US GAAP our shareholders' equity was CHF 34,412 million and CHF 44,896 million in 2002 and 2001, respectively, compared with shareholders' equity of CHF 28,517 million and CHF 35,800 million for the same periods under Swiss GAAP.

Differences in our net profit/(loss) under US GAAP and Swiss GAAP result primarily from adjustments in respect of derivatives, purchase accounting for the Winterthur legal entity and business combinations. Differences in our shareholders' equity under US GAAP and Swiss GAAP result primarily from adjustments in respect of our shares and own bonds, debt and equity securities and purchase accounting for the Winterthur legal entity. On January 7, 2003, we entered into a definitive agreement to sell Pershing to The Bank of New York Company, Inc. In accordance with US GAAP, we presented the assets and liabilities of Pershing as discontinued operations — assets and discontinued operations — liabilities in the US GAAP condensed consolidated balance sheets. For further information relating to the reconciliation of our Swiss GAAP net profit and shareholders' equity to US GAAP net profit and shareholders' equity, please refer to notes 48.2a and 48.2b of notes to the consolidated financial statements.

As previously announced, we expect to convert to US GAAP as the primary basis of accounting with effect from January 1, 2004.

Related party transactions

As the parent company of three main operating subsidiaries, the Winterthur legal entity, the Credit Suisse legal entity and the Credit Suisse First Boston legal entity, we are involved in significant financing and other transactions, and have significant related party balances, with these entities and their subsidiaries. We enter into those transactions in the ordinary course of our business, and such transactions typically reflect the pricing structure of an unrelated third-party transaction, although this is

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not achieved in all cases. Such transactions and the related inter-company balances are eliminated upon consolidation.

We also enter into related party transactions with our directors, officers and employees and those of our subsidiaries. For further information relating to these transactions, please refer to "Corporate Governance" in the attached Annual Report 2002.

Recently issued accounting standards

For a discussion of recently issued US accounting standards, please refer to note 49.4 of the notes to the consolidated financial statements.

Liquidity and capital resources

Credit Suisse Group Consolidated and Credit Suisse Group Legal Entities

Organization

Although we operate through separate business units and segments, liquidity and capital needs are addressed according to the four major legal entities: the Winterthur legal entity for the Insurance and Life & Pensions segments, the Credit Suisse legal entity for the Private Banking and Corporate & Retail Banking segments, the Credit Suisse First Boston legal entity for the Institutional Securities and CSFB Financial Services segments and legal entity Credit Suisse Group as the holding company of these three legal entities.

Each of our three main operating subsidiaries finances its operations in a manner consistent with its business mix, capitalization and ratings and in line with its asset and liability and risk management policies. Liquidity and capital management at the business unit level is coordinated at the Group level through several organizational bodies. The Liquidity Management Committee, chaired by the Group CFO, provides a forum to discuss and coordinate liquidity and funding issues and to review funding practices regarding market access, diversification of liabilities and creditor relations. The Group Risk Processes and Standards Committee, or GRIPS, chaired by the Head of Group Risk Management, monitors liquidity risk and sets the framework for the Group and the legal entities for contingency planning, including procedures to ensure that information flows remain timely and uninterrupted and division of responsibility remains clear. Annually, after the conclusion of the strategic business planning exercise, projected liquidity and capital needs of each of our businesses are evaluated and taken into consideration in determining Group-wide policies and targets. The Group, as the ultimate provider of capital to the subsidiaries, defines the appropriate capital base for its three primary legal operating entities and acts as the primary issuer to the external market of capital and those capital instruments that qualify for regulatory Tier 1 capital. The Group CFO and the Group Treasurer participate in the asset liability management of the business units.

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Funding sources and strategy

At the Credit Suisse Group consolidated level

Our funding requirements, including any supplementary capital needs, are based on regulatory requirements, liquidity requirements, rating agency criteria, taxation, and other considerations. Sources of funding are diversified in liability type, funding market, investor and geographic distribution. Given the depth of our private and retail banking business, we access core deposit funding from an international customer base that has proven to be a stable source of funds over time. This is augmented by our use of institutional market funding on both an unsecured and secured basis. Access by the various legal entities of Credit Suisse Group to the institutional market is coordinated globally in an effort to ensure optimal distribution and placement of our securities, both publicly and privately.

At the Credit Suisse Group legal entity level

The Credit Suisse Group legal entity is a holding company whose primary cash requirements result from the payment of dividends to shareholders, the servicing of Group-issued debt, the payment of Corporate Center expenses and, from time to time, the acquisition of new businesses. Generally, the Credit Suisse Group legal entity does not serve as a financing conduit for those operating subsidiaries that have direct access to external sources of funding. It does, however, issue medium-term and long-term debt for general corporate purposes in Switzerland and through finance subsidiaries for general corporate purposes outside Switzerland. In addition, the Credit Suisse Group legal entity is the provider of capital and thus is the issuer of most hybrid Tier 1 capital instruments through consolidated special purpose subsidiaries. Proceeds from these offerings are typically down-streamed to one of our operating subsidiaries on a matched basis so that the Group has limited currency, interest rate or liquidity risk. Equity investments in subsidiaries are generally funded with equity capital.

The Credit Suisse Group legal entity will receive total dividends of approximately CHF 1,500 million for the 2002 financial year, compared with CHF 1,819 million for the 2001 financial year, and CHF 3,141 million for the 2000 financial year. In 2002, the Group did not execute a share buy-back program.

The cost of servicing bonds issued by the Credit Suisse Group legal entity and its financing subsidiaries, after taking swap transactions into consideration, was CHF 599 million in 2002, CHF 670 million in 2001 and CHF 383 million in 2000.

On October 11, 2002 Credit Suisse Group filed a USD 2 billion shelf registration statement on Form F-3 under the U.S. Securities Act of 1933, which enables Credit Suisse Group to issue a wide range of senior and subordinated debt (including convertible debt), warrants and hybrid Tier 1 securities.

At December 31, 2002, the Credit Suisse Group legal entity and its finance subsidiaries had borrowings of CHF 13.9 billion, an increase of CHF 0.9 billion over year-end 2001. During 2002 and 2001, the Credit Suisse Group legal entity, through several consolidated special purpose vehicles based in Guernsey, issued the equivalent of CHF 211 million and CHF 982 million, respectively, of perpetual preferred securities qualifying as Tier 1 capital, the proceeds of which were lent to the Credit Suisse First Boston legal entity.

In 2002, Credit Suisse Group issued through its wholly owned subsidiary, Credit Suisse Group Finance (Guernsey) Ltd. mandatory convertible securities in the amount of CHF 1.25 billion. This issue qualifies as equity capital and as Tier 1 capital under BIS rules.

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The Credit Suisse Group legal entity has an agreement with a syndicate of international banks that provides USD 1 billion of revolving credit on an unsecured basis. This 364-day committed facility, which is for general corporate purposes, is available in CHF, USD, GBP and EUR with various banks. The facility contains customary covenants that we believe will not impair our ability to obtain funding. This facility was renewed in January 2003 and expires in January 2004. No amount was drawn under the predecessor facility in 2002.

In 2000 we acquired DLJ for a total consideration of approximately CHF 22 billion (USD 12.4 billion) at the date of acquisition, of which approximately 60% was payable in cash and 40% in Credit Suisse Group shares. In connection with this acquisition, Credit Suisse Group Finance (US), Inc. issued the equivalent of CHF 6.6 billion aggregate principal amount of fixed and floating rate notes and subordinated bonds, guaranteed by the Credit Suisse Group legal entity, with varying maturities from 2003 to 2020 and denominated in USD, EUR and GBP. USD 1 billion of the notes issued in connection with the acquisition mature in 2003.

In respect of the 2002 financial year, we propose a dividend in the amount of CHF 0.10 for each share ranking for dividends, or a total of approximately CHF 120 million. Repayment of share capital for each of the years ended December 31, 2001 and 2000 was CHF 2.4 billion.

Factors that may affect liquidity and capital resources

The subsidiaries of the Credit Suisse Group legal entity are generally subject to legal restrictions on the amount of dividends they can pay. For example, article 675, in conjunction with article 671, of the Swiss Code of Obligations restricts the amount of dividends that the Credit Suisse First Boston, Credit Suisse and Winterthur legal entities can pay. These legal entities may pay dividends only if and to the extent: (1) they have earned a profit during a given financial year or previously established reserves for the payment of dividends; (2) the required portion of annual profit has been allocated to reserves as prescribed by law, the articles of association or a resolution of the general meeting of shareholders; and (3) allocation and payment of the dividends has been approved at the general meeting of shareholders. We do not believe that legal or regulatory restrictions constitute a material limitation on the ability of our subsidiaries to pay dividends to the Credit Suisse Group legal entity. The amount of dividends paid by our operating subsidiaries is determined after considering the expectations for future results and growth of the operating businesses.

Credit ratings

Our access to the debt capital markets and our borrowing costs depend significantly on our credit ratings. These ratings are assigned by rating agencies, which may raise, lower or withdraw their ratings, or place us on "credit watch" with positive or negative implications at any time. Rating agencies take many factors into consideration in determining a company's rating. Such factors include earnings performance, business mix, market position, ownership, financial strategy, level of capital, risk management policies and practices and management team, in addition to the broader outlook for the

56

Group's industry. The credit ratings assigned to the senior debt of the Credit Suisse Group legal entity as of March 19, 2003 and our outlooks were as follows:

	Short-Term	Long-Term	Outlook
Fitch	F1+	AA-	Negative (October 2002)
Moody's	—	Aa3	Negative (July 2002)
Standard & Poor's	A1	A	Stable (November 2002)

In addition to those of Credit Suisse Group, each of our principal subsidiaries has its own ratings, which are described below.

Capital resources and capital adequacy

Our capital needs are a function of various factors, including economic, regulatory and market requirements. We define our economic capital requirement as that amount of capital needed to continue to operate our business franchise under extremely adverse conditions. We measure this requirement through the use of internally developed statistically based models designed to quantify potential risk exposure. We are also subject, on a consolidated basis, to regulatory capital requirements and the risk-based capital guidelines which are set forth in the Implementing Ordinance and are issued by the FBC. We also adhere to the risk-based capital guidelines set forth by BIS. These guidelines take account of the credit and market risk associated with balance sheet assets as well as certain off-balance sheet transactions. For further information about our risk-based capital guidelines, please refer to "Item 4 — Regulation and supervision." The risk and capital position of the insurance business is taken into consideration when calculating the consolidated capital ratios.

The following table sets forth our consolidated capital and BIS capital ratios as of:

	31.12.02	31.12.01	31.12.00
Tier 1 capital (in CHF m)1)	19,544	21,155	27,111
Total capital (in CHF m)	33,290	34,888	43,565
BIS Tier 1 capital ratio1)2)	9.7%	9.5%	11.3%
BIS total capital ratio3)	16.5%	15.7%	18.2%

¹⁾

Tier 1 capital includes non-cumulative perpetual preferred securities of CHF 2.2 billion, CHF 2.1 billion and CHF 1.1 billion in 2002, 2001 and 2000, respectively.

²⁾

Ratio is based on Tier 1 capital divided by BIS risk weighted assets.

³⁾

Ratio is based on total capital divided by BIS risk weighted assets.

In 2002, Credit Suisse Group issued through its wholly owned subsidiary, Credit Suisse Group Finance (Guernsey) Ltd. mandatory convertible securities in the amount of CHF 1.25 billion. This issue qualifies as equity capital and as Tier 1 capital under BIS rules.

In 2002, we issued non-cumulative perpetual preferred securities of CHF 211 million (CHF 982 million in 2001 and CHF 911 million in 2000), adding to an overall amount of CHF 2.2 billion hybrid Tier 1 included in the Tier 1 capital above.

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ITEM 5: OPERATING AND FINANCIAL REVIEW AND PROSPECTS

For details on the components of our consolidated capital structure, please refer to note 44 of the notes to the consolidated financial statements.

From time to time, the FBC and BIS propose amendments to, and issue interpretations of, risk-based capital guidelines and reporting regulations. Such proposals or interpretations could, if implemented in the future, affect our capital ratios and the measurement of our risk-weighted assets.

Contractual cash obligations and other commercial commitments

We have contractual obligations to make future payments under long-term bonds and mortgage-backed bonds, medium-term notes, long-term, non-cancelable lease agreements and other long-term obligations. The following table sets forth future cash payments associated with our contractual obligations pursuant to certain medium - and long-term debt operating leases on a consolidated basis as of December 31, 2002:

	Payments due by period
in CHF m	Less than 1 year	1-3 years	4-5 years	After 5 years	Total
Bonds and mortgage-backed bonds	14,511	20,820	17,160	29,348	81,839
Medium-term notes	986	1,246	301	66	2,599
Operating leases	809	1,372	1,691	4,645	8,517
Total long-term contractual obligations	16,306	23,438	19,152	34,059	92,955

The following table sets forth our consolidated short-term contractual obligations as of:

In CHF m	31.12.02	31.12.01
Money market paper issued	22,178	19,252
Due to banks	287,884	335,932
Total short-term contractual obligations	310,062	355,184

For information on our off-balance sheet commitments, please refer to page 124 of the consolidated financial statements in the attached Annual Report 2002.

Credit Suisse First Boston Legal Entity

Organization

Credit Suisse First Boston believes that maintaining access to liquidity is fundamental for firms operating in the financial services industry. CSFB manages liquidity at a business unit level while recognizing the constraints of the legal entities comprising the business unit. As a result, CSFB has established a comprehensive process for the management and oversight of its liquidity, funding and capital strategies. CSFB's Capital Allocation and Risk Management Committee, or CARMC, has primary oversight responsibility for these functional disciplines. CARMC reviews and approves liquidity management policies and targets and reviews the liquidity position and other key risk indicators.

CSFB's Corporate Treasury department is responsible for the management of liquidity, long-term funding and capital and for relationships with creditor banks. It also maintains regular contact with both rating agencies and regulators on liquidity and capital issues.

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Liquidity management

CSFB manages liquidity so as to ensure that sufficient funds are either on-hand or readily available on short notice in the event that it experiences any impairment in its ability to borrow in the unsecured debt markets. In this way CSFB ensures that, even in the event of a liquidity dislocation, it has sufficient funds to repay maturing liabilities and other obligations so that it is able to carry out its business plans with as little disruption as possible.

CSFB's liquidity disciplines are segregated into two main funding franchises:

•

The bank funding franchise, including funds raised directly by CSFB from stable deposit-based core funds and the interbank markets, and



•

The non-bank funding franchise, with funds raised by non-bank subsidiaries, principally CSFB (USA), Inc. and Credit Suisse First Boston, Inc., or CSFB, Inc.

The majority of assets financed by the bank funding franchise, which largely includes assets in CSFB and its principal regulated broker-dealers, are highly liquid, consisting of securities inventories and collateralized receivables, which fluctuate depending on the levels of proprietary trading and customer business. Collateralized receivables consist primarily of resale agreements and securities borrowed, both of which are secured by government and agency securities, and marketable corporate debt and equity securities. In addition, CSFB has significant receivables from customers and broker-dealers that turn over frequently. To meet client needs as a securities dealer, CSFB may carry significant levels of trading inventories. Other assets financed by the bank funding franchise include loans to corporate and other institutional clients that are held directly on CSFB bank's own balance sheet.

As part of its investment banking and fixed income markets activities, CSFB also maintains positions in less liquid assets such as certain mortgage whole loans, distressed securities, high-yield debt securities, asset-backed securities and private equity investments. These assets may be relatively illiquid at times, especially during periods of market stress. CSFB typically funds a significant portion of less liquid assets, such as private equity investments, with long-term borrowings and shareholders' equity. A large portion of these less liquid assets (with the exception of corporate loans) is financed through the non-bank funding franchise, which also provides most of the regulatory capital (equity and subordinated debt) in the broker-dealer subsidiaries.

The principal measure used to monitor the liquidity position at each of the funding franchises of CSFB is the "liquidity barometer," which estimates the time horizon over which the adjusted market value of unencumbered assets plus committed revolving credit facility exceeds the aggregate value of maturing unsecured liabilities plus conservatively forecast contingent obligations. The adjusted market value of unencumbered assets includes a reduction from market value, or "haircut," reflecting the amount that could be realized by pledging an asset as collateral to a third-party lender in a secured funding transaction. Contingent obligations include such things as letters of credit, credit rating-related collateralization requirements, backup liquidity lines provided to asset-backed commercial paper conduits and committed credit facilities to clients that are currently undrawn. CSFB's objective, as mandated by CARMC, is to ensure that the liquidity barometer for each of the funding franchises is maintained at a sufficient level so as to ensure that, in the event that CSFB is unable to access unsecured funding, it will have sufficient liquidity for an extended period. CSFB believes this will enable it to carry out its business plans during extended periods of market stress, while minimizing, to the extent possible,

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disruptions to its business. CSFB regularly stress tests its liquidity resources using scenarios designed to represent highly adverse conditions.

The bank funding franchise also has access to significant sources of secondary liquidity through its ability to access the secured funding markets (repurchase agreements, securities loaned and other collateralized financing arrangements), as these markets have proven reliable even in periods of market stress.

Additionally, the non-bank funding franchise, through CSFB (USA), Inc., the principal holding company for the broker-dealers, maintains a 364-day USD 3.0 billion revolving credit facility with various banks that is available on an unsecured basis. Proceeds from borrowings under this facility can be used for general corporate purposes and the facility is guaranteed by Credit Suisse Group. The facility contains customary covenants that CSFB believes will not impair its ability to obtain funding. The facility next matures on May 23, 2003.

Funding sources and strategy

The bank funding franchise's assets are principally funded with a mixture of secured and unsecured funding. Secured funding consists of collateralized short-term borrowings, which include repurchase agreements and securities loaned. Unsecured funding is accessed through CSFB bank's substantial and historically stable core deposit base, and through the interbank markets. Additionally, CSFB bank issues capital in long-term funding markets to meet regulatory requirements.

The non-bank funding franchise's assets are also funded with a mixture of secured and unsecured sources. Secured funding consists of collateralized short-term borrowings, while unsecured funding includes principally long-term borrowings and, to a lesser extent, commercial paper. Unsecured liabilities are issued through various debt programs. For information on these debt programs, please refer to "Funding Activity Highlights."

Other significant funding sources include financial instruments sold but not yet purchased, payables to customers and broker-dealers and shareholders' equity. Short-term funding is generally obtained at rates related to the Federal Funds rate, LIBOR or other money market indices, while long-term funding is generally obtained at fixed and floating rates related to US Treasury securities or LIBOR. Depending upon prevailing market conditions, other borrowing costs are negotiated. CSFB continually aims to broaden its funding base by geography, investor and funding instrument. In 2002, CSFB bank extended its debt maturity profile by issuing longer dated fixed income securities.

CSFB lends funds as needed to its operating subsidiaries and affiliates on both a senior and subordinated basis, the latter typically to meet capital requirements in regulated subsidiaries. CSFB generally tries to ensure that loans to its operating subsidiaries and affiliates have maturities equal to or shorter in tenor than the maturities of its market borrowings. Additionally, CSFB generally funds investments in subsidiaries with shareholders' equity. To satisfy Swiss and local regulatory capital needs of its regulated subsidiaries, CSFB enters into subordinated long-term borrowings. At December 31, 2002, it had consolidated long-term debt of approximately CHF 65 billion, with approximately CHF 14 billion representing subordinated debt.

Certain of CSFB's subsidiaries enter into various transactions whereby commercial and residential mortgages and corporate bonds are sold to special purpose entities and beneficial interests in those entities are sold to investors. For the year ended December 31, 2002, proceeds and other related cash

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flows received from new securitizations of commercial mortgages, residential mortgages and bonds aggregated CHF 7,928 million, CHF 39,184 million and CHF 16,108 million, respectively.

Funding Activity Highlights

In the non-bank funding franchise, CSFB (USA), Inc. issues long-term debt through US and Euromarket medium-term note programs, as well as syndicated and privately placed offerings around the world.

Under CSFB (USA), Inc.'s currently effective USD 10 billion shelf registration statement on file with the SEC, which allows CSFB (USA), Inc. to issue from time to time senior and subordinated debt securities and warrants to purchase such securities, CSFB (USA), Inc. had at March 19, 2003 approximately USD 6.5 billion available for issuance.

During the year ended December 31, 2002, under this and predecessor shelf registration statements, CSFB (USA), Inc. issued both medium-term notes and longer-dated fixed income securities to extend the maturity profile of CSFB (USA), Inc.'s debt. For the year ended December 31, 2002, CSFB (USA), Inc. issued USD 2.75 billion of 6¹/2% notes due 2012, USD 1.75 billion of 5³/4% notes due 2007, USD 1.0 billion of 7¹/8% notes due 2032, USD 1.4 billion of 4⁵/8% notes due 2008 and USD 2.7 billion in medium-term notes. For the year ended December 31, 2002, CSFB (USA), Inc. issued USD 822 million in medium-term notes under a USD 5 billion Euromarket program established in July 2001. For the first quarter of 2003, through March 19, 2003, CSFB (USA), Inc. issued USD 1.805 billion of floating rate notes under this program.

During the year ended December 31, 2002, approximately USD 3.2 billion of medium-term notes and USD 650 million of senior notes were repaid.

In 2001, under the then-effective shelf registration statement of USD 10.5 billion, issuances included USD 2.25 billion of 5⁷/8% notes due 2006, USD 3.0 billion 6¹/8% notes due 2011 and USD 4.8 billion of medium-term notes. In 2001, CSFB (USA), Inc. issued a total of USD 613 million of medium—term notes from its Euro Market mdedium term note programs.

In August 2001, CSFB (USA), Inc. redeemed all of the outstanding shares of the Trust Securities of DLJ Capital Trust I. In November 2001, CSFB (USA), Inc. completed a cash tender offer for its Fixed/Adjustable Rate Cumulative Preferred Stock, Series B, resulting in the acquisition of all but approximately 90,000 of the outstanding shares of such preferred stock. In December 2001 CSFB (USA), Inc. redeemed all of the outstanding shares of its Fixed/Adjustable Rate Cumulative Preferred Stock, Series A. In February 2003, CSFB (USA), Inc. redeemed all of the remaining shares of the Series B Fixed/Adjustable Rate Cumulative Preferred Stock.

CSFB, Inc. also issues long-term debt, principally through its US medium-term note program. During 2001, CSFB, Inc. issued USD 4.8 billion of medium-term notes. Nothing was issued in 2002.

Credit ratings

As described above under "— Credit Suisse Group Consolidated and Credit Suisse Group Legal Entity — Credit ratings," the cost and availability of unsecured external funding is generally a function of our credit ratings. Credit ratings are especially important to CSFB when competing in certain markets and when seeking to engage in longer-term transactions, including over-the-counter derivatives.

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A reduction in credit ratings could limit CSFB's access to capital markets, increase its borrowing costs, require it to post additional collateral or allow counterparties to terminate transactions under certain of its trading and collateralized financing contracts. This, in turn, could reduce its liquidity and negatively impact its operating results and financial position. Its planning takes into consideration those contingent events associated with a reduction in its credit ratings.

The credit ratings assigned to the senior debt of CSFB bank and CSFB (USA), Inc. as of March 19, 2003 and their outlooks were as follows:

	Short-Term	Long-Term	Outlook
CSFB
Fitch	F-1+	AA-	Negative    (October 2002)
Moody's	P-1	Aa3	Negative            (July 2002)
Standard & Poor's	A-1	A+	Stable    (November 2002)
CSFB (USA), Inc.
Fitch	F-1+	AA-	Negative    (October 2002)
Moody's	P-1	Aa3	Negative            (July 2002)
Standard & Poor's	A-1	A+	Stable    (November 2002)

Capital resources and capital adequacy

Certain of CSFB's businesses are capital intensive. In addition to normal operating requirements, capital is required to cover financing and regulatory charges on securities inventories, loans and other credit products, private equity investments and investments in fixed assets. CSFB's overall capital needs are continually reviewed to ensure that its capital base can appropriately support the anticipated needs of its business divisions as well as the regulatory capital requirements of its subsidiaries. Based upon these analyses, CSFB believes that its debt and equity base is adequate for current operating levels.

As a Swiss bank, CSFB bank is subject to regulation by the FBC. These regulations include risk-based capital guidelines set forth in the Implementing Ordinance. CSFB also adheres to the risk-based capital guidelines set forth by the BIS.

At CSFB, the regulatory guidelines are used to measure capital adequacy. These guidelines take account of the credit and market risk associated with balance sheet assets as well as certain off-balance sheet transactions.

The following table sets forth CSFB's consolidated capital and BIS capital ratios as of:

	31.12.02	31.12.01	31.12.00
Tier 1 capital (in CHF m)1)	10,596	15,157	17,595
Total capital (in CHF m)	19,958	26,425	28,582
BIS Tier 1 capital ratio1)2)	10.3%	12.9%	13.6%
BIS total capital ratio3)	19.3%	22.4%	22.2%

¹⁾

Tier 1 capital includes non-cumulative perpetual preferred securities of CHF 1.0 billion, CHF 1.1 billion and CHF 1.1 billion in 2002, 2001 and 2000, respectively.

²⁾

Ratio is based on Tier 1 capital divided by BIS risk weighted assets.

³⁾

Ratio is based on total capital divided by BIS risk weighted assets.

Additionally, various subsidiaries engaged in both banking and broker-dealer activities are regulated by the local regulators in the jurisdictions in which they operate. For further information relating to capital ratios, please refer to "Item 4 — Information on the Company — Regulation and supervision."

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CSFB's wholly owned subsidiaries, CSFB LLC and Pershing LLC, are registered broker-dealers, registered futures commission merchants and member firms of the NYSE. As such, they are subject to the NYSE's net capital rule, which conforms to the Uniform Net Capital Rule pursuant to rule 15c3-1 of the Securities Exchange Act of 1934. Under the alternative method permitted by this rule, the required net capital may not be less than two percent of aggregate debit balances arising from customer transactions or four percent of segregated funds, whichever is greater. If a member firm's capital is less than four percent of aggregate debit balances, the NYSE may require the firm to reduce its business. If a member firm's net capital is less than five percent of aggregate debit balances, the NYSE may prevent the firm from expanding its business and declaring cash dividends. At December 31, 2002, CSFB LLC and Pershing LLC's net capital of approximately USD 3.0 billion and USD 1.2 billion, respectively, was 156.5% and 25.9%, respectively, of aggregate debit balances and in excess of the minimum requirement by approximately USD 2.9 billion and USD 1.1 billion, respectively. Our OTC Derivatives Dealer, Credit Suisse First Boston Capital LLC, is also subject to the Uniform Net Capital Rule, but calculates its net capital requirements under Appendix F of Rule 15c3-1.

Other subsidiaries of CSFB are subject to capital adequacy requirements. At December 31, 2002, CSFB and its subsidiaries complied with all applicable regulatory capital adequacy requirements.

For further information on bank regulation, please refer to "Item 4 — Information on the Company — Regulation and supervision."

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Credit Suisse Legal Entity

Organization

Funding for the Credit Suisse legal entity is managed by an Asset and Liability Management Committee, or ALCO, which includes senior executives of the banking business of the Credit Suisse legal entity as well as one senior risk officer of the Group. The ALCO meets on a monthly basis and reviews the current and prospective funding for the Credit Suisse legal entity as well as the capital position and balance sheet development. It also monitors the adherence to internal risk limits and to the capital and liquidity ratios set by the guidelines of the FBC.

The treasury function of the Credit Suisse legal entity is centrally operated and monitors the daily liquidity and risk profile of the Credit Suisse legal entity. Limits for interest rate and market risks are established by the ALCO and ultimately approved by the Board of Directors of the Credit Suisse legal entity. The size of the limits depend on the natural variations of assets and liabilities, net interest income and general market conditions.

Liquidity management

Liquidity management principles applied by the Credit Suisse legal entity aim to ensure that obligations from withdrawal of deposits and drawings on committed and uncommitted credit lines can by met at any time. The liquidity position is calculated and monitored on a daily basis and is regularly tested against various scenarios that range from normal market conditions to distressed conditions including a Credit Suisse legal entity-specific crisis and a general market crisis. For any scenario, the potential excess of liabilities over assets due must be covered by a portfolio of liquid short-term fixed income securities, which could be sold or used for secured borrowing. This portfolio of securities is segregated and managed to provide for emergency liquidity needs only. The liquidity portfolio is maintained at a level well beyond regulatory requirements and could provide sufficient liquidity for an extended period in case of distressed market conditions allowing the Credit Suisse legal entity to pursue its business according to its business plans.

Funding sources and strategy

The majority of the Credit Suisse legal entity's assets consist of residential and commercial mortgages and secured and unsecured advances to a wide rage of borrowers including individuals, small- and medium-sized corporate entities and utilities in Switzerland, Swiss public entities and local and regional governments within Switzerland. Generally, these assets are in the form of fixed customer-based term loans and loans callable on demand after a contractual notice period. These assets are well diversified by geography, by customer type and by instrument. Asset growth has been slow in 2002. Apart from the internal strategic business plan, domestic and international economic cycles are the main drivers of asset growth.

Customer deposits provide a significant portion of the funds for the Credit Suisse legal entity. Consistent with the nature of the loan portfolio, the type of instruments include time deposits and deposits callable on demand. While the contractual maturity of such deposits is typically under three months, they have historically represented a stable and cost efficient source of funding. Analysis of these deposits over long periods of time shows that they are relatively independent of fluctuations in short-term interest rates or other market conditions. The customer base is well diversified by geography, by customer type and by

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instrument. Additional sources of funding include short-term inter-bank deposits, including borrowings from Group entities (CSFB bank and the Winterthur legal entity) on a secured and unsecured basis.

The Credit Suisse legal entity has traditionally issued long-term subordinated debt into the Swiss or European markets to obtain supplementary capital. At December 31, 2002, it had long-term debt (including the current portion) of CHF 5.8 billion, with CHF 3.3 billion representing third-party subordinated debt.

In 2002, the Credit Suisse legal entity borrowed a total of CHF 300 million from the Group on a subordinated basis.

Credit ratings

The debt ratings of the Credit Suisse legal entity as of March 19, 2003 and its outlooks were as follows:

	Short-Term	Long-Term	Outlook
Fitch	F1+	AA-	Negative    (October 2002)
Moody's	P1	Aa3	Negative            (July 2002)
Standard & Poor's	A1	A+	Stable    (November 2002)

Customer deposits are generally less sensitive to changes in a bank's credit ratings. We therefore believe that a moderate change in the Credit Suisse legal entity's ratings would not impair its funding sources.

Capital resources and capital adequacy

As a Swiss bank, the Credit Suisse legal entity is subject to regulation by the FBC. These regulations include risk-based capital guidelines set forth in the Implementing Ordinance. The Credit Suisse legal entity also adheres to the risk-based capital guidelines set forth by the BIS. For further information relating to these capital ratios, please refer to "Item 4 — Information on the Company — Regulation and supervision."

At December 31, 2002, the Credit Suisse legal entity's consolidated capital and BIS capital ratios were:

	31.12.02	31.12.01	31.12.00
Tier 1 capital (in CHF m)	6,118	6,191	5,996
Total capital (in CHF m)	8,975	8,996	8,488
BIS Tier 1 capital ratio 1)	7.4%	6.9%	7.1%
BIS total capital ratio 2)	10.8%	10.1%	10.0%

¹⁾

Ratio is based on Tier 1 capital divided by BIS risk weighted assets.

²⁾

Ratio is based on total capital divided by BIS risk weighted assets.

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"Winterthur" Swiss Insurance Company

Organization

The "Winterthur" Swiss Insurance Company, or the Winterthur legal entity, comprises the insurance and the life and pensions businesses of Credit Suisse Group. It generally manages its liquidity and capital resources on an independent basis, largely separate from the Group operation. These treasury operations are the responsibility of the Chief Investment Officer, or CIO, of Winterthur. Local country CIOs and treasurers work within the guidelines set by the head office and report to their head office counterparts.

Liquidity management

Overall liquidity needs are typically met through active day-to-day cash management that seeks to match anticipated cash inflows with budgeted cash requirements. In day-to-day cash management, the liquidity managers take advantage of global cash pooling among the Winterthur legal entity's companies. To support this activity, the Winterthur legal entity maintains close contacts with local and international companies including banks and corporations, where uncommitted lines of credit are in place. In addition, the Winterthur legal entity's liquidity needs are taken into account in the strategic asset allocation of its investment portfolios, which is based on asset and liability management considerations that track the duration of the assets against the duration of the liabilities. At December 31, 2002, the Winterthur legal entity's investment assets included CHF 76.9 billion of debt securities, CHF 9.1 billion of equity securities and CHF 7.1 billion of short-term investments. The bond portfolios, which consist predominantly of government securities, are highly liquid. For further information relating to asset allocation, please refer to "Operating and Financial Review — Credit Suisse Financial Services — Investments for Life & Pensions Insurance" in the attached Annual Report 2002.

Funding sources and strategy

The principal sources of funds for the Winterthur legal entity are premiums from the insurance businesses, deposits and charges on policies, investment income, proceeds from the sale and maturity of investments and, to a lesser extent, external borrowings. The liquidity requirements of the Winterthur legal entity include benefits, surrenders and claims, operating expenses, interest on borrowings, purchases of investments and dividends to the Credit Suisse Group legal entity.

The Winterthur legal entity generally has not accessed the debt capital markets on a regular basis. However, the following bonds were outstanding at December 31, 2002:

•

Winterthur Capital Ltd.: EUR 500 million aggregate principal amount of bonds, guaranteed by Winterthur, which mature in 2005;



•

Winterthur Insurance: CHF 500 million in bonds, which mature in 2006; and



•

DBV Winterthur: DEM 200 million convertible bonds due on July 28, 2003.

Credit ratings

Rating agencies assign two types of ratings to insurance companies: Insurer Financial Strength, or IFS, ratings and credit ratings.

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IFS ratings provide an assessment of the financial strength of a company and its capacity to meet senior obligations to policyholders and contract holders on a timely basis. IFS ratings are assigned to the company itself, and no liabilities or obligations of the insurer are specifically rated unless otherwise stated. Because an insurer's obligation to pay its claim and benefit obligations ranks senior to all other obligations, the IFS rating will typically be the highest rating assigned within the organization. We believe rating agencies consider several factors in determining the Winterthur legal entity's IFS ratings, including financial strategy, solvency characteristics, level of capital, operating performance, management quality, long-term competitive positioning, risk management policies and a broader outlook for the insurance industry.

These ratings may be used by insurance agents and brokers, risk managers, financial planners, pension fund advisors, individual policyholders and claimants as an unbiased viewpoint as to the Winterthur legal entity's financial viability in support of insurance placement and buying decisions.

In contrast, borrowing costs and, when required, access to debt capital markets, depend significantly on the Winterthur legal entity's credit ratings. These ratings provide an assessment of overall credit quality at the unsecured senior level and the ability of an insurer to meet related obligations. This ability is then tested under a variety of stress scenarios; perceived margin of safety and the stability/volatility of that margin of safety play important roles in the evaluation of credit quality.

The Winterthur legal entity's ratings as of March 19, 2003 and its credit rating outlooks were as follows:

	IFS	Credit	Credit rating outlook
A.M. Best	A+	—	—
Fitch IBCA Ltd.	AA	AA-	Negative (Jan. 21, 2003)
Moody's	A1	A2	Negative (Nov. 28, 2002)
Standard & Poor's	A	A	Negative (Nov. 26, 2002)

Capital resources and solvency capital adequacy

The Winterthur legal entity's capital view incorporates a combination of regulatory, market and economic requirements; the highest requirement defines the constraint and drives the amount of capital it needs to maintain. The Winterthur legal entity's overall capital needs are continually reviewed to ensure that its capital base can appropriately support anticipated needs.

The risk and capital position of the Winterthur legal entity is taken into consideration when calculating the consolidated Credit Suisse Group capital ratios. The economic capital requirement as defined by the Group's internal standards is the economic capital needed to remain solvent and in business even under extreme conditions. While several risk types are considered when deriving the Winterthur legal entity's economic capital requirements, primary components include the insurance, market and investment risk associated with its business portfolio.

In order to fulfill regulatory requirements, all of the Winterthur legal entity's insurance companies calculate their solvency on a local country level, generally on an annual basis. Internally, they review their solvency position on a quarterly basis.

The Winterthur legal entity calculates its group solvency according to Directive 98/78/EC of the European Parliament and of the Council of October 27, 1998 on the supplementary supervision of

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insurance undertakings in an insurance group. As of year-end 2002, Winterthur Swiss Insurance Company's available solvency capital exceeded the minimum required solvency margin.

In 2002, Winterthur implemented a number of measures to limit the impact of equity market volatility on its capital base. In addition, the Group implemented measures to strengthen the capital base of the insurance businesses, including the issuance of additional upper Tier 2 qualifying capital provided to Winterthur as alternative solvency capital. The upper Tier 2 issuance totalled GBP 500 million and was on lent in even amounts to Winterthur (UK) Holdings and Winterthur UK Financial Services Group Ltd. Both loans mature in 2049. The Group also injected equity capital into Winterthur.

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ITEM 5: OPERATING AND FINANCIAL REVIEW AND PROSPECTS

Selected statistical information

Non-life insurance reserves

Loss and loss adjustment expenses, or LAE, are recorded as incurred. Loss reserves are comprised of estimates of the amount of reported losses and LAE plus a provision for losses incurred but not reported, or IBNR. Loss reserves for reported claims are based on estimates of future payments that will be made in respect of claims, including expenses relating to such claims. These reserve estimates are made by loss adjusters on a case-by-case basis, or case reserves, based on known facts and interpretation of circumstances available at the valuation date. Actuarial techniques are then used to project future trends and to obtain an estimate of the ultimate cost of the reported losses and establish IBNR reserves to recognize the estimated losses and LAE for claims which have occurred but have not been reported. Management relies on past loss experience adjusted for factors that would modify past loss experience and accepted actuarial techniques to estimate the IBNR liability. Management periodically reviews the estimates, which may change in light of new information. Any subsequent adjustments are recorded in the period in which they are determined.

The estimation of the liability for losses and LAE is a complex and dynamic process influenced by various factors. It involves considerable judgment regarding the extrapolation of past claims experience into the future, and interpretations of current and future social attitudes, current and future legislative and judicial attitudes, and other economic, political and social factors. The effects of inflation are implicitly considered through the actuarial techniques employed to estimate reserves. Explicit assumptions on future inflation are used to estimate the ultimate loss to be paid.

Due to the nature of estimating future claims settlements, uncertainty underlies the assumptions inherent in any reserve estimate. These estimates are reviewed regularly and, as experience develops and new information is available, the reserves are adjusted as necessary. Such adjustments, if any, are reflected in results of operations in the period in which they are determined and are accounted for as changes in estimates. Management believes, based on the information currently available, that the non-life reserves are adequate. However, the process of determining the liability for losses and LAE involves risks that the actual results will deviate, perhaps substantially, from management's best estimate.

Please refer to note 49.20 of the notes to the consolidated financial statements for further information on the liability for losses and LAE.

Loss development tables

The tables at the end of this section set forth the year-end reserves from 1992 through 2002 and the subsequent changes in those reserves, presented on an historical basis for our non-life insurance business.

The data in the tables are presented in accordance with reporting requirements of the SEC. Care must be taken to avoid misinterpretation by those unfamiliar with such information or familiar with other data commonly reported by the insurance industry. The accompanying data are not accident year data, but rather a display of 1992-2002 year-end reserves and the subsequent changes in those reserves.

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For example, the "cumulative surplus or deficiency" shown in the accompanying tables for each year represents the aggregate amount by which original estimates of reserves as of the respective year-end have developed in subsequent years. Accordingly, the cumulative deficiency for a year relates only to reserves at that year-end and such amounts are not additive. Expressed another way, if the original reserves at the end of 1992 and each subsequent year until final settlement included CHF 4 million for a loss that is finally settled in 2002 for CHF 5 million, the CHF 1 million deficiency (the excess of the actual settlement of CHF 5 million over the original estimate of CHF 4 million) would be included in the cumulative deficiencies in each of the years 1992-2001 shown in the accompanying table.

Effect of foreign exchange

It should be noted that due to the international scope of the non-life insurance business, changes in foreign exchange rates have a material impact on the reserve movements shown in the tables. For example, the exchange rate movements in 1996 led to a significant increase in the re-estimated liability. In order to quantify this effect, the tables show the overall surplus/(deficiency) including and excluding the impact of foreign exchange.

We discuss below significant factors that impact the tables.

Italian and Spanish motor liability, Spanish medical malpractice

In the past significant changes in the legal environment in both Italy and Spain have affected reserves in ways that could not have been anticipated by the Group's management. Insurance has taken appropriate actions to adjust reserves in accordance with these legal changes.

Italy

In the 1990s, our Italian motor liability book of business has experienced significant adverse loss development. General legal developments led to significant increases in the compensation levels for bodily injury claimants in the years 1994 to 1998. In addition to higher than expected increases for the same level of injury, damages now include compensation for such items as impairment to quality of life. These increases have been mandated for all new and all current open claims. As a result, there was a shortfall in the case reserves held for motor liability. In the late 1990s Management took steps to remedy the situation by increasing the level of reserves held in Italy and it now believes the current reserves are adequate.

Spain

During the late 1980s and early 1990s, there was an increase above the rate of inflation in the cost of motor liability bodily injury claims in Spain due to lack of uniformity in compensation systems applied by the courts and due to statutory increases in the minimum level of coverage required for motor liability. The situation was rectified to a large extent by the introduction of uniform compensation tables at the beginning of 1995. To comply with the new tables, there was a significant increase in the case reserves held for all claims prior to the period. Since 1995, the market conditions in Spain have been more stable. Management now believes the current reserves are adequate.

The uniform compensation tables are not applicable to bodily injury claims stemming from medical malpractice. The cost of those claims has exploded in recent years, and more patients claim pecuniary losses as a result of medical malpractice. The case reserves held for those claims have been increased

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in recent years. Management now believes the current reserves are adequate. Our Spanish non-life operation ceased writing medical malpractice insurance during the year 2002, which reduces the risk in the reserves held for Spain compared to the past.

Factors contributing to surpluses and deficiencies

Strengthening of reserves for Italy and Spain and asbestos, pollution and other health hazards resulted in major cumulative deficiencies in net reserves for the years 1992-1995.

The deferred gain on the reinsurance of H. S. Weavers as discussed below is reflected as a cumulative surplus on the run-off of years 1992 to 1999. During 1992-1996 a part of this cumulative surplus was compensated by the considerable reserve strengthening for H. S. Weavers.

Other major contributors to the cumulative surplus in later years are our German and General Casualty business where reserves are now considered to have been too high at the end of 1997 and 1998. Releases were made at the end of 1999 as part of the ongoing assessment of reserves in the light of the development of paid and incurred claims. Nevertheless, during 2001, General Casualty strengthened the reserves due to excessive snow and ice in the Midwest Region of the US in November 2000. This led to greater than expected losses emerging from automobile and property coverages than anticipated in both case and IBNR reserves held at December 31, 2000. Significant adverse development on several large claims also exacerbated the reserve development. Workers' Compensation reserves booked at December 31, 2000 did not consider the increase in mean cost per claim during the first half of 2001.

In the year 2001, the gross loss development table shows a material adverse deficiency on the reserves held at December 31, 2000. This is mainly driven by the emergence of one major single claim on one policy incurred in 2000. As the largest portion of that claim is reinsured, this late emergence of one large single claim has a limited impact on the net loss development table.

H. S. Weavers

H. S. Weavers was an underwriting agent that wrote business on behalf of Insurance through year-end 1983. The agency accepted commercial umbrella and excess casualty business from US companies, and, as a result, had significant exposure to asbestos, pollution and other health hazard claims, including breast implant claims. Provision is only made for health hazards that have resulted in reported claims. No provision has been made for exposures to emerging mass torts, such as electromagnetic fields, for which there is insufficient information available to indicate a liability.

Our Insurance business's interest in H. S. Weavers is protected by a range of proportional and non-proportional reinsurance contracts arranged by H. S. Weavers, a significant part of which are unlimited by their nature.

This estimation of ultimate loss and loss expense liability for asbestos, pollution and other health hazards is unusually difficult, and a significant amount of uncertainty exists in our estimates. Future unknown events such as jury decisions, court interpretations, legislative actions, social conditions and economic conditions such as inflation will impact the ultimate cost of the claims incurred. It should therefore be expected that the actual emergence of losses and LAE will vary, perhaps materially, from our current estimates.

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To limit the exposure from this book of business, Insurance has purchased retroactive reinsurance coverage effective July 1, 2000 from National Indemnity Company, or NICO. Under the agreement, NICO assumes all liabilities under the original contracts, all unallocated loss expense and the right and duty to administer the entire claims handling and reinsurance collections. The reinsurance provides coverage of up to USD 800 million against net losses including deficiencies under existing reinsurance compared to an estimated undiscounted exposure of USD 584 million as of July 1, 2000; therefore, Insurance expects that the reinsurance coverage will protect it from future potential adverse development from this book of business.

As a result of this retroactive reinsurance transaction, Insurance recorded a net deferred gain as of June 30, 2000 in the amount of USD 247 million (CHF 404 million). The deferred gain resulted from the carried reserve of USD 584 million (CHF 954 million), which was net of existing reinsurance of USD 158 million (CHF 258 million), exceeding the premium paid of USD 337 million (CHF 550 million). The carried reserve at June 30, 2000 and the respective premium paid was based on many factors, and is subject to the uncertainties described above. Specifically, the following key variables were considered:

•

Range of estimated gross reserves: USD 428 million to USD 955 million (CHF 700 million to CHF 1,560 million) including principally the consideration of policy coverages, the reasonable possibility of unfavorable jury awards and the range of magnitudes of such awards;



•

Range of estimated net reserves: USD 309 million to USD 700 million (CHF 505 million to CHF 1,144 million), after consideration of reinsurance recoveries under treaties with other reinsurers;



•

Estimated settlement period: up to a maximum of 40 years, estimated at a mean term of between six and eight years, and payment patterns within this period; and



•

Range of discount rates: 6% to 7%.

Management's best estimate for the reserve was determined based on a relative weighting of the factors identified above. Based on the neutral development in 2002 and the favorable experience on this book of business, in 2001, management updated its estimates as follows:

•

Estimated undiscounted gross reserves of USD 633 million (CHF 880 million), within a range of estimated gross reserves between USD 365 million and USD 815 million (CHF 507 million and CHF 1,133 million);



•

Estimated undiscounted net reserves of USD 518 million (CHF 720 million), within a range of estimated net reserves between USD 274 million and USD 621 million (CHF 381 million and CHF 863 million).

As a result, the deferred gain was reduced by USD 4 million (CHF 5 million) and USD 30 million (CHF 51 million) in 2002 and 2001, respectively. The remaining deferred gain amounts to USD 199 million (CHF 277 million) compared to USD 203 million (CHF 340 million) in 2002 and 2001, respectively. The remaining deferred gain will be amortized to income over the estimated settlement period.

In the loss development tables, the effect of the deferred gain as of December 31, 2000 has been reflected in the re-estimated reserves in the diagonal of the year 2000, with the result that the cumulative surplus excluding foreign exchange is increased or the cumulative deficiency excluding foreign exchange is reduced by CHF 381 million for each year presented up to 1999.

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Discounted reserves

The data in the accompanying tables sets forth the discounting of certain reserves for annuity-type claims effects. To the extent permitted under the Group accounting policies, certain long-term accident claims are discounted to reflect the time value of money, due to the relatively long time period over which these claims are to be paid. Apparent deficiencies will continue to occur as the discount on these reserves unwinds. The impact of the unwinding of the discount has not been reflected in the accompanying tables. Because of these and other factors, it is difficult to develop a meaningful extrapolation of estimated future redundancies or deficiencies in loss reserves from the data in the accompanying tables.

The following table shows the amount of discounted reserves held and discount amounts by country as of:

	Undiscounted reserves		Discount amount		Discounted reserves		Discount rate
Country	31.12.02 in CHF m	31.12.01 in CHF m	31.12.02 in CHF m	31.12.01 in CHF m	31.12.02 in CHF m	31.12.01 in CHF m	31.12.02 in %	31.12.01 in %
Switzerland	1,204	973	457	368	747	605	3.3	3.3
Belgium	2,249	2,254	1,237	1,239	1,012	1,015	3.0	3.0
Other	183	245	64	101	119	144	5.0	5.0
Total	3,636	3,472	1,758	1,708	1,878	1,764	—	—

Acquired business

In 2002, Insurance had no acquisitions. During 2001, Insurance acquired CGU and entered into a strategic alliance with AMP Pearl and Prudential plc in the United Kingdom. These transactions led to a significant increase in the loss and LAE reserves in 2001. During 2000, Insurance acquired NIG, which contributed to the increase in loss and LAE reserves.

Divested business

During 1998, Insurance divested its reinsurance operations by selling the US business and by fully reinsuring the part of the Swiss business that was in run-off. Effective July 1, 2000, Insurance sold Republic Insurance Company, one of its US non-life insurance companies, to NICO and thereby eliminated significant exposure to asbestos, pollution and other health hazard risks. The data relating to these divested businesses has been excluded from the following tables.

Effective July 1, 2001, Insurance sold certain of its international operations to XL Capital Ltd. As this business was not managed separately it was not excluded from the following tables. The elimination is reflected as a payment in 2001. The disposal of Winterthur Swiss Insurance (Asia), Hong Kong and the transfer of the Czech non-life portfolio to a third party in 2001 are also reflected as payments in the 2001 diagonal. In 2002 Insurance disposed of the Paris based and Austrian operations. These disposals have been reflected as payments in the latest year.

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The following table presents an analysis of consolidated loss and LAE reserve development, net of reinsurance recoverables. Net reserves at December 31 for the period from 1992 through 2002 and the subsequent changes in those reserves are as follows:

in CHF m	1992		1993		1994		1995		1996	1997	1998	1999	2000		2001	2002
Net reserves for unpaid losses and LAE	8,348		9,235		9,555		10,782		13,511	14,833	15,583	16,422	16,690		16,696	17,031
Net paid (cumulative) as of:
One year later	2,243		2,348		2,109		2,880		3,505	3,490	3,993	4,835	6,241		4,698
Two years later	3,377		3,360		3,388		4,501		5,178	5,438	6,433	7,792	8,441
Three years later	3,933		4,173		4,315		5,530		6,419	7,159	8,404	9,148
Four years later	4,500		4,870		5,051		6,408		7,789	8,540	9,393
Five years later	5,010		5,427		5,707		7,504		8,723	9,274
Six years later	5,419		5,934		6,670		8,163		9,288
Seven years later	5,819		6,796		7,154		8,594
Eight years later	6,604		7,163		7,509
Nine years later	6,866		7,469
Ten years later	7,116
Net liability re-estimated as of:
One year later	8,411		8,995		9,211		11,733		13,786	14,505	15,698	15,874	16,678		16,093
Two years later	8,329		8,833		10,026		11,945		13,627	14,549	14,974	15,747	16,433
Three years later	8,272		9,513		10,259		11,946		13,671	13,927	14,875	15,389
Four years later	8,844		9,849		10,344		12,047		13,114	13,857	14,620
Five years later	9,168		9,921		10,471		11,568		13,096	13,711
Six years later	9,252		10,081		10,022		11,500		12,925
Seven years later	9,402		9,602		9,959		11,332
Eight years later	8,925		9,578		9,803
Nine years later	8,890		9,418
Ten years later	8,750
Cumulative surplus /(deficiency)	(402	)	(183	)	(248	)	(550	)	586	1,122	963	1,033	257		603	—
Cumulative surplus/(deficiency) excluding foreign exchange	(961	)	(558	)	(331	)	29		298	1,071	890	543	(114	)	114	—

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The following table presents an analysis of consolidated loss and LAE reserve development, gross of reinsurance recoverables. Gross reserves at December 31 for the period from 1992 through 2002 and the subsequent changes in those reserves are as follows:

in CHF m	1992		1993		1994		1995		1996	1997	1998	1999	2000		2001		2002
Gross reserves for unpaid losses and LAE	9,529		10,407		10,670		12,046		15,052	16,607	17,559	19,072	20,604		19,588		19,374
Gross paid (cumulative) as of:
One year later	2,604		2,689		2,385		3,206		3,999	4,014	4,363	4,947	8,367		5,617
Two years later	3,793		3,737		3,761		5,115		5,913	6,057	6,409	9,054	10,913
Three years later	4,454		4,655		4,965		6,336		7,275	7,323	8,908	10,631
Four years later	5,105		5,538		5,832		7,286		8,055	9,058	10,095
Five years later	5,712		6,197		6,561		7,765		9,302	9,965
Six years later	6,154		6,740		6,886		8,719		10,026
Seven years later	6,586		6,994		7,671		9,290
Eight years later	6,766		7,600		8,146
Nine years later	7,187		8,007
Ten years later	7,520
Gross liability re-estimated as of:
One year later	9,569		10,093		10,277		13,113		15,459	16,489	17,840	18,903	21,224		19,080
Two years later	9,363		9,854		11,187		13,453		15,364	16,321	17,187	18,792	20,607
Three years later	9,276		10,605		11,584		13,489		15,392	16,105	16,975	18,258
Four years later	9,907		11,074		11,690		13,634		15,171	15,884	16,527
Five years later	10,295		11,153		11,925		13,451		15,033	15,488
Six years later	10,356		11,396		11,789		13,346		14,676
Seven years later	10,553		11,257		11,690		13,009
Eight years later	10,414		11,192		11,400
Nine years later	10,336		10,890
Ten years later	10,060
Cumulative surplus/(deficiency)	(531	)	(483	)	(730	)	(963	)	376	1,119	1,032	814	(3	)	508		—
Cumulative surplus/(deficiency) excluding foreign exchange	(1,254	)	(1,008	)	(819	)	(154	)	90	1,023	995	194	(506	)	(167	)	—

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ITEM 5: OPERATING AND FINANCIAL REVIEW AND PROSPECTS

Banking

Banking average balances and interest rates

The following table sets forth average interest-earning assets, average interest-bearing liabilities and average rates for our banking businesses for the years presented. Month end balances were predominately used in computing the averages disclosed below. We believe these amounts approximate daily averages.

Average balances and interest rates		Average balance 2002 in CHF m		Interest income 2002 in CHF m	Average rate 2002 in %	Average balance 2001 in CHF m		Interest income 2001 in CHF m	Average rate 2001 in %	Average balance 2000 in CHF m		Interest income 2000 in CHF m	Average rate 2000 in %
Money market papers
	Switzerland	2,601		40	1.5%	2,500		105	4.2%	3,921		124	3.2%
	Foreign	25,050		496	2.0%	27,169		1,485	5.5%	24,625		1,600	6.5%
Due from banks
	Switzerland	8,725		441	5.1%	9,382		592	6.3%	18,016		820	4.6%
	Foreign	183,141		6,015	3.3%	207,707		12,482	6.0%	185,792		13,204	7.1%
Due from customers
	Switzerland	36,755		1,544	4.2%	41,539		1,787	4.3%	47,612		1,903	4.0%
	Foreign	131,889		4,521	3.4%	112,660		7,329	6.5%	78,482		8,344	10.6%
Mortgages
	Switzerland	74,030		2,996	4.0%	74,377		3,176	4.3%	72,938		3,084	4.2%
	Foreign	17,709		1,232	7.0%	21,337		1,626	7.6%	11,996		901	7.5%
Interest-earning trading portfolios
	Switzerland	9,951		187	1.9%	16,522		417	2.5%	23,523		453	1.9%
	Foreign	190,055		9,770	5.1%	204,404		12,661	6.2%	151,118		7,568	5.0%
Interest-earning financial investments
	Switzerland	3,727		139	3.7%	4,522		204	4.5%	4,630		128	2.8%
	Foreign	32,053		594	1.8%	25,320		310	1.2%	16,171		578	3.6%
Net interest income/(expenses) on swaps
	Switzerland	—		67	—	—		100	—	—		201	—
	Foreign	—		326	—	—		5	—	—		0	—
Interest-earning assets		715,686		28,368	4.0%	747,439		42,279	5.7%	638,824		38,908	6.1%
Allowance for losses		(8,213	)			(10,109	)			(12,071	)
Participations		4,966				3,335				2,848
Non-interest earning assets		140,173				146,486				102,903
Total assets		852,612		28,368	3.3%	887,151		42,279	4.8%	732,504		38,908	5.3%
Percentage of assets attributable to foreign activities		81.5%				81.1%				70.1%

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Banking average balances and interest rates (continued)

		Average balance 2002 in CHF m	Interest expenses 2002 in CHF m		Average rate 2002 in %	Average balance 2001 in CHF m	Interest expenses 2001 in CHF m		Average rate 2001 in %	Average balance 2000 in CHF m	Interest expenses 2000 in CHF m	Average rate 2000 in %
Money market papers issued
	Switzerland	757	16		2.1%	49	2		4.2%	25	1	4.0%
	Foreign	22,883	582		2.5%	23,343	1,161		5.0%	18,310	1,213	6.6%
Due to banks
	Switzerland	42,658	640		1.5%	52,388	1,578		3.0%	56,881	2,030	3.6%
	Foreign	253,972	9,704		3.8%	303,015	18,199		6.0%	232,298	15,555	6.7%
Due to customers in savings and investment deposits
	Switzerland	34,122	417		1.2%	34,184	528		1.5%	37,295	555	1.5%
	Foreign	3,273	28		0.9%	3,395	37		1.1%	3,821	38	1.0%
Due to customers, other
	Switzerland	51,362	668		1.3%	53,751	1,427		2.7%	48,397	1,295	2.7%
	Foreign	183,406	4,357		2.4%	166,837	8,691		5.2%	137,064	10,393	7.6%
Swiss cash bonds
	Switzerland	2,621	102		3.9%	3,108	113		3.6%	3,575	144	4.0%
	Foreign	—	—		—	—	—		—	—	—	—
Bonds and mortgage-backed bonds
	Switzerland	9,524	442		4.6%	11,121	536		4.8%	11,329	562	5.0%
	Foreign	78,261	3,519		4.5%	64,845	3,362		5.2%	40,338	1,875	4.6%
Net interest income/(expenses) on swaps
	Switzerland	—	135		—	—	0		—	—	0	—
	Foreign	—	(226	)	—	—	(35	)	—	—	8	—
Interest-bearing liabilities		682,839	20,384		3.0%	716,036	35,599		5.0%	589,333	33,669	5.7%
Non-interest bearing liabilities		136,779				137,794				118,650
Total liabilities		819,618	20,384		2.5%	853,830	35,599		4.2%	707,983	33,669	4.8%
Shareholders' equity		32,994				33,321				24,521
Total liabilities and shareholders' equity		852,612				887,151				732,504
Percentage of liabilities attributable to foreign activities		81.1%				79.7%				74.6%

Certain reclassifications have been made to prior-year amounts to conform to the current presentation.

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Net interest income/interest rate spread	Net interest income 2002 in CHF m	Interest rate spread 2002 in %	Net interest income 2001 in CHF m	Interest rate spread 2001 in %	Net interest income 2000 in CHF m	Interest rate spread 2000 in %
Switzerland	2,994	2.3%	2,197	1.6%	2,126	1.0%
Foreign	4,990	0.7%	4,483	0.4%	3,113	0.2%
Total net	7,984	1.0%	6,680	0.7%	5,239	0.5%

The average rates earned and paid on related assets and liabilities can fluctuate within wide ranges and are influenced by several key factors; the most significant factor is the changes in global interest rates. Additional factors include changes in the mix of business of the Group, both geographic and product types and foreign exchange rate movements between the Swiss franc and the currency of the underlying individual assets and liabilities.

The following table shows selected margin information applicable to our banking businesses for the years ended December 31:

in %	Average rate 2002	Average rate 2001	Average rate 2000
Switzerland	2.2%	1.5%	1.2%
Foreign	0.9%	0.7%	0.7%
Net interest margin	1.1%	0.9%	0.8%

In 2002, the Swiss domestic interest rate spread increased from 1.6% in 2001 to 2.3% in 2002 reflecting the low interest rate environment in Switzerland. The foreign interest rate spread increased slightly from 0.4% in 2001 to 0.7% in 2002. In 2002, both the domestic and foreign interest rate spreads increased as interest rates paid on liabilities declined more rapidly than interest rates earned on assets.

In 2001 the Group profited from the increased interest spread between the bid and ask prices for the Swiss franc resulting in an increase of the domestic interest rate spread from 1.0% in 2000 to 1.6% in 2001. This effect was attributable to increased short-term interest rates during the fourth quarter of 2001. The interest rate spread of the foreign banking business increased from 0.2% in 2000 to 0.4% in 2001, as a result of more favorable average rates attained in the interest-earning trading portfolios compared with 2000. These effects resulted in a total net interest rate spread increase from 0.5% in 2000 to 0.7% in 2001.

The Group experienced a decrease in the interest spread of the banking businesses to 0.5% in 2000. The major contributing factor was an approximate average increase of 200 basis points in both domestic and foreign short-term borrowing rates, partly influenced by the liquidity requirements due to concerns surrounding the year 2000. The increase of rates in Switzerland had the effect of more closely aligning the short-term borrowing rates of the Swiss franc with those of the Euro.

We experienced similar decreases in the interest margin (net interest income divided by average interest earning assets). This was based principally on an approximate average increase of 200 basis points in both domestic and foreign short-term borrowing rates and an increase in the volume of inter-bank money market lending and borrowing and the flattening of the USD yield curve. This activity is transacted at very low margins, but at typically higher volumes. This growth of this business has the effect of overshadowing the relatively higher margins of traditionally more stable retail interest business.

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Analysis of changes in net interest income

The following table allocates, by categories of interest-earning assets and interest-bearing liabilities, changes in net interest income due to changes in volume and in rates for 2002 compared to 2001 and for 2001 compared to 2000. Volume and rate variances have been calculated in movements in average balances and changes in average rates. Changes due to a combination of volume and rate have been allocated to the change due to average rate.

		2002 vs. 2001						2001 vs. 2000
		Increase/(decrease) due to changes in						Increase/(decrease) due to changes in
in CHF m		Average volume		Average rate		Net change		Average volume		Average rate		Net change
Money market papers
	Switzerland	4		(69	)	(65	)	(45	)	26		(19	)
	Foreign	(117	)	(872	)	(989	)	165		(280	)	(115	)
Due from banks
	Switzerland	(41	)	(110	)	(151	)	(393	)	165		(228	)
	Foreign	(1,474	)	(4,993	)	(6,467	)	1,557		(2,279	)	(722	)
Due from customers
	Switzerland	(206	)	(37	)	(243	)	(243	)	127		(116	)
	Foreign	1,250		(4,058	)	(2,808	)	3,634		(4,649	)	(1,015	)
Mortgages
	Switzerland	(15	)	(165	)	(180	)	61		31		92
	Foreign	(276	)	(118	)	(394	)	702		23		725
Interest-earning trading portfolios
	Switzerland	(164	)	(66	)	(230	)	(135	)	99		(36	)
	Foreign	(890	)	(2,001	)	(2,891	)	2,669		2,424		5,093
Interest-earning financial investments
	Switzerland	(36	)	(29	)	(65	)	(3	)	79		76
	Foreign	81		203		284		327		(595	)	(268	)
Interest-earning assets
	Switzerland	(458	)	(476	)	(934	)	(758	)	527		(231	)
	Foreign	(1,426	)	(11,839	)	(13,265	)	9,054		(5,356	)	3,698
Change in interest income excluding swaps		(1,884	)	(12,315	)	(14,199	)	8,296		(4,829	)	3,467
Swaps
	Switzerland	—		—		(33	)	—		—		(101	)
	Foreign	—		—		321		—		—		5
Change in interest income		—		—		(13,911	)	—		—		3,371

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Analysis of changes in net interest income (continued)

		2002 vs. 2001						2001 vs. 2000
		Increase/(decrease) due to changes in						Increase/(decrease) due to changes in
in CHF m		Average volume		Average rate		Net change		Average volume		Average rate		Net change
Money market papers issued
	Switzerland	29		(15	)	14		1		0		1
	Foreign	(23	)	(556	)	(579	)	334		(386	)	(52	)
Due to banks
	Switzerland	(293	)	(645	)	(938	)	(160	)	(292	)	(452	)
	Foreign	(2,946	)	(5,549	)	(8,495	)	4,735		(2,091	)	2,644
Due to customers in savings and investment deposits
	Switzerland	(1	)	(110	)	(111	)	(46	)	19		(27	)
	Foreign	(1	)	(8	)	(9	)	(4	)	3		(1	)
Due to customers, other
	Switzerland	(63	)	(696	)	(759	)	143		(11	)	132
	Foreign	863		(5,197	)	(4,334	)	2,258		(3,960	)	(1,702	)
Swiss cash bonds
	Switzerland	(18	)	7		(11	)	(19	)	(12	)	(31	)
	Foreign	—		—		—		—		—		—
Bonds and mortgage-backed bonds
	Switzerland	(77	)	(17	)	(94	)	(10	)	(16	)	(26	)
	Foreign	696		(539	)	157		1,139		348		1,487
Interest-bearing liabilities
	Switzerland	(423	)	(1,476	)	(1,899	)	(91	)	(312	)	(403	)
	Foreign	(1,411	)	(11,849	)	(13,260	)	8,462		(6,086	)	2,376
Change in interest expenses excluding swaps		(1,834	)	(13,325	)	(15,159	)	8,371		(6,398	)	1,973
Swaps
	Switzerland	—		—		135		—		—		0
	Foreign	—		—		(191	)	—		—		(43	)
Change in interest expenses		—		—		(15,215	)	—		—		1,930
Change in net interest income
	Switzerland	(35	)	1,000		965		(667	)	839		172
	Foreign	(15	)	10		(5	)	592		730		1,322
Change in net interest income excluding swaps		(50	)	1,010		960		(75	)	1,569		1,494
Swaps
	Switzerland	—		—		(168	)	—		—		(101	)
	Foreign	—		—		512		—		—		48
Net change in swaps		—		—		344		—		—		(53	)
Change in net interest income
	Switzerland	—		—		797		—		—		71
	Foreign	—		—		507		—		—		1,370
Total change in net interest income		—		—		1,304		—		—		1,441

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ITEM 5: OPERATING AND FINANCIAL REVIEW AND PROSPECTS

Investments portfolio

Banking business investment strategy

Investment strategy for our banking businesses is determined within the respective asset and liability management committee of each business. Exposures to market and interest rate risk are managed by modifying the components of the investment portfolio, either directly or through the use of derivatives. For additional information, please refer to "Risk Management — Market risk," in the attached Annual Report 2002.

The following table presents the carrying value of financial investments of our banking businesses as of:

in CHF m	31.12.02	31.12.01	31.12.00
Debt securities issued by the Swiss Federal Government, cantonal or local governmental entities	473	502	764
Debt securities issued by the United States Government	1,095	111	214
Debt securities issued by other foreign governments	14,703	14,022	11,432
Corporate debt securities	840	1,209	1,075
Mortgage-backed securities	297	262	82
Other debt securities	2,654	160	396
Debt securities	20,062	16,266	13,963
Own bonds	19	31	1
Equity securities 1)	12,543	18,924	9,132
Precious metals	10	9	9
Repossessed commodities	0	6	0
Real estate 2)	760	2,070	2,469
Total financial investments from the banking business	33,394	37,306	25,574

¹⁾

Equity securities include private equity positions (long-term equity financing of companies usually not listed on a stock exchange) and own shares.

²⁾

Real estate includes real estate acquired for sale and designated for resale.

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The following table analyzes the maturities and weighted-average yields of debt securities included in the financial investments of our banking businesses as of December 31, 2002:

				Remaining Maturity
	within 1 year		1 to 5 years		5 to 10 years		Over 10 years		Total
	Amount in CHF m	Yield in %	Amount in CHF m	Yield in %	Amount in CHF m	Yield in %	Amount in CHF m	Yield in %	Amount in CHF m
Debt securities issued by the Swiss Federal Government, cantonal or local governmental entities	50	3.3%	260	3.4%	156	3.3%	7	4.4%	473
Debt securities issued by the United States Government	1,051	1.4%	44	4.7%	0	—	0	—	1,095
Debt securities issued by other foreign governments	6,677	3.9%	6,789	2.4%	1,033	5.3%	204	5.7%	14,703
Corporate debt securities	486	3.0%	265	2.8%	5	2.8%	84	2.2%	840
Mortgage-backed securities	21	3.1%	240	3.5%	36	3.4%	0	—	297
Other debt securities	2,267	1.2%	270	0.0%	116	0.4%	1	—	2,654
Total debt securities	10,552	3.1%	7,868	2.4%	1,346	4.6%	296	4.7%	20,062

Since substantially all investment securities held by our banking businesses are taxable securities, the yields presented above are on a tax-equivalent basis.

Deposits

The following table presents information on deposits for the years indicated. Deposits are included within the Swiss GAAP balance sheet captions Due to banks, Due to customers in savings and investment deposits. This table excludes professional securities transactions (i.e., repurchase agreements and securities lending and borrowing). Designation of Switzerland versus foreign is based upon location of the office receiving and recording the deposit. Month-end balances were predominantly used in computing the averages disclosed below. We believe these amounts approximate daily averages.

in CHF m	Average balance 2002 in CHF m	Average rate 2002 in %		Average balance 2001 in CHF m	Average rate 2001 in %		Average balance 2000 in CHF m	Average rate 2000 in %
Non-interest bearing demand	5,882	—		11,094	—		11,749	—
Interest-bearing demand	35,115	0.5	%	26,222	1.3	%	24,366	1.3	%
Savings deposits	37,383	1.2	%	37,566	1.5	%	41,396	1.4	%
Time deposits	46,076	1.6	%	48,952	3.2	%	40,271	4.0	%
Switzerland bank offices	124,456	1.1	%	123,834	2.0	%	117,782	2.2	%
Non-interest bearing demand	1,535	—		3,553	—		3,662	—
Interest-bearing demand	4,314	2.1	%	4,420	4.1	%	5,583	4.9	%
Savings deposits	12	0.9	%	12	0.9	%	18	1.2	%
Time deposits	136,540	2.2	%	138,769	4.1	%	123,016	5.9	%
Foreign bank offices	142,401	2.1	%	146,754	4.0	%	132,279	5.7	%
Total deposits	266,857	1.7	%	270,588	3.1	%	250,061	4.0	%

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The following table presents the aggregate of individual time deposits issued by Switzerland bank offices and foreign bank offices of our banking businesses in the CHF equivalent amounts of USD 100,000 or more, together with their remaining maturities as of December 31, 2002.

in CHF m	Switzerland	Foreign	Total
3 months or less	0	5,732	5,732
Over 3 through 6 months	0	1,607	1,607
Over 6 through 12 months	0	7,192	7,192
Over 12 months	0	2,733	2,733
Certificates of deposit	0	17,264	17,264
3 months or less	37,059	72,970	110,029
Over 3 through 6 months	1,581	2,166	3,747
Over 6 through 12 months	1,334	2,773	4,107
Over 12 months	300	18,818	19,118
Other time deposits	40,274	96,727	137,001
Total time deposits	40,274	113,991	154,265

Deposits by foreign depositors in Swiss offices amounted to CHF 34,267 million, CHF 32,554 million and CHF 31,774 million at December 31, 2002, 2001 and 2000, respectively.

Short-term borrowings

Short-term borrowings are included within the Swiss GAAP balance sheet captions Due to banks, Due to customers in savings and investment deposits, Due to customers, other, and Money market papers issued.

The short-term borrowings of the Group's banking operations consist of federal funds purchased, securities sold under agreements to repurchase, commercial paper, investment banking and brokerage borrowings, and other. Generally, original maturities of securities sold under repurchase agreements are less than six months, commercial paper are less than nine months and investment banking and brokerage borrowings and other short-term borrowings are one year or less.

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The following table shows details of the Group's significant short-term borrowings for the years ended December 31:

in CHF m		2002	2001	2000
Federal funds purchased and securities sold under agreements to repurchase
	Outstanding as of December 31	205,060	209,019	177,643
	Maximum amount outstanding at any month-end during the year	229,751	249,212	177,643
	Approximate average amount outstanding during the year	214,334	226,987	153,587
	Interest expenses for the year ended December 31	7,435	15,621	14,447
	Approximate weighted-average interest rate during the year	3.5%	6.9%	9.4%
	Approximate weighted-average interest rate at year end	3.5%	6.3%	5.8%
Commercial papers
	Outstanding as of December 31	1,496	3,496	2,465
	Maximum amount outstanding at any month-end during the year	4,516	4,526	3,627
	Approximate average amount outstanding during the year	3,573	2,616	2,916
	Interest expenses for the year ended December 31	76	119	197
	Approximate weighted-average interest rate during the year	2.1%	4.5%	6.8%
	Approximate weighted-average interest rate at year end	3.0%	2.0%	6.8%
Other short-term borrowings
	Outstanding as of December 31	3,173	8,648	813
	Maximum amount outstanding at any month-end during the year	9,759	10,148	813
	Approximate average amount outstanding during the year	4,918	5,599	316
	Interest expenses for the year ended December 31	79	224	21
	Approximate weighted-average interest rate during the year	1.6%	4.0%	6.6%
	Approximate weighted-average interest rate at year end	1.5%	4.4%	3.7%
Investment banking and brokerage borrowings
	Outstanding as of December 31	13,660	15,254	20,520
	Maximum amount outstanding at any month-end during the year	14,062	27,055	25,353
	Approximate average amount outstanding during the year	11,614	18,068	17,325
	Interest expenses for the year ended December 31	276	1,263	1,014
	Approximate weighted-average interest rate during the year	2.4%	7.0%	5.9%
	Approximate weighted-average interest rate at year end	3.0%	4.1%	6.3%

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ITEM 6: DIRECTORS, SENIOR MANAGEMENT AND EMPLOYEES

Information on Credit Suisse Group's Directors, Senior Management and Employees is set forth under the caption "Corporate Governance" in the Annual Report 2002 on pages 208 to 229 and such information is incorporated herein by reference.

For information on compensation please refer to note 43 of the notes to the consolidated financial statements in the attached Annual Report 2002.

ITEM 7: MAJOR SHAREHOLDERS AND RELATED PARTY TRANSACTIONS

Information on Credit Suisse Group's Major Shareholders and Related Party Transactions is set forth under the caption "Corporate Governance" on pages 208 to 229 in the Annual Report 2002 and such information is incorporated herein by reference.

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ITEM 8: FINANCIAL INFORMATION

Consolidated financial statements

Please refer to "Item 18 — Consolidated financial statements."

Legal proceedings

We are involved in a number of judicial, regulatory and arbitration proceedings, including those described below, concerning matters arising in connection with the conduct of our businesses. These actions have been brought on behalf of various classes of claimants and, unless otherwise specified, seek damages of material and/or indeterminate amounts. We believe, based on currently available information, that the results of such proceedings, in the aggregate, will not have a material adverse effect on the financial condition of Credit Suisse Group as a whole, but could be material to our operating results for any particular period. For additional information about legal proceedings involving CSFB (USA), Inc., our indirectly wholly owned subsidiary, please refer to the Annual Report on Form 10-K, Quarterly Reports on Form 10-Q and Current Reports on Form 8-K filed by CSFB (USA), Inc. with the SEC.

World War II settlement

Swiss banking settlement

In October 1996, several class action lawsuits were brought against us and another Swiss bank in the United States District Court for the Eastern District of New York. In January 1999, an agreement was signed with various Jewish groups and the lawyers representing the US class action plaintiffs on a global settlement that would resolve all claims against all Swiss businesses with the exception of certain named life insurance carriers, including our subsidiary Winterthur Life, relating to the World War II era. On July 26, 2000, the court approved the global settlement, and on November 22, 2000, the court adopted a plan for distributing the settlement funds. The full and conclusive settlement committed the defendant Swiss banks to pay USD 1.25 billion under certain terms and conditions. We committed to pay up to one-third of this sum. On November 23, 2000, we paid the final installment into an escrow fund. A small number of persons have elected to opt out of the settlement and not to participate in the class action. Such persons' claims were not released by the settlement. In addition, a number of appeals challenging the fairness of the settlement, or the distribution plan, were filed by purported class members, but all of those appeals have been denied; therefore, the settlement is fully effective. Accordingly, the settlement money paid into the escrow fund has been transferred to a settlement fund that is fully under the control of the court and class plaintiffs' counsel. We and another bank have filed an appeal challenging a ruling by the court that seeks to narrow in two respects the scope of the releases given to Swiss companies and their affiliates who are alleged to have used slave labor during World War II. The court of appeals issued a favorable ruling with respect to one such issue and an unfavorable one with respect to the other. An agreement in principle to resolve this aspect of the dispute has now been reached, subject to approval by the district court.

Claims against Winterthur Life

In 1997, a class action lawsuit, referred to as the Cornell case, was filed against 16 European insurance companies, including Winterthur Life, in the United States District Court for the Southern District of New York. Winterthur Life did not receive a release under the Swiss banking settlement described above. The plaintiffs claimed that these companies failed or refused to pay out benefits, particularly in connection

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with life policies, to which victims or survivors of the Holocaust were entitled. In January 1999, Winterthur Life was named as a defendant in a second class action, also in the Southern District of New York, referred to as the Winters/Schenker case, which asserts the same or similar claims. In January 2000, the Cornell case was dismissed. In July 2002, the Winters/Schenker case was dismissed as well.

In addition to the litigation and in response to actions by various American insurance regulators, in August 1998 an agreement was reached with the regulators, Jewish organizations and other European insurers, establishing a common procedure for the filing and processing of life insurance claims related to the Holocaust. The organization established for this purpose, the International Commission on Holocaust Era Insurance Claims, or ICHEIC, has initiated procedures for claims outreach, claims handling, the publication of lists of policy holders, the auditing of the insurers, and similar matters. Winterthur Life is taking an active part in ICHEIC.

The American Insurance Association, and certain of the Winterthur legal entity's US-domiciled insurance subsidiaries, along with several other US-domiciled insurance companies affiliated with non-US entities have challenged in court proceedings legislation in the State of California purporting to suspend the licenses of California insurers if the State determines that the insurers (or their non-US affiliates) have not followed certain procedures for insurance claims relating to the Holocaust, the outcome of which challenge is at the present time uncertain.

South Africa

Two purported class actions have been filed against us and numerous other defendants in the United States District Court for the Southern District of New York, in one of which the complaint has since been amended to delete us as a defendant, and another case that is not a class action has been filed in the United States District Court for the Eastern District of New York. These lawsuits allege that we and numerous other defendants are liable under international and US law by virtue of doing business in South Africa during the apartheid era prior to 1995. Efforts are under way to consolidate these and other similar cases against others in the Southern District of New York. We have not been properly served with process in any of these cases. We intend to defend ourselves vigorously against all of the claims asserted.

Governmental/Regulatory Inquiries Relating to IPO Allocation/Research-related Practices

In early 2002, in connection with industry-wide investigations into research analyst practices and certain IPO allocation practices, CSFB received subpoenas and/or requests for information from the following governmental and regulatory bodies: (1) the NYAG; (2) the MSD; (3) the SEC; (4) the NASDR; (5) the NYSE; and (6) the United States Attorneys' Office for the Southern District of New York. The SEC, NASDR and NYSE have conducted a joint investigation.

CSFB has cooperated fully with these investigations, and has produced a significant volume of documents, consisting primarily of e-mails, compensation-related information and research reports. During these investigations, the NASDR, NYAG and MSD have taken testimony from various present and former employees of CSFB. The investigations have focused on equity research independence and the allocation of certain IPO shares to senior executives of the firm's clients (a practice that regulators have referred to as "spinning").

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On September 19, 2002, the MSD referred certain aspects of its investigation to the NYAG to determine whether CSFB or any of its employees engaged in activity that would constitute a violation of New York criminal laws. The NYAG is continuing its investigation in response to the referral.

On October 21, 2002, the MSD filed an administrative complaint against CSFB, alleging violations of the Massachusetts Uniform Securities Act and seeking the imposition of a USD 1.9 million fine and various administrative remedies; CSFB filed an answer denying these charges on November 25, 2002. CSFB expects the MSD's allegations to be settled as part of a recently announced global agreement in principle, discussed below.

On December 20, 2002, CSFB and other financial services firms reached an agreement in principle with a coalition of state and federal regulators and self-regulatory organizations to resolve pending investigations. Pursuant to the agreement in principle, CSFB agreed, without admitting or denying the allegations, among other things, (i) to pay USD 150 million, of which USD 75 million is a civil penalty and USD 75 million is for restitution for investors, (ii) to adopt internal structural and operational reforms that will further augment the steps it has already taken to ensure research analyst independence and promote investor confidence, (iii) to contribute USD 50 million over five years to provide third-party research to clients and (iv) to adopt restrictions on the allocation of shares in IPOs to corporate executives and directors.

Several governmental and regulatory authorities have recently issued subpoenas to, and/or made requests for documents and information from, CSFB concerning the firm's preservation and production of documents in 2000 in response to then-pending investigations into the firm's allocation of shares in IPOs and subsequent transactions and commissions, including an investigation by the U.S. Attorney's Office for the Southern District of New York, which was concluded in December 2001 without charges being filed, and SEC and NASDR investigations that were settled in January 2002. CSFB is cooperating with the authorities in their investigations.

Litigation Relating to IPO Allocation/Research-related Practices

Since January 2001, CSFB LLC, an affiliate of CSFB LLC and several other investment banks, have been named as defendants in several putative class action complaints filed in the US District Court for the Southern District of New York concerning IPO allocation practices. On April 19, 2002, the plaintiffs filed consolidated amended complaints alleging various violations of the federal securities law resulting from alleged material omissions and misstatements in registration statements and prospectuses for the IPOs, and in some cases follow-on offerings, and with respect to transactions in the aftermarket. The complaints contain allegations that the registration statements and prospectuses either omitted or misrepresented material information about commissions paid to investment banks and aftermarket transactions by certain customers that received allocations of shares in the IPOs. The complaints also allege that misleading analyst reports were issued to support the issuers' allegedly manipulated stock price and that such reports failed to disclose the alleged allocation practices or that analysts were allegedly subject to conflicts of interest. On July 1, 2002, CSFB moved to dismiss the consolidated class action complaints. Oral argument on the motion was held on November 1, 2002, and on February 19, 2003, the court denied the motion as to the defendant investment banks and certain issuer and individual defendants.

Since March 2001, CSFB LLC and several other investment banks have been named as defendants in several putative class actions filed with the US District Court for the Southern District of New York,

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alleging violations of the federal and state antitrust laws in connection with alleged practices in allocation of shares in IPOs in which such investment banks were a lead or co-managing underwriter. The amended complaint in these lawsuits, which have now been consolidated into a single action, alleges that the underwriter defendants have engaged in an illegal antitrust conspiracy to require customers, in exchange for IPO allocations, to pay non-competitively determined commissions on transactions in other securities, to purchase an issuer's shares in follow-on offerings, and to commit to purchase other less desirable securities. The complaint also alleges that the underwriter defendants conspired to require customers, in exchange for IPO allocations, to agree to make aftermarket purchases of the IPO securities at a price higher than the offering price, as a precondition to receiving an allocation. These alleged "tie-in" arrangements are further alleged to have artificially inflated the market price for the securities. On May 24, 2002, CSFB moved to dismiss the amended complaint. Oral argument was held on January 17, 2003, and we are now awaiting the court's decision.

On May 25, 2001, CSFB LLC was sued in the US District Court for the Southern District of Florida by a putative class of issuers in IPOs in which CSFB LLC acted as lead manager. The complaint alleged that CSFB LLC underpriced IPOs, accepted excessive brokerage commissions in exchange for allocations in IPOs, required investors to give CSFB LLC a share of IPO profits, and used IPO allocations to obtain additional investment banking business, all in breach of the underwriting agreements. This case was subsequently transferred to the US District Court for the Southern District of New York. An amended complaint was filed on February 4, 2002 in this matter alleging, among other things, a claim for indemnification in the initial public offerings matter. On March 29, 2002, CSFB LLC moved to dismiss this complaint. On June 25, 2002, the court denied CSFB LLC's motion to dismiss. In December 2002, prior to a motion for class certification being filed, MDCM Holdings, Inc., the putative class representative, informed the court that it wished to withdraw from the action. Notice of MDCM Holdings' decision has been provided to the putative class and a March 26, 2003 deadline has been set for a putative class member to substitute as the putative class representative. If no member of the putative class seeks to substitute for MDCM Holdings, the action will be dismissed.

On November 15, 2002, CSFB (USA), Inc., as alleged successor-in-interest for a subsidiary then known as Donaldson, Lufkin & Jenrette Securities Corporation (now Pershing LLC), was sued in the US District Court for the Southern District of New York on behalf of a putative class of issuers in IPOs for which it acted as underwriter. The complaint alleges that the issuers' IPOs were underpriced, and that Pershing LLC allocated the underpriced IPO stock to certain of its favored clients and subsequently shared in portions of the profits of such favored clients pursuant to side agreements or understandings. This purported conduct is alleged to have been in breach of the underwriting agreements.

Several putative class action lawsuits have been filed against CSFB LLC in the wake of publicity surrounding various governmental and regulatory investigations into the practices of equity research analysts. Thus far, cases have been brought against CSFB LLC in US District Courts for the Southern District of New York and the District of Massachusetts on behalf of purchasers of shares of Agilent Technologies, Inc., AOL Time Warner Inc., Covad Communications Co. and Razorfish, Inc. An individual action has been filed in the Superior Court of the State of California by a purchaser of shares of Clarent Corporation. The complaints generally assert claims under Section 10(b) of the Exchange Act and Rule 10b-5 promulgated thereunder, and Section 20(a) of the Exchange Act. The actions relating to Covad Communications Co. have been consolidated in the US District Court for the Southern District of New York, and CSFB and its co-defendants have filed a motion to dismiss the complaint. The actions

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related to Agilent Technologies, Inc., AOL Time Warner Inc. and Razorfish, Inc. have not yet been consolidated and no lead plaintiff or lead counsel has been appointed in any of those cases.

Investigations of regulators relating to Japan and the United Kingdom

In 1999, the Securities and Futures Authority of the United Kingdom, or UK SFA, the principal regulator of our broker-dealer operations in the United Kingdom, commenced an inquiry into the activities that were the subject of examination by the Financial Supervisory Agency of Japan, which was disclosed in previous SEC filings, as well as other activities associated with our operations in Tokyo. On December 1, 2001, the UK SFA ceased to exist, and the UK SFA's successor regulator, the FSA, assumed the investigation. On March 8, 2002, Credit Suisse First Boston International, or CSFBi, our derivatives business subsidiary, received the FSA's "Preliminary Findings Letter," setting forth the FSA's findings of fact upon which a decision to institute disciplinary proceedings against CSFBi would be based. On December 19, 2002, the FSA and CSFBi reached a full and final settlement of this matter. In connection therewith, the FSA found that between 1995 and 1998, CSFBi's conduct, primarily in Japan, violated certain UK regulatory rules regarding internal organization and controls and relationships with regulators and other authorities. CSFBi has accepted these findings and paid a fine to the FSA. In the four years since the conduct that forms the basis of these findings took place, CSFB has implemented changes in senior management and made extensive organizational, personnel and structural reforms to address the conduct.

Securities and Exchange Board of India investigation

On April 18, 2001, the Securities and Exchange Board of India, or SEBI, issued an interim order requiring that Credit Suisse First Boston (India) Securities Private Limited, or CSFB India, not undertake any new stock broking business until further orders were passed by SEBI. The interim order, which was issued following a preliminary inquiry by SEBI but prior to any hearing on the matter, was based on a preliminary determination by SEBI that (i) certain purchase and sale transactions in certain shares executed by CSFB India for a client in 2001 were financing transactions that were structured to give a misleading appearance of active trading in such shares, leading to the creation of an artificial market and (ii) CSFB India had entered into unauthorized lending of securities. Subsequently, the scope of the inquiry was expanded to include transactions entered into from April 1, 2000 to March 31, 2001. On June 13, 2002, SEBI entered a final order and suspended the stockbroker registration of CSFB India for two years, with the term of the suspension beginning on April 18, 2001.

Enron-related litigation and inquiries

Numerous actions have been filed against CSFB LLC and its affiliates relating to Enron Corp. or its affiliates, or Enron. On April 8, 2002, CSFB LLC and certain other investment banks were named as defendants along with, among others, Enron, Enron executives and directors, lawyers and accountants in two putative class action complaints filed in the US District Court for the Southern District of Texas. The first, Newby v. Enron Corp., et al., was filed by purchasers of Enron securities and alleges claims against CSFB LLC for violations of the federal securities laws. The second, Tittle, et al. v Enron Corp., et al., was filed by Enron employees who participated in various Enron employee savings plans and alleges violations of the Employee Retirement Income Security Act and the Racketeer Influenced and Corrupt Organizations Act and asserts state law negligence and civil conspiracy claims. A motion by CSFB LLC to dismiss the complaint in Newby was denied in December 2002, and CSFB LLC has since answered

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the complaint, denying all liability. On May 8, 2002, CSFB LLC moved to dismiss the Tittle complaint, and that motion is pending before the court. In both matters, plaintiffs have filed motions for class certification that are pending before the court. Several actions filed against CSFB LLC and certain CSFB-related affiliates, along with other parties, have been consolidated with the Newby action and stayed pending the court's decision on certain motions to dismiss by other defendants in Newby that are still pending. Two of the consolidated actions have duplicate proceedings in the US District Court for the Southern District of New York.

Additional actions have been filed in various US federal and state courts against CSFB LLC and/or certain CSFB-related affiliates, along with other parties, including (i) a series of putative class actions by purchasers of NewPower Holdings common stock alleging violations of the federal securities law, including Section 11 of the Securities Act of 1933 and Section 10(b) of the Exchange Act; (ii) an action filed by The Retirement Systems of Alabama alleging violations of state and federal securities laws and Alabama statutory and common law; (iii) a complaint by two investment funds that purchased certain Enron-related securities alleging claims of insider trading and other violations of California law; (iv) a complaint by investment funds or fund owners that purchased senior secured notes issued by Osprey Trust and Osprey Trust I alleging violations of California law and fraud, deceit and negligent misrepresentation; (v) an action by AUSA Life Insurance Company, Inc. and eleven other insurance company plaintiffs alleging violations of state securities law, common law fraud and civil conspiracy in connection with offerings of notes and certificates by certain Enron special purpose entities, including Osprey Trust; (vi) a complaint by purchasers of Enron, Marlin, Osprey and Montclare Trust securities alleging violations of state securities law, fraud and deceit, and civil conspiracy; (vii) an action by CalPERS, California's state pension fund, alleging violations of federal securities law, California law and fraud and concealment in connection with CalPERS' investment in certain notes issued by Enron; (viii) an action filed by an individual purchaser of various Enron notes alleging violations of California law, fraud and concealment and breach of fiduciary duty in connection with offerings of those notes; and (ix) four actions against Arthur Andersen, in which Andersen has brought a claim for contribution against CSFB LLC and CSFB-related affiliates and other parties as third-party defendants.

In December 2001, Enron filed a petition for Chapter 11 relief in the US Bankruptcy Court for the Southern District of New York. On September 12, 2002, the court entered an order allowing discovery from more than 100 institutions, including CSFB LLC. We have produced documents on a rolling basis, subject to a confidentiality order. The bankruptcy examiner has requested additional discovery, including depositions, and CSFB LLC is voluntarily cooperating with such requests.

CSFB LLC and its affiliates have received requests for information from certain US Congressional committees and requests for information and/or subpoenas from certain governmental and regulatory agencies regarding certain transactions and business relationships with Enron and its affiliates, including certain Enron-related special purpose entities. We are cooperating fully with such inquiries and requests.

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NASD anti-tying investigation

In September 2002, the NASD began an inquiry into the services provided by investment banks to customers that maintained a commercial banking relationship with any affiliates of the investment bank at the time such services were provided. It is our understanding that the NASD is investigating the question of whether improper "tying" of these various services took place. The NASD sent requests for information on this topic to CSFB and to a number of other financial institutions. CSFB is cooperating fully with this investigation and has produced and will continue to produce the requested documents and information.

Dividends policy

Under Swiss law, dividends may be paid out only if and to the extent the corporation has distributable profits from previous business years, or if the free reserves of the corporation are sufficient to allow distribution of a dividend. Within these legal constraints, we maintain a flexible dividend policy. For financial year 2002, we propose a dividend CHF 0.10 per share.

The following table outlines the dividends paid for the years ended December 31:

Dividend per ordinary share 1)	USD 2)	CHF
2002	0.07	0.10
2001 3)	1.20	2.00
2000 4)	1.23	2.00
1999	1.10	1.75
1998	0.91	1.25

¹⁾

Share and per share information has been adjusted retroactively to reflect the share split on August 15, 2001.

²⁾

For details of the period end exchange rates used, please refer to "Item 3 — Key information — Exchange rate information."

³⁾

Repayment out of share capital as approved on May 31, 2002, in lieu of a dividend for financial year 2001.

⁴⁾

Repayment out of share capital as approved on June 1, 2001, in lieu of a dividend for financial year 2000.

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ITEM 9: THE OFFER AND THE LISTING

Listing details

Our shares are primarily listed on the SWX Swiss Exchange; since June 25, 2001, the principal trading market for our shares is virt-x, a joint venture between Tradepoint plc and the SWX Swiss Exchange. Our shares are also listed on the Frankfurt Stock Exchange and our American Depositary Shares, or ADSs, are traded on the New York Stock Exchange.

The following table sets forth, for the periods indicated, the reported highest and lowest closing price for one share on the SWX Swiss Exchange or from June 25, 2001, virt-x, and the average daily trading volume as reported by the SWX Swiss Exchange or virt-x:

		Average   trading   volumes 2)	Shares 2)
Period			High	Low
2003
	Through March 19, 2003	6,512,499	34.4	20.7
2002
	First quarter	5,566,964	73.6	56.5
	Second quarter	5,379,152	63.5	41.7
	Third quarter	7,376,761	48.9	26.8
	Fourth quarter	8,979,806	35.7	20.6
2001
	First quarter	6,483,553	87.0	69.8
	Second quarter 1)	4,869,675	83.1	72.3
	Third quarter	5,292,914	75.9	44.8
	Fourth quarter	5,601,598	71.3	51.6
2000
	First quarter	3,535,368	82.8	66.4
	Second quarter	3,452,079	84.9	75.8
	Third quarter	4,014,660	97.1	80.6
	Fourth quarter	5,488,325	87.4	73.3
1999
	First quarter	5,202,046	69.1	52.9
	Second quarter	4,080,824	77.1	65.5
	Third quarter	3,865,214	75.8	63.8
	Fourth quarter	3,396,256	79.1	63.1
1998		6,835,171	95.5	37.4

¹⁾

Reflects trading on virt-x since June 25, 2001.

²⁾

Volume and price information has been adjusted retroactively to reflect the share split on August 15, 2001.

Our shares are registered with a par value of CHF 1 per share.

Official trading of our shares in the form of ADSs on the New York Stock Exchange began on September 25, 2001, under the symbol "CSR." The following table sets forth, for the periods indicated,

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the reported highest and lowest closing price of ADSs, each representing one share, on the New York Stock Exchange, and the daily average trading volume as reported by the New York Stock Exchange.

			American Depositary Shares (in USD)
Period		Average trading volumes
			High	Low
2003
	Through March 19, 2003	162,479	24.8	15.9
2002
	First quarter	46,358	44.6	33.5
	Second quarter	57,564	38.4	28.4
	Third quarter	129,222	32.5	18.2
	Fourth quarter	208,200	23.8	13.7
2001
	Fourth quarter	16,077	43.0	32.6

Trading in our own shares

We buy and sell our own shares and derivatives on our own shares within our normal trading and market-making activities through the Swiss broker-dealer operations of CSFB and some of our private banks. In the Swiss market, we buy and sell, through CSFB, our shares and derivatives on these shares to facilitate customer orders, to provide liquidity as a market maker and to hedge derivative instruments issued by CSFB on our own shares.

In addition, we may from time to time place orders for our own shares to satisfy obligations under various employee and management incentive plans, and potentially for shares to be used as payment in acquisitions. On February 25, 2003, we announced the termination of our share buyback program of up to CHF 5 billion. We began the buyback program over a second trading line at the SWX Swiss Exchange on March 14, 2001, and the program was subsequently transferred to virt-x. As part of the share buyback program, we purchased the equivalent of 15,330,000 shares with a par value of CHF 1 each in 2001; we did not purchase any shares in 2002. The value of the shares repurchased was CHF 1.1 billion, and our share capital was reduced by this amount. The second trading line for shares on virt-x has been closed.

The market-making and trading by CSFB in our own shares and the use of our own shares for corporate purposes are separate activities.

The net long or short position held by CSFB and the private banking subsidiaries in our shares has been at non-material levels relative to the number of our outstanding shares, due in part to FBC regulations requiring a 100% capital charge to the relevant legal entity for the entire net position in our shares. In addition to FBC rules, trading in our own shares in the Swiss market is subject to regulation under the Stock Exchange Act, the rules of SWX Swiss Exchange and the EUREX electronic exchange, and the SBA Code of Conduct for Securities Dealers. Trading is also limited by our risk management limits, internal capital allocation rules, balance sheet requirements, counterparty restrictions and other internal regulations and guidelines.

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ITEM 10: ADDITIONAL INFORMATION

Articles of Association

The following is a summary of the material provisions of our Articles of Association, or Articles, and the Swiss Code of Obligations (Schweizerisches Obligationenrecht) as they relate to our shares. We incorporate by reference herein the summaries contained under the captions "Corporate Governance — Shareholders" and "Corporate Governance — Changes of control and defense measures" in the attached Annual Report 2002. This description does not purport to be complete and is qualified in its entirety by reference to the Swiss Code of Obligations and to the Articles, copies of which are available at our office, Paradeplatz 8, P.O. Box 1, CH 8070 Zürich, Switzerland.

Registration and business purpose

We are registered as a Swiss corporation (Aktiengesellschaft) in the Commercial Register of the Canton of Zurich under the registration number CH-020.3.906.075-9 and have our registered offices in Zurich, Switzerland. Our business purpose, as set forth in Article 2 of our Articles of Association, is to hold direct or indirect interests in all types of businesses in Switzerland and abroad, in particular in the areas of banking, finance, asset management and insurance. We have the power to establish new businesses, acquire a majority or minority interest in existing businesses and provide related financing. We also have the power to acquire, mortgage and sell real estate properties both in Switzerland and abroad.

Directors

The Swiss Code of Obligations requires directors and members of senior management to safeguard the interests of the corporation and, in connection with this requirement, imposes a duty of care and a duty of loyalty on directors and officers. While Swiss law does not have a general provision on conflicts of interest, the duties of care and loyalty are generally understood to disqualify directors and senior officers from participating in decisions that could directly affect them. Directors and officers are personally liable to the corporation for any breach of these provisions. In addition, Swiss law contains a provision under which payments made to a shareholder or director or any person associated with them (for example, family members, business partners, agents, or financing providers), other than at arms' length, must be repaid to us if the shareholder or director was acting in bad faith. Our Articles provide that the Board of Directors determines the yearly remuneration of the directors. Such remuneration is determined by our Board upon recommendation of the Compensation and Appointments Committee of our Board.

Our Articles provide that the Board of Directors shall consist of a minimum of seven members. The members of our Board are elected for a period of three years and are eligible for re-election, without any age or term limitations. Each director must hold at least one share.

Neither Swiss law nor the Articles restrict in any way our power to borrow and raise funds. The decision to borrow funds is passed by or under the direction of our Board of Directors, with no shareholders' resolution required.

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Dividends

Under Swiss law, dividends may be paid out only if and to the extent the corporation has distributable profits from previous business years, or if the free reserves of the corporation are sufficient to allow distribution of a dividend. In addition, at least 5% of the annual net profits must be retained and booked as general legal reserves for so long as these reserves amount to less than 20% of our paid-in share capital. Our reserves currently exceed this 20% threshold. Furthermore, dividends may be paid out only after approval at the shareholders' meeting. The Board of Directors may propose that a dividend be paid out, but cannot itself set the dividend. The auditors must confirm that the dividend proposal of the Board conforms to statutory law. In practice, the shareholders usually approve the dividend proposal of the Board of Directors. Dividends are usually due and payable after the shareholders' resolution relating to the allocation of profits has been passed. Under Swiss law, the statute of limitations in respect of dividend payments is five years.

Pre-emptive subscription rights

Under Swiss law, any share issue, whether for cash or non-cash consideration or no consideration, is subject to the prior approval of the shareholders' meeting. Shareholders of a Swiss corporation have certain pre-emptive subscription rights to subscribe for new issues of shares in proportion to the nominal amount of shares held. A resolution adopted at a shareholders' meeting with a supermajority may, however, limit or suspend preferential subscription rights in certain limited circumstances.

Repurchase of shares

Swiss law limits a corporation's ability to hold or repurchase its own shares. We may only repurchase shares if we have sufficient free reserves to pay the purchase price, and if the aggregate nominal value of the repurchased shares does not exceed 10% of our nominal share capital. Furthermore, we must create a special reserve on our balance sheet in the amount of the purchase price of the acquired shares. Shares repurchased by us do not carry any voting rights at shareholders' meetings.

Notices

Notices to shareholders are made by publication in the Swiss Official Commercial Gazette (Schweizerisches Handelsamtsblatt). The Board of Directors may designate further means of communication for publishing notices to shareholders. Notices required under the listing rules of the SWX Swiss Exchange will either be published in two Swiss newspapers in German and French and sent to the SWX Swiss Exchange or otherwise be communicated to the SWX Swiss Exchange in accordance with applicable listing rules. The SWX Swiss Exchange may disseminate the relevant information on its online exchange information system "Newsboard."

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Liquidation and merger

Under Swiss law and our Articles, we may be dissolved at any time by a shareholders' resolution which must be passed by (1) a supermajority of at least three quarters of the votes cast at the meeting in the event we are to be dissolved by way of liquidation, or (2) a supermajority of at least two-thirds of the votes represented and an absolute majority of the par value of the shares represented at the meeting in other events. Dissolution by court order is possible if we become bankrupt. Under Swiss law, any surplus arising out of liquidation (after the settlement of all claims of all creditors) is distributed to shareholders in proportion to the paid up nominal value of shares held.

Disclosure of principal shareholders

Under the applicable provisions of the Stock Exchange Act, persons acting individually or in concert who acquire or dispose of shares and thereby reach, exceed or fall below the respective thresholds of 5%, 10%, 20%, 33¹/3%, 50% or 66²/3% of the total voting rights of a Swiss listed corporation must notify the corporation and the SWX Swiss Exchange of such transaction, whether or not the voting rights can be exercised. Following receipt of such notification, the corporation has the obligation to inform the public. In addition, pursuant to the Swiss Code of Obligations, we must disclose in the notes to the annual financial statements the identity of any shareholders who own in excess of 5% of our shares.

Material contracts

On January 7, 2003, CSFB (USA), Inc. entered into a definitive agreement to sell Pershing, a leading provider of financial services to broker-dealers and investment managers, to The Bank of New York Company, Inc. for USD 2 billion in cash, the repayment of a USD 480 million subordinated loan and a contingent payment of up to USD 50 million based on future performance. The transaction is expected to close in the first half of the year, subject to regulatory approvals and other conditions. The disposition is expected to result in an after-tax loss of approximately USD 250 million for the Group. The sale of Pershing will be effected through the sale of the equity interests in Donaldson, Lufkin & Jenrette Securities Corporation (which was converted to the Delaware limited company Pershing LLC on January 17, 2003), and certain other subsidiaries, including iNautix, through which the Pershing business is conducted.

For more information about this transaction, please refer to the Transaction Agreement by and between CSFB (USA), Inc. and The Bank of New York Company, Inc., which has been filed as Exhibit 4.1 to this Form 20-F.

Exchange controls

There are no restrictions under our Articles of Association or Swiss law, presently in force, that limit the right of non-resident or foreign owners to hold our securities freely or, when entitled, to vote our securities freely. Other than in connection with government sanctions imposed on Iraq, Yugoslavia, Liberia, Sierra Leone, Myanmar, Zimbabwe, persons or organizations with links to Osama bin Laden, the "al Qaeda" group or the Taliban, and Libya (currently suspended), there are currently no Swiss exchange

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control laws or laws restricting the import or export of capital, including but not limited to, the remittance of dividends, interest or other payments to non-resident holders of our securities.

Indemnification

Neither the Articles of Association of Credit Suisse Group nor Swiss statutory law contains provisions regarding the indemnification of directors and officers. According to general principles of Swiss employment law, an employer may, under certain circumstances, be required to indemnify an employee against losses and expenses incurred by such person in the execution of such person's duties under an employment agreement, unless the losses and expenses arise from the employee's gross negligence or willful misconduct. From time to time, Credit Suisse Group has agreed to indemnify certain of its current or former directors and/or officers against certain losses and expenses in respect of service as a director or officer of an affiliate of Credit Suisse Group or of another entity approved by Credit Suisse Group, subject to specific conditions or exclusions. Credit Suisse Group maintains directors' and officers' insurance for its directors and officers.

American Depositary Shares

Under Swiss law, holders of ADSs are not shareholders and are not recorded in our share register. A nominee for the ADS depositary is the registered holder of the shares underlying the ADSs. Rights of ADS holders to exercise voting rights, receive dividends and other matters are governed by the deposit agreement pursuant to which their ADSs are issued. For further information relating to our ADSs, please refer to the Registration Statement on Form F-6, Reg. no. 333-13926 filed with the SEC. Subject to any applicable law to the contrary, with respect to ADSs for which timely voting instructions are not received by the ADS depositary in relation to any proposed resolution or for which voting instructions are received by the ADS depositary but do not specify how the ADS depositary shall vote in relation to any proposed resolution, the ADS depositary shall, or shall instruct the nominee to, vote such shares underlying the ADSs in favor of such resolution if it has been proposed by the Board of Directors or otherwise in accordance with the recommendation of the Board of Directors.

Taxation

The following summary contains a description of the principal Swiss and US federal income tax consequences of the purchase, ownership and disposition of our shares or American Depositary Receipts, which we refer to collectively as Shares, but it does not purport to be a comprehensive description of all of the tax considerations that may be relevant to a decision to own or dispose of Shares. In particular, the summary is directed only to holders that hold Shares as capital assets, and does not address tax considerations applicable to investors that may be subject to special tax rules, such as banks, tax-exempt entities, insurance companies, dealers in securities or currencies, traders in securities electing to mark to market, persons that actually or constructively own 10% or more of our voting stock, persons that hold Shares as a position in a "straddle" or "conversion" transaction, or as part of a "synthetic security" or other integrated financial transaction, or persons that have "functional currency" other than CHF or USD.

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This summary is based on the current tax laws of Switzerland and the United States, including the current Convention Between the United States of America and the Swiss Confederation for the Avoidance of Double Taxation with Respect to Taxes on Income, or the Treaty, the US Internal Revenue Code of 1986, as amended, or the Code, existing and proposed regulations there under, published rulings and court decisions, all of which are subject to change, possibly with retroactive effect.

This discussion does not generally address any aspects of US taxation other than federal income taxation or any aspects of Swiss taxation other than income and capital taxation. Prospective investors are urged to consult their tax advisors regarding the US federal, state and local, Swiss and other tax consequences of owning and disposing of Shares.

Swiss taxation

Withholding tax on dividends and similar distributions

Dividends paid and other similar cash or in-kind taxable distributions made by us to a holder of Shares (including dividends on liquidation proceeds and stock dividends) are subject to a federal withholding tax at a rate of 35%. The withholding tax will be withheld by us on the gross distributions and will be paid to the Swiss Federal Tax Administration.

Swiss resident recipients

Swiss resident individuals or legal entities are generally entitled to a full refund or tax credit for the withholding tax if they are the beneficial owners of such distributions at the time the distribution is due and duly report the receipt thereof in the relevant income tax return.

Non-resident recipients

The recipient of a taxable distribution who is an individual or a legal entity not resident in Switzerland for tax purposes may be entitled to a total or partial refund of the withholding tax if the country in which such recipient resides for tax purposes has entered into a bilateral treaty for the avoidance of double taxation with Switzerland and the further conditions of such treaty are met. Holders of Shares not resident in Switzerland should be aware that the procedures for claiming treaty benefits (and the time frame required for obtaining a refund) may differ from country to country. Holders of Shares not resident in Switzerland should consult their own legal, financial or tax advisors regarding receipt, ownership, purchases, sale or other dispositions of Shares and the procedures for claiming a refund of the withholding tax.

Residents of the United States

A non-Swiss resident holder who is a resident of the United States for purposes of the Treaty is eligible for a reduced rate of withholding tax on dividends equal to 15% of the dividend, provided that such holder (i) qualifies for benefits under the Treaty, (ii) holds, directly or indirectly, less than 10% of our voting stock and (iii) does not conduct business through a permanent establishment or fixed base in Switzerland to which Shares are attributable. Such an eligible US holder may apply for a refund of the amount of the withholding tax in excess of the 15% Treaty rate. The claim for refund must be filed on Swiss Tax Form 82 (82C for corporations; 82I for individuals; 82E for other entities), which may be

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obtained from any Swiss consulate general in the United States or from the Federal Tax Administration of Switzerland at the address below, together with an instruction form. Four copies of the form must be duly completed, signed before a notary public of the United States, and sent to the Federal Tax Administration of Switzerland, Eigerstrasse 65, CH 3003, Berne, Switzerland. The form must be accompanied by suitable evidence of deduction of Swiss tax withheld at source, such as certificates of deduction, signed bank vouchers or credit slips. The form may be filed on or after July 1 or January 1 following the date the dividend was payable, but no later than December 31 of the third year following the calendar year in which the dividend became payable.

Income and profit tax on dividends and similar distributions

Individuals

An individual who is a Swiss resident for tax purposes, or who is a non-Swiss resident holding Shares as part of a Swiss business operation or Swiss permanent establishment, is required to report the receipt of taxable distributions received on the Shares in her or his relevant Swiss tax returns.

Legal entities

Legal entities resident in Switzerland and non-Swiss resident legal entities holding Shares as part of a Swiss establishment are required to include taxable distributions received on the Shares in their income subject to Swiss corporate income taxes. A Swiss corporation or co-operative or a non-Swiss corporation or co-operative holding Shares as part of a Swiss permanent establishment may, under certain circumstances, benefit from relief from taxation with respect to dividends (Beteiligungsabzug).

Non-resident recipients

Recipients of dividends and similar distributions on Shares who are neither residents of Switzerland for tax purposes nor holders of Shares as part of a Swiss business operation or a Swiss permanent establishment are not subject to Swiss income taxes in respect of such distributions.

Capital gains tax realized on shares

Individuals

Swiss resident individuals who hold Shares as part of their private property generally are exempt from Swiss federal, cantonal and communal taxes with respect to capital gains realized upon the sale or other disposal of Shares, unless such individuals are qualified as security trading professionals for income tax purposes. Gains realized upon a repurchase of Shares by us for the purpose of a capital reduction are characterized as a partial liquidation of the company. In this case, the difference between the nominal value of the shares and their repurchase price may qualify as taxable income. The same would be true for gains realized upon a repurchase of Shares if we were not to dispose of the repurchased shares within six years after the repurchase, or if such Shares were repurchased in connection with a capital reduction. Taxable income would be the difference between the repurchase price and the nominal value of the Shares. Individuals who are Swiss residents for tax purposes and who hold the Shares as business assets, or who are non-Swiss residents holding Shares as part of a Swiss business operation or Swiss permanent establishment, are required to include capital gains realized upon the disposal of Shares in their income subject to Swiss income tax.

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Legal entities

Legal entities resident in Switzerland or non-Swiss resident legal entities holding Shares as part of a Swiss permanent establishment are required to include capital gains realized upon the disposal of Shares in their income subject to Swiss corporate income tax.

Non-resident individuals and legal entities

Individuals and legal entities which are not resident in Switzerland for tax purposes and do not hold Shares as part of a Swiss business operation or a Swiss permanent establishment are not subject to Swiss income taxes on gains realized upon the disposal of the Shares.

Net worth and capital taxes

Individuals

Individuals who are Swiss residents for tax purposes, or who are non-Swiss residents holding Shares as part of a Swiss business operation or Swiss permanent establishment, are required to include their Shares in their assets that are subject to cantonal and communal net worth taxes.

Legal entities

Legal entities resident in Switzerland or non-Swiss resident legal entities holding Shares as part of a Swiss permanent establishment are required to include their Shares in their assets that are subject to cantonal and communal capital tax.

Non-resident individuals and legal entities

Individuals and legal entities, which are not resident in Switzerland for tax purposes and do not hold Shares as part of a Swiss business operation or a Swiss permanent establishment are not subject to Swiss cantonal and communal net worth and capital taxes.

Stamp duties upon transfer of securities

The transfer of Shares, whether by Swiss residents or non-resident holders, may be subject to a Swiss securities transfer duty of 0.15% of the transaction value if the transfer occurs through or with a Swiss bank or other Swiss or foreign securities dealer as defined in the Swiss Federal Stamp Duty Act. The stamp duty is paid by the securities dealer and may be charged to the parties in a taxable transaction who are not securities dealers. In addition to this stamp duty, the sale of Shares by or through a member of the SWX/Virt-x may be subject to a minor SWX/Virt-x levy on the sale proceeds (this levy also includes the Federal Banking Commission surcharge).

United States federal income tax

For purposes of this discussion, a "US Holder" is any beneficial owner of Shares that is (i) a citizen or resident of the United States, (ii) a corporation organized under the laws of the United States or any political subdivision thereof, or (iii) any other person that is subject to US federal income tax on a net income basis in respect of Shares. A "Non-US Holder" is any beneficial owner of Shares that is a foreign corporation or non-resident alien individual.

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Taxation of dividends

US Holders

For US federal income tax purposes a US Holder will be required to include the full amount (before reduction for Swiss withholding tax) of a dividend paid with respect to Shares as ordinary income. For this purpose, a "dividend" will include any distribution paid by us with respect to Shares, but only to the extent such distribution is not in excess of our current and accumulated earnings and profits as defined for US federal income tax purposes. Such dividend will constitute income from sources outside the United States. Subject to the limitations and conditions provided in the Code, a US Holder may deduct from its US federal taxable income, or claim as a credit against its US federal income tax liability, the Swiss withholding tax withheld. Under the Code, dividend payments by us on Shares are not eligible for the dividends received deduction generally allowed to corporate shareholders. Any distribution that exceeds our earnings and profits will be treated as a non-taxable return of capital to the extent of the US Holder's tax basis in Shares and thereafter as capital gain.

In general, a US Holder will be required to determine the amount of any dividend paid in CHF by translating the CHF into USD at the "spot rate" of exchange on the date of receipt. The tax basis of CHF received by the US Holder generally will equal the USD equivalent of such CHF, translated at the spot rate of exchange on the date such CHF dividends are received. Upon a subsequent exchange of such CHF for USD, or upon the use of such CHF to purchase property, a US Holder will generally recognize ordinary income or loss in the amount equal to the difference between such US Holder's tax basis for the CHF and the USD received or, if property is received, the fair market value of the property. In addition, a US Holder may be required to recognize domestic-source foreign currency gain or loss on the receipt of a refund in respect of Swiss withholding tax to the extent the USD value of the refund differs from the USD equivalent of the amount on the date of receipt of the underlying dividend.

Non-US Holders

Dividends paid to a Non-US Holder in respect of Shares will generally not be subject to US federal income tax unless such dividends are effectively connected with the conduct of a trade or business within the United States by such Non-US Holder.

Capital gains tax upon disposal of shares

US Holders

Gain or loss realized by a US Holder on the sale or other disposition of Shares will be subject to US federal income taxation as capital gain or loss in an amount equal to the difference between the US Holder's basis in Shares and the amount realized on the disposition. Such gain or loss will generally be long-term capital gain or loss if the US Holder holds Shares for more than one year. Long-term capital gain realized by a US Holder that is an individual generally is subject to reduced rates.

Non-US Holders

A Non-US Holder will generally not be subject to US federal income tax in respect of gain realized on a sale or other disposition of Shares unless the gain is effectively connected with a trade or business of the Non-US Holder in the United States.

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Backup withholding tax and information reporting requirements

Dividends paid on, and proceeds from the sale or other disposition of, Shares paid to a US Holder generally may be subject to the information reporting requirements of the Code and may be subject to backup withholding unless the holder (i) establishes that it is a corporation or other exempt holder or (ii) provides an accurate taxpayer identification number on a properly completed Internal Revenue Service Form W-9 and certifies that no loss of exemption from backup withholding has occurred. The amount of any backup withholding from a payment to a holder will be allowed as a credit against the US Holder's US federal income tax liability and may entitle such holder to a refund, provided that certain required information is furnished to the Internal Revenue Service.

A non-US Holder may be required to comply with certification and identification procedures in order to establish its exemption from information reporting and backup withholding.

ITEM 11: QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

Information regarding quantitative and qualitative disclosures about market risk is set forth under the caption "Risk Management" in the Annual Report 2002 on pages 86 to 114 and such information is incorporated herein by reference.

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ITEM 15: CONTROLS AND PROCEDURES

Disclosure Controls and Procedures

(a) Within the 90 days prior to the date of this Form 20-F, the Group carried out an evaluation under the supervision and with the participation of the Group's management, including the Group's Chief Executive Officers and Chief Financial Officer, of the effectiveness of the design and operation of the Group's disclosure controls and procedures. There are inherent limitations to the effectiveness of any system of disclosure controls and procedures, including the possibility of human error and the circumvention or overriding of the controls and procedures. Accordingly, even effective disclosure controls and procedures can only provide reasonable assurance of achieving their control objectives. Based upon and as of the date of the Group's evaluation, the Chief Executive Officers and Chief Financial Officer concluded that the disclosure controls and procedures are effective in all material respects to ensure that information required to be disclosed in the reports the Group files and submits under the Exchange Act is recorded, processed, summarized and reported as and when required.

(b) There were no significant changes in the Group's internal controls or in other factors that could significantly affect these controls subsequent to the date of their evaluation.

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ITEM 18: CONSOLIDATED FINANCIAL STATEMENTS

The consolidated financial statements of the Group, together with the notes and schedules thereto and the Independent Auditor's reports thereon, are set forth on pages F-1 and F-78 of this Annual Report on Form 20-F and under the caption "Financial Information—Consolidated Finanical Statements" in the Annual report 2002 on pages 118 to 191, which is incorporated herein by reference.

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ITEM 19: EXHIBITS

Exhibit No.	Exhibit Title
1.1	Articles of Association (Statuten) of Credit Suisse Group as of January 30, 2003 (together with an English translation).
4.1	Transaction Agreement between Credit Suisse First Boston (USA), Inc. and The Bank of New York Company, Inc. dated as of January 7, 2003.
8.1	Significant subsidiaries of the Registrant (a list of significant subsidiaries is included in note 46 of the notes to the consolidated financial statements of the Registrant).
10	The following portions of Credit Suisse Group's Annual Report 2002, which are incorporated by reference in this Annual Report on Form 20-F in response to Items 3, 4, 5, 6, 7, 11 and 18, are filed as an exhibit:
10.2	"Information on the Company", (Pages 8 to 33).
10.3	"Operating and Financial Review", (Pages 36 to 83 other than the tables under the heading "Operating and Financial Review — Supplemental Information" (Pages 80 to 83).
10.4	"Corporate Governance" (Pages 208 to 229).
10.5	"Risk Management" (Pages 86 to 114).
10.6	"Financial Information" (Pages 118 to 191).
10.7	"Five-Year Summary of Selected Financial Data" (Pages 204 to 205).
	The Annual Report, except for those portions thereof which are expressly incorporated by reference herein, is furnished for the information of the SEC and is not to be deemed as "filed" as part of the filing of this Form 20-F.
10.8	Consent of KPMG Klynveld Peat Marwick Goerdeler SA, Zurich.
10.9	Certification pursuant to 16 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.
	The total amount of long-term debt securities of Credit Suisse Group authorized under any instrument does not exceed 10% of the total assets of the Group on a consolidated basis. The Group hereby agrees to furnish to the SEC upon its request a copy of any instrument defining the rights of holders of long-term debt of Credit Suisse Group or of its subsidiaries for which consolidated or unconsolidated financial statements are required to be filed.

106

Signatures

The registrant hereby certifies that it meets all of the requirements for filing on Form 20-F and has duly caused and authorised the undersigned to sign this registration statement on its behalf.

	CREDIT SUISSE GROUP (REGISTRANT)
Name: David P. Frick Title: General Counsel	Name: Philip K. Ryan Title: Chief Financial Officer

107

I, Oswald J. Grübel, certify that:

1.

I have reviewed this annual report on Form 20-F of Credit Suisse Group;

2.

Based on my knowledge, this annual report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this annual report;

3.

Based on my knowledge, the financial statements, and other financial information included in this annual report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this annual report;

4.

The registrant's other certifying officers and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-14 and 15d-14) for the registrant and we have:

a)

designed such disclosure controls and procedures to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this annual report is being prepared;

b)

evaluated the effectiveness of the registrant's disclosure controls and procedures as of a date within 90 days prior to the filing date of this annual report (the "Evaluation Date"); and

c)

presented in this annual report our conclusions about the effectiveness of the disclosure controls and procedures based on our evaluation as of the Evaluation Date;

5.

The registrant's other certifying officers and I have disclosed, based on our most recent evaluation, to the registrant's auditors and the audit committee of registrant's board of directors (or persons performing the equivalent function):

a)

all significant deficiencies in the design or operation of internal controls which could adversely affect the registrant's ability to record, process, summarize and report financial data and have identified for the registrant's auditors any material weaknesses in internal controls; and

b)

any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant's internal controls; and

6.

The registrant's other certifying officers and I have indicated in this annual report whether or not there were significant changes in internal controls or in other factors that could significantly affect internal controls subsequent to the date of our most recent evaluation, including any corrective actions with regard to significant deficiencies and material weaknesses.

Dated: March 27, 2003	Name:	Oswald J. Grübel
	Title:	Chief Executive Officer

108

I, John J. Mack, certify that:

1.

I have reviewed this annual report on Form 20-F of Credit Suisse Group;

2.

Based on my knowledge, this annual report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this annual report;

3.

Based on my knowledge, the financial statements, and other financial information included in this annual report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this annual report;

4.

The registrant's other certifying officers and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-14 and 15d-14) for the registrant and we have:

a)

designed such disclosure controls and procedures to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this annual report is being prepared;

b)

evaluated the effectiveness of the registrant's disclosure controls and procedures as of a date within 90 days prior to the filing date of this annual report (the "Evaluation Date"); and

c)

presented in this annual report our conclusions about the effectiveness of the disclosure controls and procedures based on our evaluation as of the Evaluation Date;

5.

The registrant's other certifying officers and I have disclosed, based on our most recent evaluation, to the registrant's auditors and the audit committee of registrant's board of directors (or persons performing the equivalent function):

a)

all significant deficiencies in the design or operation of internal controls which could adversely affect the registrant's ability to record, process, summarize and report financial data and have identified for the registrant's auditors any material weaknesses in internal controls; and

b)

any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant's internal controls; and

6.

The registrant's other certifying officers and I have indicated in this annual report whether or not there were significant changes in internal controls or in other factors that could significantly affect internal controls subsequent to the date of our most recent evaluation, including any corrective actions with regard to significant deficiencies and material weaknesses.

Dated: March 27, 2003	Name:	John J. Mack
	Title:	Chief Executive Officer

109

I, Philip K. Ryan, certify that:

1.

I have reviewed this annual report on Form 20-F of Credit Suisse Group;

2.

Based on my knowledge, this annual report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this annual report;

3.

Based on my knowledge, the financial statements, and other financial information included in this annual report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this annual report;

4.

The registrant's other certifying officers and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-14 and 15d-14) for the registrant and we have:

a)

designed such disclosure controls and procedures to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this annual report is being prepared;

b)

evaluated the effectiveness of the registrant's disclosure controls and procedures as of a date within 90 days prior to the filing date of this annual report (the "Evaluation Date"); and

c)

presented in this annual report our conclusions about the effectiveness of the disclosure controls and procedures based on our evaluation as of the Evaluation Date;

5.

The registrant's other certifying officers and I have disclosed, based on our most recent evaluation, to the registrant's auditors and the audit committee of registrant's board of directors (or persons performing the equivalent function):

a)

all significant deficiencies in the design or operation of internal controls which could adversely affect the registrant's ability to record, process, summarize and report financial data and have identified for the registrant's auditors any material weaknesses in internal controls; and

b)

any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant's internal controls; and

6.

The registrant's other certifying officers and I have indicated in this annual report whether or not there were significant changes in internal controls or in other factors that could significantly affect internal controls subsequent to the date of our most recent evaluation, including any corrective actions with regard to significant deficiencies and material weaknesses.

Dated: March 27, 2003	Name:	Philip K. Ryan
	Title:	Chief Financial Officer

110

ITEM 18: CONSOLIDATED FINANCIAL STATEMENTS

Index to financial statements

Credit Suisse Group

Report of the independent auditors		F-2
Notes to the consolidated financial statements
48	Differences between Swiss and US accounting principles	F-3
49.1	Earnings per share	F-27
49.2	US GAAP consolidated changes in shareholders' equity	F-28
49.3	US GAAP accumulated other comprehensive income	F-30
49.4	Recently issued US accounting standards	F-31
49.5	Goodwill and intangible assets	F-34
49.6	Discontinued operations	F-35
49.7	Investments	F-36
49.8	Real estate held for investment from the insurance business	F-40
49.9	Brokerage receivables and brokerage payables	F-41
49.10	Securities borrowed, lent and subject to repurchase agreements	F-41
49.11	Income taxes	F-45
49.12	Reinsurance	F-47
49.13	Present value of future profits	F-48
49.14	Deferred policy acquisition costs	F-49
49.15	Real estate	F-49
49.16	Fair value of financial instruments	F-50
49.17	Derivative financial instruments	F-52
49.18	Litigation	F-57
49.19	Deposits	F-63
49.20	Liabilities for loss and loss adjustment expenses from the non-life insurance business	F-64
49.21	Participating policies of insurance business	F-65
49.22	Related party transactions	F-66
49.23	Pension and post-retirement benefits	F-66
49.24	Capital requirements	F-70
49.25	Credit Suisse Group (parent company only)	F-72
Schedule I – Schedule of investments from the insurance business		F-76
Schedule III – Schedule of supplementary insurance information		F-77
Schedule IV – Schedule of reinsurance		F-78

F-1

	Assurance
	KPMG Klynveld Peat Marwick Goerdeler SA		Telephone +41 1 249 31 31
	Badenerstrasse 172 CH-8004 Zurich	P.O. Box CH-8026 Zurich	Fax +41 1 249 30 41 www.kpmg.ch

Report of the Independent Auditors
The Board of Directors of Credit Suisse Group

We have audited the consolidated balance sheets of Credit Suisse Group and subsidiaries as of December 31, 2002 and 2001, and the related consolidated statements of income and cash flows for each of the years in the three-year period ended December 31, 2002, incorporated by reference from the Annual Report 2002, pages 118 to 191, and on the accompanying pages F-3 to F-74. These consolidated financial statements are the responsibility of Credit Suisse Group management. Our responsibility is to express an opinion on these consolidated financial statements based on our audits.

We conducted our audits in accordance with auditing standards generally accepted in the United States of America. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audits provide a reasonable basis for our opinion.

In our opinion, the consolidated financial statements referred to above present fairly, in all material respects, the financial position of Credit Suisse Group and subsidiaries as of December 31, 2002 and 2001, and the results of their operations, and cash flows for each of the years in the three-year period ended December 31, 2002, in conformity with accounting principles generally accepted in Switzerland and comply with Swiss law.

As discussed in note 2 to the consolidated financial statements, Credit Suisse Group has modified for the financial year 2002 its accounting policies in relation to deferred taxation.

Accounting principles generally accepted in Switzerland vary in certain significant respects from accounting principles generally accepted in the United States of America. Application of accounting principles generally accepted in the United States of America would have affected shareholders' equity as of December 31, 2002 and 2001 and the results of operations for each of the three years then ended, to the extent summarized in note 48 to the consolidated financial statements.

KPMG Klynveld Peat Marwick Goerdeler SA

/s/  BRENDAN R. NELSON    
Brendan R. Nelson
Chartered Accountant
Auditors in Charge
/s/  PETER HANIMANN    
Peter Hanimann
Certified Accountant

Zurich, February 21, 2003, except as to notes 48 and 49, which are as of March 20, 2003.

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

48    Differences between Swiss and US accounting principles

The following narratives provide additional details to support the tabular reconciliation in notes 48.2a and 48.2b of net profit and shareholders' equity prepared under Swiss generally accepted accounting principles, or Swiss GAAP, to net profit and shareholders' equity prepared under US generally accepted accounting principles, or US GAAP. For those reconciling items where the differences between the methods under Swiss GAAP and US GAAP accounting are significant to a particular segment, the segment has been identified.

Additional information concerning Swiss accounting principles can be found in note 1 "Summary of significant accounting policies."

48.1    Valuation and income recognition differences between Swiss and US accounting principles

a)    Debt and equity securities

Valuation

Under Swiss GAAP, debt and equity securities for the banking business that are held for sale and which do not constitute trading balances are carried at the lower of cost or market value, or LOCOM. Unrealized losses are recorded through the income statement when market value is lower than cost. When market value increases, unrealized gains are recorded only up to the initial cost value.

Debt securities held until final maturity are valued at amortized cost (accrual method). Premiums and discounts are deferred and accrued over the term of the instrument until final maturity. Realized gains or losses that are interest related and that arise from the early disposal or redemption of the instrument are deferred and accrued over the remaining term of that instrument.

Under US GAAP, debt and equity securities must be classified as either:

•

trading, which are carried at fair value with changes in fair value recorded through earnings;



•

held-to-maturity (debt securities only), which are carried at amortized cost; or



•

available-for-sale, which are carried at fair value, with changes in fair value recorded in other comprehensive income, a separate component of shareholders' equity.

Under US GAAP a decline in the market value of available-for-sale or held-to-maturity securities that is deemed to be other than temporary results in an impairment being charged to the income statement. This also establishes a new cost basis which is not adjusted for subsequent recoveries.

In addition, under US GAAP premiums and discounts are amortized to interest income using the effective yield method over the contractual life of the securities. Gains or losses on the sales of debt and equity securities are recognized into income at the time of sale on a specific identified cost basis.

The US GAAP adjustments to net profit attributable to securities valuation differences were decreases of CHF 154 million and CHF 48 million and an increase of CHF 46 million for 2002, 2001 and 2000, respectively. The US GAAP adjustments to shareholders' equity attributable to

F-3

securities valuation differences were increases of CHF 170 million, CHF 2,269 million and CHF 3,402 million for 2002, 2001 and 2000, respectively.

Private equity

Under Swiss GAAP, private equity investments are carried at LOCOM.

Under US GAAP, in accordance with specialized industry accounting principles, private equity investments held by subsidiaries that are considered investment companies which engage exclusively in venture capital and other related activities, are carried at estimated fair value, with changes in fair value recorded through net profit.

The US GAAP adjustments to net profit attributable to private equity investments were decreases of CHF 57 million, CHF 168 million and CHF 87 million for 2002, 2001 and 2000, respectively. The US GAAP adjustment to shareholders' equity attributable to private equity investments were increases of CHF 151 million, CHF 209 million and CHF 391 million for 2002, 2001 and 2000, respectively.

b)    Consolidation

Special Purpose Entities

Under Swiss GAAP, consolidation of a special purpose entity, or SPE, is required if the Group holds more than 50% of the voting rights of the entity or if it has the ability to exercise control of the SPE. Consolidation would also be required if the Group has a legal or de facto obligation to support the entity or the SPE is dependent on the Group for funding. Consolidation may be required by application of the principle of substance over form.

Under US GAAP, a sponsored SPE must be considered for consolidation unless it meets the criteria of a qualifying SPE as defined in the Statement of Financial Accounting Standard, or SFAS, No. 140, Accounting for Transfers and Servicing of Financial Assets and Extinguishment of Liabilities. If the SPE is not a qualifying SPE then the following factors must be considered to determine if the SPE has to be consolidated. The three criteria to be considered are whether: (1) independent third parties have made a substantive equity investment; (2) independent third parties control the SPE; and (3) independent third parties have the substantive risks and rewards of the assets of the SPE throughout its term. These criteria are subjective and must be analyzed together with all relevant facts and circumstances to determine whether consolidation is required.

The US GAAP adjustments to net profit attributable to the consolidation of SPEs not consolidated under Swiss GAAP were decreases of CHF 8 million and CHF 52 million for 2002 and 2001, respectively, and an increase of CHF 73 million for 2000. The US GAAP adjustments to shareholders' equity attributable to the consolidation of SPEs not consolidated under Swiss GAAP were an increase of CHF 7 million, a decrease of CHF 15 million and an increase of CHF 51 million for 2002, 2001 and 2000, respectively.

F-4

Determination of consolidated subsidiaries and equity method subsidiaries

Under Swiss GAAP, majority owned subsidiaries that are not long-term investments or do not operate in the core business of the Group may be accounted for as financial investments or using the equity method, respectively. US GAAP has no such exception to consolidating majority owned subsidiaries.

Under Swiss GAAP, the accounting for investments using the equity method is generally the same as under US GAAP; however, US GAAP has stricter guidelines for determining whether an entity has the ability to exercise significant influence over the operating and financial policies of certain investees.

The US GAAP adjustments to net profit attributable to differences in the determination of consolidated subsidiaries and equity method subsidiaries were decreases of CHF 35 million and CHF 97 million for 2002 and 2001, respectively. The net profit adjustment was a decrease of less than CHF 1 million for 2000. The US GAAP adjustments to shareholders' equity attributable to differences in determination of consolidated subsidiaries and equity method subsidiaries were a decrease of CHF 61 million and increases of CHF 35 million and CHF 16 million for 2002, 2001 and 2000, respectively.

c)    Transfer of financial assets

Swiss GAAP requires that, in transferring financial assets, the assets should be removed from the transferor's balance sheet and a gain or loss should be recognized when the following conditions are met:

•

the securities are isolated from the transferor;



•

the transferee obtains the right to pledge or exchange the transferred securities; and



•

the transferor does not maintain effective control.

In addition, under Swiss GAAP, repurchase and reverse repurchase transactions held in the trading book, so-called matched book repo transactions, are recorded at fair value.

Under US GAAP, the accounting for transfers of financial assets that are considered sales generally is based on the same conditions as under Swiss GAAP. However, satisfying the US GAAP criteria is dependent on a "true sale" legal opinion, which is a more stringent threshold than under Swiss GAAP. The resulting adjustment for transfers not deemed as sales is that the transferred assets remain on the balance sheet and the transaction is treated as a secured borrowing.

Under US GAAP, income from matched book repo transactions is recorded on an accrual basis.

The US GAAP adjustments to net profit attributable to differences in the accounting treatment of transfers of financial assets were decreases of CHF 278 million and CHF 74 million for 2002 and 2001, respectively, and an increase of CHF 100 million for 2000. The US GAAP adjustments to shareholders' equity attributable to such differences in accounting treatment were decreases of

F-5

CHF 272 million and CHF 29 million for 2002 and 2001, respectively, and an increase of CHF 43 million for 2000.

d)    Real estate

Under Swiss GAAP, the banking segments' real estate held for own use that has been designated as held for disposal is carried at the lower of cost less accumulated depreciation or market value. Until a contract for sale is executed, depreciation continues on these properties.

Under Swiss GAAP, upon adoption of FER 20 as of January 1, 2002, real estate investments for the insurance business are impaired when the carrying amount exceeds the higher of net selling price and value in use. Value in use is defined as the sum of the discounted cash flows. An impairment results in a charge to the income statement. If the factors to determine the recoverable amount materially improve in subsequent periods, this would lead to a value increase, resulting in an adjustment to investment income from the insurance business.

Under US GAAP, real estate that is classified as held for disposal and where the sale is probable within one year is carried at the lower of carrying amount or fair value less costs to sell. No depreciation is recorded on real estate held for disposal.

Under US GAAP, real estate investments are impaired when the carrying amount exceeds both the fair value and the sum of undiscounted cash flows. An impairment results in a charge to the income statement and establishes a new cost basis. It is not adjusted for subsequent recoveries.

e)    General provisions

Under Swiss GAAP, valuation adjustments and reserves are permitted to be recorded when economically necessary or legally required. The criteria for establishing such provisions under US GAAP are more stringent than under Swiss GAAP.

The balance sheet line item Valuation adjustments and provisions includes provisions for restructuring, litigation, technology and other operational risks. Reserve for general banking risks is recorded as a separate component of shareholders' equity. For purposes of the US GAAP reconciliation, certain of these provisions are not allowed and have been reversed.

Provision for restructuring

Under Swiss GAAP, restructuring provisions are recognized when a legal obligation exists or is likely to materialize in connection with a restructuring.

Under US GAAP, provisions are made for those costs which are directly associated with a plan to exit an activity, such as employee termination benefits and other restructuring costs. The costs qualify for restructuring costs if they are not associated with or incurred to generate revenues that benefit future periods. Restructuring provisions are recognized in the period when management approves and commits the entity to a restructuring plan that identifies an expected completion date and all significant actions required to be taken to complete the plan. The plan should commence as soon as possible and the timetable for completion should not accommodate significant plan changes.

F-6

The US GAAP adjustments to net profit attributable to disallowed restructuring provisions were an increase of CHF 11 million and decreases of CHF 25 million and CHF 75 million for 2002, 2001 and 2000, respectively. The US GAAP adjustments to shareholders' equity attributable to disallowed restructuring provisions were increases of CHF 10 million and CHF 43 million for 2002 and 2000, respectively. There was no adjustment to shareholders' equity for 2001.

Other business risks and Other provisions

Valuation adjustments and provisions for other business risks principally include provisions for miscellaneous operating receivables and technology risks and other provisions consist primarily of litigation reserves. Under Swiss GAAP, these reserves are permitted to be recorded when economically necessary or legally required.

Under US GAAP, probable and estimable costs that can be identified with an event or set of events that have occurred prior to the balance sheet date are accrued.

The US GAAP adjustments to net profit attributable to provisions for other business risks and other provisions were decreases of CHF 9 million, CHF 176 million and CHF 215 million in 2002, 2001 and 2000, respectively. The US GAAP adjustments to shareholders' equity attributable to provisions for other business risks and other provisions were increases of CHF 160 million, CHF 169 million and CHF 326 million in 2002, 2001 and 2000, respectively.

Reserve for general banking risks

In accordance with Swiss banking regulations, a reserve for general banking risks is recorded as a separate component of shareholders' equity. Changes in the equity component must be recorded as an extraordinary item in the income statement or result from a reclassification from valuation adjustments and provisions no longer required.

US GAAP does not allow general unallocated provisions. For purposes of the US GAAP reconciliation, the reserve for general banking risks has been reversed.

The US GAAP adjustments to net profit to reverse the reserve for general banking risks were a decrease of CHF 580 million and an increase of CHF 188 million for 2002 and 2000, respectively. There was no net profit adjustment for 2001. There is no adjustment to shareholders' equity because the reserve for general banking risks is included in shareholders' equity under Swiss GAAP.

f)      Business combinations and disposals

Under Swiss GAAP, the Group capitalizes goodwill and intangible assets and amortizes them over their estimated useful lives on a straight-line basis.

Under US GAAP, all business combinations effected after June 30, 2001 must be accounted for using the purchase method. The associated goodwill and intangible assets with an indefinite life are not amortized but are subject to an annual impairment test and whenever events or circumstances occur that would more likely than not reduce the fair value below the carrying amount.

F-7

The amortization amounts recorded under Swiss GAAP are reversed for the US GAAP reconciliation. For further detail please refer to note 49.5.

Further US GAAP adjustments are the result of: (1) capitalization of goodwill for pre-1997 acquisitions net of accumulated depreciation; (2) differences in the valuation of net assets at the date of acquisition, including certain amounts which are expensed under US GAAP but capitalized under Swiss GAAP and adjustments for items such as retention payments and certain restructuring charges and differences related to share options plans; and (3) differences in the carrying values of assets of discontinued operations and long-lived assets to be disposed of.

The US GAAP adjustments to net profit attributable to the goodwill charged to shareholders' equity prior to January 1997 were an increase of CHF 302 million and decreases of CHF 117 million and CHF 127 million for 2002, 2001 and 2000, respectively. The US GAAP adjustments to shareholders' equity attributable to the goodwill charged to shareholders' equity prior to January 1997 were increases of CHF 1,444 million, CHF 868 million and CHF 990 million for 2002, 2001 and 2000, respectively.

The US GAAP adjustments to net profit attributable to valuation of net assets at the date of acquisition were an increase of CHF 541 million and decreases of CHF 506 million and CHF 160 million for 2002, 2001 and 2000, respectively. The US GAAP adjustments to shareholders' equity attributable to valuation of net assets at the date of acquisition were increases of CHF 214 million, CHF 108 million and CHF 670 million for 2002, 2001 and 2000, respectively.

Specifically, the 2000 adjustments to net profit and shareholders' equity for the DLJ acquisition were a decrease of CHF 168 million and an increase of CHF 924 million, respectively. The adjustments are included in the related amounts above.

The US GAAP adjustment to net profit attributable to differing carrying values of assets of discontinued operations and long-lived assets to be disposed of was a decrease of CHF 162 million for 2002. The related US GAAP adjustment to shareholders' equity was a decrease of CHF 130 million for 2002. There was no impact on net profit or shareholders' equity for 2001 or 2000.

g)    Share-based compensation

Under Swiss GAAP, no expenses are recognized for share option plans upon grant or exercise. For share awards, the intrinsic value of shares granted and for which no future service is required is accrued in the period in which the service is rendered. For shares granted under the requirement to provide future services, the intrinsic value is deferred and recognized over the future service period and at each balance sheet date the accrual is adjusted for the changes in the share price over the reporting period. The accrual is reported within liabilities.

US GAAP permits the recognition of compensation expense based on the estimated fair value or intrinsic value of the equity instruments issued. Recognition based on the intrinsic value requires additional disclosure of pro forma effects on net profit and earnings per share, as if the fair value method had been applied. The Group has chosen to apply the intrinsic value method. For share option plans that have no intrinsic value at the date of grant, no cash settlement features and no

F-8

performance-based vesting requirements, fixed plan accounting is applied and no compensation expense is recognized. Credit Suisse Group has option plans outstanding, primarily related to the years 2000 and before, which have either a cash settlement feature or which are linked to performance-based vesting requirements. For those plans, variable plan accounting is applied until settlement. For share awards, the intrinsic value of shares granted and for which no future service is required is accrued in the period in which the service is rendered. For shares granted under the requirement to provide future services, the intrinsic value at the grant date is deferred and recognized over the future service period. For US GAAP purposes, the Group's obligation to deliver shares in the future is reported in additional paid-in capital.

The US GAAP adjustments to net profit related to share-based compensation were decreases of CHF 66 million and CHF 119 million for 2002 and 2001, respectively, and an increase of CHF 81 million for 2000. The US GAAP adjustments to shareholders' equity related to share-based compensation were increases of CHF 2,238 million, CHF 3,421 million and CHF 3,327 million for 2002, 2001 and 2000, respectively.

The Group has adopted the pro forma disclosure requirement of SFAS No. 123, Accounting for Stock Based Compensation (SFAS 123), which requires companies to measure and disclose pro forma employee share compensation based on the fair value method of accounting. For option plans with a cash settlement feature, the pro forma expense for the period is the change of the intrinsic value in the options outstanding during the period. The pro forma expense for option plans with no cash settlement feature is calculated based on the fair value at the grant date for those options that have vested during the period.

in CHFm, except per share amounts		2002		2001	2000
Expenses for stock-based compensation, net of related tax effect	As reported	1,082		1,573	1,459
	Pro forma1)	1,572		2,134	1,816
Net profit/(loss)	As reported	(3,309	)	1,587	5,785
	Pro forma1)2)	(3,799	)	1,026	5,428
Earnings per share	As reported	(2.78	)	1.33	5.21
	Pro forma1)2)	(3.19	)	0.86	4.89
Earnings per share–diluted	As reported	(2.78	)	1.32	5.19
	Pro forma1)2)	(3.19	)	0.85	4.87

¹⁾

The pro forma net profit/(loss) calculation includes options granted subsequent to the financial year-end as part of the financial year compensation.

²⁾

The above pro forma amounts are not indicative of future reported net profit amounts.

h)    Pension benefits

Most pension plans of the Group are separate legal entities and employees have to pay contributions to a specific pension plan. The Group also makes contributions to the pension plans.

F-9

Under Swiss GAAP, pension expense is equal to the amounts to be contributed by the employer based on the plan statutes. However, certain plans record pension expense based on a specific method of actuarial valuation of projected plan liabilities for accrued service.

Under US GAAP, pension expense and liabilities for defined benefit plans are valued based on specific actuarial assumptions such as future salary increases, expected return on plan assets, employee turnover, mortality, retirement age and administrative expenses of the pension plan. In calculating the current pension benefit obligation, estimated future pension benefits are discounted to the current period. The discount rate was established by examining the rates of return of both high-quality, long-term corporate bonds and long-term government bonds. The methodology for determination of appropriate discount rates has been applied consistently groupwide.

The US GAAP adjustments to net profit attributable to pension benefits were increases of CHF 330 million, CHF 282 million and CHF 201 million for 2002, 2001 and 2000, respectively. The US GAAP adjustments to shareholders' equity attributable to pension benefits were decreases of CHF 155 million, CHF 65 million and CHF 93 million for 2002, 2001 and 2000, respectively.

i)      Taxation

Under Swiss GAAP for the years prior to 2002, generally no deferred tax asset was recognized for net operating loss carry-forwards. For those periods, deferred tax assets on net operating losses were recorded only in the event of management's assessment that their realization in a future period was certain, based on contracts existing at the balance sheet date to sell businesses at a taxable gain.

Pursuant to the change in accounting policy during 2002 as described in note 2, our Swiss GAAP accounting for deferred tax assets on net operating losses is the same as under US GAAP, in that all deferred tax assets on net operating loss carryforwards are recognized, net of an allowance for the estimated unrealizable amount.

The US GAAP adjustments to net profit attributable to the recognition of the tax effect of net operating loss carryforwards were a decrease of CHF 383 million, an increase of CHF 25 million and a decrease of CHF 191 million for 2002, 2001 and 2000, respectively. The US GAAP adjustments to shareholders' equity attributable to the recognition of the tax effect of net operating loss carryforwards were increases of CHF 368 million and CHF 230 million for 2001 and 2000, respectively. There was no adjustment to shareholders' equity for 2002.

An adjustment arises from the aggregate differences between Swiss GAAP and US GAAP that will result in taxable or deductible amounts in future years (temporary differences).

The related US GAAP adjustments to net profit for such temporary differences were an increase of CHF 157 million and decreases of CHF 169 million and CHF 109 million for 2002, 2001 and 2000, respectively. The US GAAP adjustments to shareholders' equity related to such temporary differences were increases of CHF 481 million and CHF 104 million and a decrease of CHF 115 million for 2002, 2001 and 2000, respectively.

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j)      Loans

Loan fees and costs

Under Swiss GAAP, loan origination fee income is deferred but direct loan origination costs are normally expensed.

Under US GAAP, certain qualifying direct loan origination costs must be deferred and amortized over the life of the loan using the effective interest method.

Loan impairment

Under Swiss GAAP, provisions for impaired loans are recorded based on either the fair value of the underlying collateral or, if the loans are not collateralized, the undiscounted future cash flows.

For certain non-collateral dependent impaired loans, US GAAP requires measurement of impairment using the present value of future cash flows.

The Group has estimated that the difference to net profit or shareholders' equity between impaired loan valuation recognized for Swiss GAAP and impaired loan valuation that would have been recognized for US GAAP is not material.

k)    Leasing

For Swiss GAAP purposes, the Group, as lessor, classifies lease contracts as financial leases and records a leasing receivable based on the leased asset's underlying value at lease inception. This balance is amortized over the life of the lease using the interest method.

For US GAAP purposes, certain of these lease contracts are classified as operating leases. The underlying leased asset is recorded as a fixed asset and depreciated on a straight line basis over its useful life. This adjustment relates to the difference between the interest amortization of the lease receivable under Swiss GAAP and the straight-line depreciation of leased assets under US GAAP.

l)      Derivatives

Under Swiss GAAP, trading derivatives are recorded on the balance sheet at fair value as positive and negative replacement values. Changes in fair value are reported in earnings unless the derivative is designated and qualifies as a hedge. Gains and losses on hedging derivative instruments are recognized in income on the same basis as the underlying item being hedged. There is no requirement for an external transaction to lay off all risks associated with intercompany hedges on a one-to-one basis.

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48.1    Valuation and income recognition differences between Swiss and US accounting principles (continued)

Under US GAAP, prior to January 1, 2001 derivatives are reported on the balance sheet at fair value, which is the same as replacement value. Changes in fair value are recorded in income unless specific criteria are met to obtain hedge accounting treatment. The criteria to obtain hedge accounting are different than what is required for Swiss GAAP. If the criteria are met, US GAAP permits off-balance sheet or amortized cost tretament of certain hedging instruments. For intercompany hedging, US GAAP requires there to be a one-to-one link between the internal transaction and a transaction with an external third-party for hedge accounting to take place. If this is not evident, then the internal derivative is eliminated upon consolidation.

Effective January 1, 2001 the Group adopted SFAS No. 133, Accounting for Derivative Instruments and Hedging Activities (SFAS 133), and SFAS No. 138, Accounting for Certain Derivative Instruments and Certain Hedging Activities—an amendment of SFAS No. 133. Under SFAS 133, all derivatives are required to be recognized as assets or liabilities in the consolidated balance sheet at fair value. Under US GAAP the recognition of the changes in the fair value depends upon the intended use and designation of the derivative. If the derivative instrument is not a hedge, then changes in fair value are recognized in earnings. If a derivative qualifies as a hedge, depending on the nature of the hedge, changes in fair value of the derivative will either be offset against the change in fair value of the hedged asset, liability, or firm commitment through earnings or recognized in other comprehensive income. The cumulative effect of the change in accounting for derivatives resulted in a decrease to net profit of CHF 123 million for 2001. For further information, please refer to note 49.17.

The US GAAP adjustments to net profit attributable to derivatives were increases of CHF 34 million, CHF 1,072 million and CHF 12 million for 2002, 2001 and 2000, respectively. The US GAAP adjustments to shareholders' equity attributable to derivatives were increases of CHF 172 million and CHF 33 million for 2002 and 2001, respectively, and a decrease of CHF 718 million for 2000.

m)    Own shares and own bonds

Own shares

Under Swiss GAAP, own shares classified in the securities trading portfolio or as financial investments are carried at fair value and LOCOM, respectively. Derivatives on own shares are carried at fair value and are reported as positive and negative replacement values in Other assets and Other liabilities, respectively. Gains and losses on sales and dividends received are recorded in net profit. Changes in market value of own shares held in the trading portfolio are recorded in net profit. Changes in market value of own shares held in the insurance business are reported in shareholders' equity. Changes in market value of own shares held as financial investments from the banking business, up to cost, are recorded in net profit.

Under US GAAP, own shares are recorded at cost and reported as treasury shares, resulting in a reduction to total shareholders' equity. Derivatives on own shares are classified as assets, liabilities or in shareholders' equity depending on the manner of settlement. Dividends received on own shares and unrealized and realized gains and losses on own shares and derivatives on own shares classified in shareholders' equity are excluded from net profit.

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The US GAAP adjustments to net profit for own shares were an increase of CHF 331 million for 2002 and decreases of CHF 310 million and CHF 52 million for 2001 and 2000, respectively. The US GAAP adjustments to shareholders' equity related to own shares were decreases of CHF 3,081 million, CHF 5,165 million and CHF 6,619 million for 2002, 2001 and 2000, respectively.

Own bonds

Under Swiss GAAP, the Group's own bonds classified in the securities trading portfolio are recorded at fair value with changes in fair value recorded in net profit. Changes in market value of own bonds held in the insurance business are reported in shareholders' equity.

Under US GAAP, the purchase of own bonds is treated as a reduction of the debt outstanding. Any difference between the cost of repurchase and the carrying value of the liability is treated as an extraordinary gain or loss during the period. Any gain or loss on resale is treated as a premium or discount and amortized over the remaining term.

The Group has estimated that the differences between own bond transactions recognized under Swiss GAAP and own bond transactions that would have been recognized under US GAAP are not material to net profit or shareholders' equity.

n)    Foreign currency

Accounting for foreign currency is similar under Swiss GAAP and US GAAP. Specifically, each Group entity must choose and document a functional currency in which its financial statements will be prepared. Individual transactions denominated in currencies other than the functional currency are considered foreign currency transactions and result in gains and/or losses recognized in earnings. Foreign currency gains and losses related to trading activity are included in trading income. Foreign currency translation adjustments resulting from consolidation of financial statements with functional currencies different than the Group's reporting currency are recorded in equity.

For Swiss GAAP, the determination of the functional currency is generally the same as under US GAAP. Under Swiss GAAP, the local currency is normally assumed to be the functional currency. US GAAP has stricter guidelines and the determination of the functional currency is made based on evaluation of the primary economic environment in which the entity operates using specific salient economic indicators. This difference results in certain Group affiliates having different functional currencies for US GAAP than for Swiss GAAP and, consequently, different amounts of foreign currency gains and losses reported in the Group's consolidated net profit.

o)    Capitalization of software

Under Swiss GAAP, certain costs related to the acquisition and development of internal use computer software have been expensed as incurred for the banking business. Beginning January 1, 2002, such costs are capitalized and depreciated over the estimated useful life of the software. This treatment is in line with the treatment under US GAAP.

The US GAAP adjustments to net profit attributable to capitalization of software were a decrease of CHF 244 million for 2002 and increases of CHF 296 million and CHF 269 million for 2001 and 2000, respectively. The US GAAP adjustments to shareholders' equity attributable to capitalization

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of software were increases of CHF 457 million, CHF 700 million and CHF 402 million for 2002, 2001 and 2000, respectively.

p)    Mandatory convertible securities

Under Swiss GAAP, the Mandatory Convertible Securities (MCS), issued by the Group thorugh its wholly owned subsidiary, Credit Suisse Finance (Guernsey) Ltd. on December 23, 2002 are disclosed in the line item Capital Reserves. For US GAAP the MCS are classified as Long-term debt. The MCS have fixed and variable coupons. Under Swiss GAAP, the fixed coupon amount is accrued through the line item Other operating expense and the variable coupon amount is disclosed as a movement in shareholders' equity. For US GAAP, both the fixed and variable coupon amounts are recorded as Interest expense.

There were no material adjustments to net profit attributable to the mandatory convertible securities in 2002. The US GAAP adjustment to shareholders' equity attributable to the mandatory convertible securities was a decrease of CHF 1,238 million in 2002.

q)    Winterthur purchase accounting

Under Swiss GAAP, the Group accounted for the merger of Credit Suisse Group and "Winterthur" Swiss Insurance Company using the pooling of interests method. The balance sheets and income statements of the companies were combined and no adjustments to carrying values of the assets and liabilities were made.

Under US GAAP, the business combination is accounted for under the purchase method of accounting with Credit Suisse Group as the acquirer. Under the purchase method, the acquirer reports the assets and liabilities of the acquired company at fair market value on the date of acquisition. Any excess of the fair market value of the consideration given over the fair market value of the net tangible assets acquired is allocated first to identifiable intangible assets based on their fair value, if determinable, with the remainder allocated to goodwill.

The following table details adjustments to shareholders' equity and net profit attributable to purchase accounting as described below:

in CHF m		Shareholders' equity 31.12.02		Shareholders' equity 31.12.01		Shareholders' equity 31.12.00		Net profit 2002		Net profit 2001		Net profit 2000
Investments		2,203		2,713		3,158		(928	)	(2,558	)	(1,747	)
Life insurance
	Deferred policy acquisition costs	(1,380	)	(1,627	)	(1,679	)	217		37		215
	Present value of future profits	2,191		2,556		2,806		(333	)	(225	)	(174	)
	Technical provisions	(884	)	(781	)	(1,153	)	(98	)	360		273
Goodwill		3,452		3,681		4,069		(228	)	(388	)	(239	)
Retirement benefits		159		164		102		26		29		11
Taxation		(605	)	(867	)	(926	)	386		632		389
Other		0		0		0		0		21		0
Total purchase accounting adjustments		5,136		5,839		6,377		(958	)	(2,092	)	(1,272	)

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Investments

Under purchase accounting, investments are restated to fair value at the date of acquisition. The unrealized gains and losses on available-for-sale securities existing before the date of acquisition are reclassified in shareholders' equity from net unrealized gains to retained earnings. The fair value at the date of acquisition becomes the new cost basis for the investments and the realized gains and losses on disposal of investments, depreciation on real estate and the unrealized gains and losses on available-for-sale securities are adjusted for the new cost basis.

Life insurance

Deferred policy acquisition costs

Under purchase accounting, the deferred policy acquisition costs for life insurance existing at the date of acquisition are eliminated.

Present value of future profits

The Present value of future profits (PVFP) is the present value of anticipated profits embedded in the life and health insurance in force at the date of the merger with "Winterthur" Swiss Insurance Company. Interest accrues on the unamortized PVFP based upon the policy liability rate or contract rate. The PVFP asset is amortized over the years that such profits are anticipated to be received in proportion to the estimated gross margins or estimated gross profits for participating traditional life products and non-traditional life products, respectively, and over the premium paying period in proportion to premiums for other traditional life products.

Any PVFP from previous acquisitions by Winterthur existing at the date of acquisition is eliminated.

Technical provisions

Under purchase accounting, life insurance technical provisions are revalued at the date of acquisition, using current assumptions at such date.

Goodwill

The excess of the CHF 14,600 million consideration paid for "Winterthur" Swiss Insurance Company over the fair value of the net tangible assets of Winterthur received has been recorded as goodwill which is under US GAAP subject to an annual impairment test and whenever events or circumstances occur that would more likely than not reduce the fair value below the carrying amount.

Retirement benefits

Under purchase accounting, the projected benefit obligation and fair value of plan assets are remeasured at the date of acquisition.

Taxation

This adjustment represents the tax effect of the purchase accounting adjustments that result in temporary differences.

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48.2a    Reconciliation of Swiss GAAP and US GAAP net profit

in CHF m	References are to note 48.1	2002		2001		2000
Swiss GAAP net profit before minority interests		(3,326	)	1,814		6,022
Swiss GAAP minority interests		17		(227	)	(237	)
Swiss GAAP net profit		(3,309	)	1,587		5,785
Adjustments in respect of
Debt and equity securities	a)	(211	)	(216	)	(41	)
Consolidation	b)	(43	)	(149	)	73
Transfer of financial assets	c)	(278	)	(74	)	100
Real estate	d)	(9	)	21		10
General provisions	e)	(578	)	(201	)	(102	)
Business combinations and disposals	f)	681		(623	)	(287	)
Share-based compensation	g)	(66	)	(119	)	81
Pension plans	h)	330		282		201
Taxation	i)	(226	)	(144	)	(300	)
Loans	j)	(79	)	14		14
Leasing	k)	35		(25	)	(9	)
Derivatives	l)	34		1,072		12
Own shares and own bonds	m)	331		(310	)	(52	)
Foreign currency	n)	(90	)	(6	)	5
Capitalization of software	o)	(244	)	296		269
Mandatory convertible securities	p)	0		—		—
Winterthur purchase accounting	q)	(958	)	(2,092	)	(1,272	)
Total adjustments		(1,371	)	(2,274	)	(1,298	)
US GAAP net (loss)/profit		(4,680	)	(687	)	4,487
US GAAP minority interests		61		(241	)	(317	)
US GAAP net (loss)/profit before minority interests		(4,741	)	(446	)	4,804

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48.2b    Reconciliation of Swiss GAAP and US GAAP shareholders' equity

in CHF m	References are to note 48.1	31.12.02		31.12.01		31.12.00
Swiss GAAP shareholders' equity before minority interests		31,395		38,921		43,522
Swiss GAAP minority interests		(2,878	)	(3,121	)	(2,571	)
Swiss GAAP shareholders' equity		28,517		35,800		40,951
Adjustments in respect of
Debt and equity securities	a)	321		2,478		3,793
Consolidation	b)	(54	)	20		67
Transfer of financial assets	c)	(272	)	(29	)	43
Real estate	d)	(8	)	1		(21	)
General provisions	e)	170		169		369
Business combinations and disposals	f)	1,528		976		1,660
Share-based compensation	g)	2,238		3,421		3,327
Pension plans	h)	(155	)	(65	)	(93	)
Taxation	i)	481		472		115
Loans	j)	193		274		260
Leasing	k)	7		(28	)	(3	)
Derivatives	l)	172		33		(718	)
Own shares and own bonds	m)	(3,081	)	(5,165	)	(6,619	)
Foreign currency	n)	0		0		(4	)
Capitalization of software	o)	457		700		402
Mandatory convertible securities	p)	(1,238	)	—		—
Winterthur purchase accounting	q)	5,136		5,839		6,377
Total adjustments		5,895		9,096		8,955
US GAAP shareholders' equity		34,412		44,896		49,906
US GAAP minority interests		(2,881	)	(3,155	)	(3,926	)
US GAAP shareholders' equity before minority interests		37,293		48,051		53,832

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48.3    Presentation differences between Swiss and US accounting principles

In addition to differences related to valuation and income recognition principles, financial statement presentation differences exist between Swiss GAAP and US GAAP. Although these differences do not result in adjustments between Swiss GAAP and US GAAP reported net profit and shareholders' equity, it may be useful to understand these differences to interpret the condensed consolidated income statement and condensed consolidated balance sheet in accordance with US GAAP at notes 48.3a and 48.3b. The following is a summary of these differences.

Offsetting policies

Under Swiss GAAP, in the insurance business assets and liabilities are offset when the Group has a legal right to offset amounts with the same counterparty and the transaction is expected to settle net. Additionally, insurance technical provisions are presented net of reinsurance. In the banking segments assets and liabilities are offset when all of the following conditions are met:

•

receivables and payables arise from transactions of a similar nature;

•

with the same counterparty;

•

with the same or earlier maturity;

•

in the same currency; and

•

which cannot lead to counterparty risk.

Positive and negative replacement values are offset with the same counterparty insofar as bilateral agreements exist that are recognized and legally enforceable.

Under US GAAP, offsetting of assets and liabilities in the balance sheet is improper except where a right of set-off exists. A right of set-off exists when all of the following criteria are met:

•

each of the two parties owes the other determinable amounts;

•

the reporting party has the right to set-off the amount owed by the other party;

•

the reporting party intends to set-off; and

•

the right of set-off is enforceable by law.

Presentation differences exist between Swiss GAAP and US GAAP related to offsetting of assets and liabilities of certain repurchase and reverse repurchase transactions and certain securities lending and borrowing transactions that did not meet the US GAAP criteria. These are illustrated in note 48.3b to the "Condensed consolidated balance sheet."

The gross up of insurance balances for US GAAP is described in the presentation differences below and is reflected in note 48.3b to the "Condensed consolidated balance sheet."

Income statement presentation differences

a.

Net interest income in the Swiss GAAP income statement has been presented in the US GAAP and Swiss GAAP reformatted income statements based on the respective products' interest income and expense line items.

b.

Net commission and service fee income in the Swiss GAAP income statement is presented in the US GAAP and Swiss GAAP reformatted income statements gross of related expense in the

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line item Commissions and fees. Commission expenses are presented in the US GAAP and Swiss GAAP reformatted income statements in the line item Other expenses.

c.

In the Swiss GAAP income statement, Net trading income includes realized and unrealized gains and losses on trading securities, trading income, foreign exchange, interest and dividends from trading securities and other trading income.

In the US GAAP and Swiss GAAP reformatted income statements, income on securities lending and borrowing of securities classified as trading is included in Commission and fees. All foreign exchange related income is included in Other revenue. Interest and dividends from trading securities are presented in the line item Interest income. All other components of net trading income are included in Trading revenue.

Net income from the insurance business in the Swiss GAAP income statement is presented in the US GAAP and Swiss GAAP reformatted income statements as follows:

Premiums earned, net (which includes premiums for non-traditional products which are recognized when due) are presented in the line item Insurance premiums, except for premiums from separate account business and premiums for non-traditional products which are not reported as insurance premiums but are included in the provisions for policyholder benefits. Revenue from these products represent amounts assessed against the policyholder and are presented in the line item Other revenue.

Claims incurred and actuarial provisions are presented in the line item Policyholder benefits and claims, except for dividends to policyholders, which are presented in the line item Dividends to policyholders and claims associated with separate account business, which are presented in the line item Other expenses.

Commission expenses, net are reclassified to Insurance underwriting and acquisition expenses, except for premium taxes, which are presented in the line item Insurance premiums.

Investment income from the insurance business is presented primarily in two line items, Interest income and Realised gains/(losses) from sales of investments, net. In addition, investment income from separate account business is reclassified to Other revenue and investment and asset management expenses are reclassified to Other expenses.

d.

In the Swiss GAAP income statement, Other ordinary income/(expenses), net includes unrealized gains and losses from investments from the banking business.

In the US GAAP and Swiss GAAP reformatted income statements, such unrealized gains and losses from financial investments are included in Other comprehensive income, a separate component of shareholders' equity. The remaining components of Other ordinary income/(expenses), net are presented in the line items Other revenue or Other expenses.

e.

Amortization of PVFP, which is recorded in Depreciation of non-current assets in the Swiss GAAP income statement, is presented in the line item Insurance underwriting and acquisition expenses in the US GAAP and Swiss GAAP reformatted income statements.

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f.

Valuation adjustments, provisions and losses from the banking business in the Swiss GAAP income statement are presented in the US GAAP and Swiss GAAP reformatted income statements in the line item Provision for credit losses. All other provisions and write-downs are presented in the US GAAP and Swiss GAAP reformatted income statements in the line item Other expenses.

g.

In the Swiss GAAP income statement, Extraordinary income and Extraordinary expenses include realized gains and losses on sales of participations and tangible fixed assets, recoveries of charge-off loans, allocation of contingency reserves, personnel and consulting costs related to restructurings, IT systems and other extraordinary income and expenses.

In the US GAAP and Swiss GAAP reformatted income statements, those gains and losses associated with extraordinary events are presented, net of income taxes, in the line item Extraordinary income/(expenses), net. Recoveries of charge-off loans are presented in the line item Provision for credit losses. Personnel costs, IT systems, and expenses for consultants related to restructuring projects are presented under the caption Restructuring charges. All other components are presented in either Other revenue or Other expenses.

h.

In the US GAAP and Swiss GAAP reformatted income statements, the results of operations of components which are held for sale are excluded from continuing operations and reported in the separate consolidated income statement line item Discontinued operations, net.

Balance sheet presentation differences

i.

The line item Cash and other liquid assets in the Swiss GAAP balance sheet includes cash, bank notes and certain interest bearing and non-interest bearing accounts. The line item Money market papers includes non-trading bankers' acceptances and commercial papers with original maturities of greater than 90 days, certain trading instruments, non-trading certificates of deposit, cash instruments and money market instruments with an original maturity less than 90 days. The amount is shown net of the respective specific allowances.

In the US GAAP and Swiss GAAP reformatted balance sheets, cash, bank notes, non-interest bearing accounts, cash instruments and money market instruments with original maturities less than 90 days are presented in the line item Cash and cash equivalents. Interest bearing accounts and non-trading time deposits are presented in the line item Interest-bearing deposits with banks. Non-trading bankers' acceptances and commercial papers with original maturities greater than 90 days are presented in the line items Investment securities. Trading instruments are presented in the line item Trading account assets. Specific allowances for money market claims are presented in line items consistent with the related assets.

j.

The line item Due from banks in the Swiss GAAP balance sheet includes demand and time accounts, precious metals demand and time accounts, federal funds sold, securities purchased under resale agreements and securities borrowing accounts. The amount is shown net of the respective specific allowances.

In the US GAAP and Swiss GAAP reformatted balance sheets, precious metals demand accounts and certain demand accounts are presented in the line item Cash and cash

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equivalents. Other demand accounts, precious metals time accounts and all other time accounts with an original maturity less than one year are presented in the line item Interest-bearing deposits with banks. Demand accounts, time accounts and precious metals time accounts related to certain brokerage transactions are presented in the line item Brokerage receivables. Securities lending, certain securities borrowing accounts and certain time accounts are presented in the line item Trading account assets. Reverse repurchases, certain securities borrowing and federal funds sold accounts are presented in the line item Federal funds sold, securities purchased under resale agreements, and securities borrowing transactions. Precious metals time accounts and all other time accounts with an original maturity greater than one year are presented in the line item Loans, net of allowance for credit losses. Specific allowances for due from banks are presented in line items consistent with the related assets.

k.

The line item Receivables from the insurance business in the Swiss GAAP balance sheet includes premiums and other receivables from agents and policyholders, policy loans and other miscellaneous receivables.

In the US GAAP and Swiss GAAP reformatted balance sheets, premiums and other receivables from agents and policyholders are presented in the line item Premiums and insurance balances receivable, net. Policy loans and miscellaneous receivables are presented in the line item Other assets.

l.

The line item Due from customers in the Swiss GAAP balance sheet includes precious metals demand and time accounts, demand and time accounts, reverse repurchase, securities lending, securities borrowing and lease financing accounts. The amount is shown net of the respective specific allowances.

In the US GAAP and Swiss GAAP reformatted balance sheets, precious metals demand accounts are presented in the line item Cash and cash equivalents. Demand and time accounts and precious metals time accounts related to brokerage transactions are presented in the line item Brokerage receivables. Securities lending, certain securities borrowing accounts and certain time accounts are presented in the line item Trading account assets. Precious metals time accounts and time accounts are presented in the line item Other assets. Securities purchased under resale agreements and certain securities borrowing accounts are presented in the line item Federal funds sold, securities purchased under resale agreements and securities borrowing transactions. Demand accounts, precious metals time accounts and time accounts not held for sale and lease financing accounts are presented in the line item Loans, net of allowance for credit losses. Specific allowances for due from customers' accounts are presented in line items consistent with the related assets.

m.

The line item Mortgages in the Swiss GAAP balance sheet includes mortgages and real estate related lease financings. The amount is shown net of the respective specific allowances.

In the US GAAP and Swiss GAAP reformatted balance sheets, mortgages and real estate related lease financings are included in the line item Other assets or the line item Loans, net of allowance for credit losses, depending on management's intent. Certain mortgages are presented in the line item Trading account assets.

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n.

The line item Securities and precious metals trading portfolios in the Swiss GAAP balance sheet includes certain trading securities and precious metal physical stocks.

In the US GAAP and Swiss GAAP reformatted balance sheets, these accounts are presented in the line item Trading account assets.

o.

The line item Financial investments from the banking business in the Swiss GAAP balance sheet includes equity securities, investments in venture capital, debt securities, money market papers, real estate and repossessed assets. Investments from the insurance business in the Swiss GAAP balance sheet includes equity securities, debt securities, derivative instruments, real estate held for investment, real estate held for sale, loans, mortgages, money market investments and investments held for separate accounts.

In the US GAAP and Swiss GAAP reformatted balance sheets, equity securities and debt securities classified as available for sale, interest rate instruments classified as held-to-maturity and investments in venture capital are presented in the line item Investment securities. Derivative instruments are classified as Trading account assets and Trading account liabilities. Real estate held for sale is presented in the line item Other assets and real estate investments are presented in the line item Real estate held for investment. Other repossessed assets are presented in the line item Other assets. Investments held for separate accounts are presented in the line item Assets held for separate accounts. Money market investments and loans and mortgages of the insurance business are presented in the line items Interest-bearing deposits with banks and Other assets, respectively.

p.

The line item Money market papers issued in the Swiss GAAP balance sheet includes certificates of deposit, commercial papers and bankers' acceptances. In the US GAAP and Swiss GAAP reformatted balance sheets, certificates of deposit are presented in the line item Deposits. Commercial papers are presented in the line item Short-term borrowings. Bankers' acceptances are presented in the line item Other liabilities.

q.

The line items Due to banks and Due to customers, other in the Swiss GAAP balance sheet include demand deposits, time deposits, precious metals demand and time deposits, fiduciary deposits, liabilities from short positions, mortgages on own real estate, federal funds purchased, securities lending, repurchase agreements and lease finance accounts.

In the US GAAP and Swiss GAAP reformatted balance sheets, precious metals demand and time deposits, demand deposits, fiduciary deposits and certain time deposits are presented in the line item Deposits. Certain time deposits with an original maturity less than one year are presented in the line item Short-term borrowings. Certain time deposits with an original maturity greater than one year are presented in the line item Long-term debt. Due to banks and Due to customers, other accounts related to certain brokerage transactions are presented in the line item Brokerage payables. Time deposits, interest bearing precious metals time deposits and interest bearing demand and time deposits used to finance investment banking or brokerage activities are presented in the line item Short term borrowings. Liabilities from short positions and obligations to return collateral that has been resold are presented in the line item Trading account liabilities. Mortgages on own real estate and certain interest bearing time deposits are

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presented in the line item Long-term debt. Securities lending, repurchase agreements and Federal funds purchased are included in the line item Federal funds purchased, securities sold under repurchase agreements and securities lending transactions. Lease liabilities are presented in the line item Other liabilities.

r.

The line item Due to customers in savings and investment deposits in the Swiss GAAP balance sheet is presented in the line item Deposits in the US GAAP and Swiss GAAP reformatted balance sheets.

s.

The line item Technical provisions for the insurance business in the Swiss GAAP balance sheet includes provisions for future policyholder benefits, provisions for future dividends to policyholders, bonuses held on deposits, actuarial provisions for annuities provisions for death and other benefits, provisions for unearned premiums, loss and loss adjustment expense reserves, net of reinsurance reserves and policyholder funds.

In the US GAAP and Swiss GAAP reformatted balance sheets, provisions for future policyholder benefits, actuarial provisions for annuities, provisions for death and other benefits and loss and loss adjustment expense reserves are presented gross of reinsurance reserves in the line item Insurance policy and claims reserves. Reinsurance reserves are presented separately on the balance sheet in Reinsurance recoverables. The provision for future dividends to policyholders, provision for unearned premiums and policyholder funds are presented in separate line items. Bonuses held on deposit are included in the line item Policyholder funds.

t.

In the US GAAP and Swiss GAAP reformatted balance sheets, the Swiss GAAP balance sheet line items Reserve for general banking risks and Reserve for own shares are included in the line item Retained earnings.

u.

In the US GAAP and Swiss GAAP reformatted balance sheets, assets and liabilities of discontinued operations as of December 31, 2002 are reported gross in the line items Discontinued operations — assets and Discontinued operations — liabilities, respectively.

v.

Under Swiss GAAP, the Mandatory Convertible Securities (MCS) are included within the line item Capital Reserves. For US GAAP, however, the MCS is classified in the line item Long-term debt. For additional information, please refer to note 48.1a.

F-23

48.3a    Condensed consolidated statements of income

The following are condensed consolidated statements of income for the years ended December 31, 2002, 2001 and 2000. In the following table US GAAP amounts reflect adjustments for the valuation and income recognition differences as described in note 48.2 and the presentation differences described in note 48.3. Swiss GAAP has been reformatted to reflect US GAAP presentation differences.

in CHF m	US GAAP 2002		US GAAP 2001		US GAAP 2000		Swiss GAAP reformatted 2002		Swiss GAAP reformatted 2001		Swiss GAAP reformatted 2000
Interest income	30,653		44,124		41,762		31,176		46,647		43,303
Commissions and fees	15,349		18,378		17,430		16,433		19,496		17,563
Trading revenue	257		8,618		9,334		959		8,160		8,976
Realised gains/(losses) from sales of investments, net	(3,827	)	(1,777	)	3,005		(3,450	)	799		4,262
Insurance premiums	29,342		27,947		24,872		29,502		28,170		25,078
Other revenue	2,540		4,947		3,253		2,872		3,130		1,879
Total revenue	74,314		102,237		99,656		77,492		106,402		101,061
Interest expense	20,153		35,734		33,601		20,302		35,915		33,676
Revenue, net of interest expense	54,161		66,503		66,055		57,190		70,487		67,385
Provision for credit losses	2,820		1,569		1,041		2,878		1,717		910
Policyholder benefits and claims	25,941		24,923		22,253		26,192		25,202		22,257
Total provisions for benefits, claims and credit losses	28,761		26,492		23,294		29,070		26,919		23,167
Insurance underwriting and acquisition expenses	4,378		4,181		3,600		4,296		4,041		3,687
Dividends to policyholders	(1,508	)	492		2,087		(1,718	)	733		2,473
Salaries and employee benefits	15,528		20,976		18,814		16,784		21,821		18,503
Premises and equipment expenses, net	3,615		3,942		3,151		3,808		3,993		3,055
Restructuring charges	17		33		607		17		26		1,499
Other expenses	7,916		10,963		8,251		8,301		10,750		7,718
Total operating expenses	29,946		40,587		36,510		31,488		41,364		36,935
(Loss)/profit from continuing operations before taxes, extraordinary items and minority interests	(4,546	)	(576	)	6,251		(3,368	)	2,204		7,283
Income taxes	(376	)	(109	)	1,469		495		389		1,261
(Loss)/profit from continuing operations before extraordinary items and minority interests	(4,170	)	(467	)	4,782		(3,863	)	1,815		6,022
Minority interests	(61	)	241		317		(17	)	227		237
(Loss)/profit from continuing operations before extraordinary items	(4,109	)	(708	)	4,465		(3,846	)	1,588		5,785
(Loss)/profit from discontinued operations, net of tax benefit/(expense) of CHF (235) m, CHF 35 m and CHF (26) m for 2002, 2001 and 2000, respectively.	(648	)	(101	)	(10	)	0		0		0
(Loss)/profit before extraordinary items and cumulative change in accounting principles	(4,757	)	(809	)	4,455		(3,846	)	1,588		5,785
Extraordinary income/(expenses), net	17		(1	)	31		17		(1	)	0
Cumulative effect of changes in accounting principles	60		123		1		520	2)	0		0
Net (loss)/profit	(4,680	)	(687	)	4,487		(3,309	)	1,587		5,785

Certain reclassifications have been made to prior-year amounts to conform to the current presentation.

1)

Relates to the adoption of SFAS 141 Business Combinations. See note 49.4.

2)

Relates to a change in the accounting for deferred tax assets. See note 2.

F-24

48.3b    Condensed consolidated balance sheets

The following are condensed consolidated balance sheets of the Group, at December 31, 2002 and 2001. In the following table US GAAP amounts reflect adjustments for the valuation and income recognition differences as described in note 48.2 and the presentation differences described in note 48.3. Swiss GAAP has been reformatted to reflect US GAAP presentation differences.

in CHF m	US GAAP 31.12.02	US GAAP 31.12.01	Swiss GAAP reformatted 31.12.02	Swiss GAAP reformatted 31.12.01
Assets
Cash and cash equivalents	15,547	9,524	17,207	9,361
Interest-bearing deposits with banks	24,757	30,462	30,617	28,176
Brokerage receivables	16,551	37,427	29,837	35,601
Investment securities (whereof encumbered CHF 992 m and CHF 587 m for 2002 and 2001) 1)	115,947	130,804	116,393	130,599
Trading account assets (whereof encumbered CHF 96,427 m and CHF 131,082 m for 2002 and 2001)	271,307	311,789	243,669	281,879
Real estate held for investment	10,408	11,096	8,117	8,639
Federal funds sold, securities purchased under resale agreements, and securities borrowing transactions	267,634	298,810	227,913	230,604
Loans, net of allowance for credit losses 2)	167,538	165,651	174,261	169,998
Tangible fixed assets	7,974	10,133	7,845	9,027
Premiums and insurance balances receivable, net	9,081	8,024	9,139	8,021
Reinsurance recoverables	3,389	4,509	3,395	4,509
Goodwill	16,664	17,997	11,035	13,664
Present value of future profits	3,781	4,749	1,966	2,335
Deferred policy acquisition costs	5,336	4,237	6,498	5,662
Other assets (whereof encumbered CHF 5,594 m and CHF 9,963 m for 2002 and 2001)	58,892	75,241	59,482	68,691
Assets held for separate accounts	13,377	14,519	13,395	14,519
Discontinued operations — assets	19,046	0	0	0
Total assets	1,027,229	1,134,972	960,769	1,021,285

¹⁾

Including venture capital of CHF 10,681 m and CHF 13,985 m for US GAAP in 2002 and 2001, respectively, and CHF 11,034 m and CHF 14,457 m for Swiss GAAP reformatted for 2002 and 2001, respectively.

²⁾

Net of allowance for credit losses of CHF 7,308 m and CHF 9,245 m for US GAAP in 2002 and 2001, respectively and CHF 7,504 m and CHF 9,234 m for Swiss GAAP reformatted in 2002 and 2001, respectively.

F-25

in CHF m	US GAAP 31.12.02		US GAAP 31.12.01		Swiss GAAP reformatted 31.12.02		Swiss GAAP reformatted 31.12.01
Liabilities and shareholders' equity
Deposits	245,265		267,813		255,538		269,076
Short-term borrowings	16,692		22,148		18,329		27,397
Brokerage payables	20,580		46,889		37,448		38,073
Trading account liabilities	144,584		161,997		135,994		154,100
Insurance policy and claims reserves	102,353		100,946		102,431		100,555
Provision for dividends to policyholders	3,575		5,917		3,076		5,782
Provision for unearned premiums	7,358		6,914		7,435		6,914
Policyholder funds	13,673		15,028		14,013		15,021
Federal funds purchased, securities sold under repurchase agreements, and securities lending transactions	251,637		276,621		205,060		209,019
Other liabilities	53,814		67,675		44,151		52,215
Long-term debt	100,454		99,875		92,378		89,114
Liabilities held for separate accounts	13,503		15,098		13,521		15,098
Discontinued operations — liabilities	16,448		0		0		0
Total liabilities	989,936		1,086,921		929,374		982,364
Minority interests	2,881		3,155		2,878		3,121
Common shares	1,190		3,590		1,190		3,590
Additional paid in capital	23,981		25,490		21,113		19,886
Common shares in treasury, at cost	(3,879	)	(5,602	)	0		0
Retained earnings	18,601		19,612		9,788		9,198
Accumulated other comprehensive income	(801	)	2,493		(265	)	1,539
Net income after minority interests	(4,680	)	(687	)	(3,309	)	1,587
Total shareholders' equity	34,412		44,896		28,517		35,800
Total liabilities and shareholders' equity	1,027,229		1,134,972		960,769		1,021,285

Certain reclassifications have been made to prior-year amounts to conform to the current presentation.

F-26

49    Additional disclosures required under US GAAP

The following disclosures within note 49 are required under US GAAP and unless otherwise noted support the Swiss GAAP consolidated financial statements and are presented on a Swiss GAAP basis.

49.1    Earnings per share

		2002		2001		2000
Net profit/(loss) available for common shares (in CHF m)
Swiss GAAP – basic		(3,309	)	1,587		5,785
Interest on convertible debt		—		1		4
Swiss GAAP – diluted		(3,309	)	1,588		5,789
US GAAP – basic		(4,680	)	(687	)	4,487
Interest on convertible debt		—		—		4
US GAAP – diluted		(4,680	)	(687	)	4,491
Weighted-average number of shares outstanding
Swiss GAAP – basic		1,190,206,207		1,194,090,788		1,111,100,088
Potential dilutive common shares
	Contingent issuable shares	—		69,028		139,084
Incremental shares from assumed conversions
	Convertible bonds	—		770,152		2,064,896
	Mandatory convertible securities	—		—		—
	Share options	—		8,517,586		2,387,608
Potential dilutive common shares		—		9,356,766		4,591,588
Swiss GAAP – diluted		1,190,206,207		1,203,447,554		1,115,691,676
US GAAP – basic 1)		1,154,529,909		1,134,355,261		1,051,796,048
Potential dilutive common shares
	Contingent issuable shares	—		—		34,957,620
Incremental shares from assumed conversions
	Convertible bonds	—		—		2,064,896
	Mandatory convertible securities	—		—		—
	Share options	—		—		1,704,012
Potential dilutive common shares		—		—		38,726,528
US GAAP – diluted		1,154,529,909		1,134,355,261		1,090,522,576
Earnings per share (in CHF)
Swiss GAAP basic
Earnings before extraordinary items		(3.50	)	1.52		6.73
Cumulative effect change in accounting principles		0.44		—		—
Extraordinary items		0.28		(0.19	)	(1.52	)
Net earnings per share		(2.78	)	1.33		5.21
Swiss GAAP diluted
Earnings before extraordinary items		(3.50	)	1.51		6.70
Cumulative effect change in accounting principles		0.44		—		—
Extraordinary items		0.28		(0.19	)	(1.51	)
Net earnings per share — diluted 2)		(2.78	)	1.32		5.19
US GAAP basic
Earnings from continuing operations		(3.56	)	(0.62	)	4.25
Earnings from discontinued operations		(0.56	)	(0.09	)	(0.01	)
Cumulative effect change in accounting principles		0.05		0.11		0.00
Extraordinary items		0.02		(0.01	)	0.03
US GAAP — basic		(4.05	)	(0.61	)	4.27
US GAAP diluted
Earnings from continuing operations		(3.56	)	(0.62	)	4.10
Earnings from discontinued operations		(0.56	)	(0.09	)	(0.01	)
Cumulative effect change in accounting principles		0.05		0.11		0.00
Extraordinary items		0.02		(0.01	)	0.03
US GAAP — diluted 2)		(4.05	)	(0.61	)	4.12

All share-related data have been adjusted for the 4-for-1 share split effective as of August 15, 2001.

¹⁾

The weighted average number of shares outstanding reflects the deductions of own shares and the addition of vested contingent issuable shares.

²⁾

For 2002 and 2001, the computation of the diluted earnings per share excludes the effect of the potential exchange of convertible bonds and securities, the contingent issuable shares and the potential exercise of options to purchase shares, because the efftect would be anti-dilutive.

F-27

49.2    US GAAP consolidated changes in shareholders' equity

See note 35 for additional information on changes in shareholders' equity. The following table for the changes in shareholders' equity is in accordance with US GAAP.

in CHF m, except number of shares	Common shares outstanding  1)		Common shares		Additional paid in capital  5)		Retained earnings		Accumulated other comprehensive income  4)		Common shares in treasury at cost  2)		Total
Balance at December 31, 1999	1,043,224,728		5,444		15,149		16,762		5,933		(2,901	)	40,387
Net profit	–		–		–		4,487		–		–		4,487
Other comprehensive income, net of tax	–		–		–		–		303		–		303
Issuance of common shares	112,926,008		565		8,152		–		–		–		8,717
Share-based compensation	–		–		1,298		–		–		–		1,298
Accrual for earned share compensation					1,945								1,945
Release of treasury shares for share compensation	20,355,660				(1,277	)					1,277		0
Sale of treasury shares	153,126,600		–		297		–		–		12,304		12,601
Repurchase of treasury shares	(225,750,840	)	–		–		–		–		(17,955	)	(17,955	)
Net premium/discount on treasury share and own share derivative activity	–		–		(67	)	–		–		–		(67	)
Cash dividends paid 3) (CHF 1.75 per share)	–		–		–		(1,917	)	–		–		(1,917	)
Dividend on treasury shares	–		–		–		107		–		–		107
Balance at December 31, 2000	1,103,882,156		6,009		25,497		19,439		6,236		(7,275	)	49,906
Net profit/(loss)	–		–		–		(687	)	–		–		(687	)
Other comprehensive income, net of tax	–		–		–		–		(3,743	)	–		(3,743	)
Issuance of common shares	2,457,851		11		164		–		–		–		175
Cancellation of repurchased shares	(7,600,000	)	(38	)	(531	)	–		–		–		(569	)
Share-based compensation	–		–		457		–		–		–		457
Accrual for earned share compensation					2,097								2,097
Release of treasury shares for share compensation	29,913,015				(2,133	)					2,133		0
Sale of treasury shares	235,177,204		–		(115	)	–		–		15,925		15,810
Repurchase of treasury shares	(243,106,991	)	–		–		–		–		(16,385	)	(16,385	)
Net premium/discount on treasury share and own share derivative activity	–		–		54		–		–		–		54
Repayment out of share capital 3) (CHF 2.00 per share)	–		(2,392	)	–		—		–		–		(2,392	)
Dividend on treasury shares	–		–		–		173		–		–		173
Balance at December 31, 2001	1,120,723,235		3,590		25,490		18,925		2,493		(5,602	)	44,896
Net profit/(loss)	–		–		–		(4,680	)	–		–		(4,680	)
Other comprehensive income, net of tax	–		–		–		–		(3,294	)	–		(3,294	)
Issuance of common shares	1,011,909		2		26		–		–		–		28
Cancellation of repurchased shares	(7,730,000	)	(23	)	(69	)	(450	)	–		–		(542	)
Share-based compensation					(633	)							(633	)
Accrual for earned share compensation					1,353								1,353
Release of treasury shares for share compensation	24,110,853				(1,798	)					1,798		0
Sale of treasury shares	141,837,418		–		137		–		–		4,775		4,912
Repurchase of treasury shares	(163,895,110	)	–		(534	)	–		–		(4,850	)	(5,384	)
Net premium/discount on treasury share and own share derivative activity	–		–		9		–		–		–		9
Repayment out of share capital 3) (CHF 2.00 per share)	–		(2,379	)	–		–		–		–		(2,379	)
Dividend on treasury shares	–		–		–		126		–		–		126
Balance at December 31, 2002	1,116,058,305		1,190		23,981		13,921		(801	)	(3,879	)	34,412

All share-related data have been adjusted for the 4-for-1 share split effective as of August 15, 2001.

¹⁾

At par value CHF 1 each, fully paid at December 31, 2002.

²⁾

Comprising 73,833,415, 75,886,576 and 97,869,804 treasury shares at December 31, 2002, 2001 and 2000, respectively. In addition to the treasury shares, a maximum of 228,970,984, 191,026,457 and 164,279,536 unissued shares (conditional

F-28

and authorized capital) at December 31, 2002, 2001 and 2000, respectively, were available for issuance without the approval of the shareholders.

³⁾

Dividends are declared and paid in the year subsequent to the reporting period. For the financial year 2000, repayment out of share capital as approved on June 1, 2001 in lieu of a dividend. For the financial year 2001, repayment out of share capital as approved on May 31, 2002 in lieu of a dividend.

⁴⁾

Unrealized investment gains and losses have been reduced to the extent that there is a legal or contractual obligation to pass those gains and losses to policyholders when recognized. As a result, unrealized gains and losses have been reduced by CHF (902) million, CHF (47) million and CHF 1,120 million in 2002, 2001 and 2000, respectively.

⁵⁾

Balances include the accrued cost for shares to be delivered under the share award plans. The cost attributable to share award plans at December 31, 2002, 2001, 2000 and 1999 amount to CHF 2,823 million, CHF 3,268 m, CHF 3,304 m and CHF 2,636 m respectively. The balances include the accrued cost for shares granted subsequent to the financial year-end as part of the financial year compensation.

The Group commenced a share repurchase program of up to CHF 5 billion in 2001, corresponding to approximately 66 million shares, over two years. The Group began the repurchase over a second trading line at the SWX Swiss Exchange on March 14, 2001. This program, under which the Group purchased the equivalent of 15,330,000 shares with a par value of CHF 1 each in 2001 has been terminated as of February 25, 2003. The value of the shares repurchased was CHF 1.1 billion, and the Group's share capital was reduced by this amount. No purchases were made in 2002.

F-29

49.3    US GAAP accumulated other comprehensive income

The following table of accumulated other comprehensive income is in accordance with US GAAP.

in CHF m	Foreign currency translation adjustments		Unrealized gains/ (losses) on securities 1)		Cash flow hedges		Minimum pension liability adjustment		Accumulated other comprehensive income		Comprehensive income
Balance at December 31, 1999	1,172		4,758		–		3		5,933		–
Net profit	–		–		–		–		–		4,487
Foreign currency translation adjustments	(825	)	–		–		–		(825	)	–
Unrealized holding gains arising during period, net of tax of CHF 225 m	–		3,536		–		–		3,536		–
Less reclassification adjustment for gains included in net income, net of tax of CHF 709 m	–		(2,404	)	–		–		(2,404	)	–
Minimum pension liability adjustment, net of tax benefit of CHF 2 m	–		–		–		(4	)	(4	)	–
Other comprehensive income	(825	)	1,132		—		(4	)	303		303
Balance at December 31, 2000	347		5,890		—		(1	)	6,236		–
Total comprehensive income 2000	–		–		—		–		–		4,790
Net profit	—		—		–		—		—		(687	)
Foreign currency translation adjustments	(48	)	–		–		–		(48	)	—
Unrealized holding losses arising during period, net of tax benefit of CHF 412 m	–		(3,052	)	–		–		(3,052	)	—
Less reclassification adjustment for gains included in net income, net of tax benefit of CHF 190 m	–		(330	)	–		–		(330	)	—
Unrealized holding losses arising during period, net of tax benefit of CHF 1 m	–		–		(81	)	–		(81	)	—
Cumulative effect of changes in accounting principles, net of tax benefit of CHF 7 m	–		–		(17	)	–		(17	)	—
Minimum pension liability adjustment, net of tax benefit of CHF 60 m	–		–		–		(215	)	(215	)	—
Changes in other comprehensive income	(48	)	(3,382	)	(98	)	(215	)	(3,743	)	(3,743	)
As of December 31, 2001	299		2,508		(98	)	(216	)	2,493		—
Total comprehensive income 2001	—		—		—		—		—		(4,430	)
Net profit	—		—		—		—		—		(4,680	)
Foreign currency translation adjustments	(2,303	)	—		—		—		(2,303	)	—
Unrealized holding losses arising during period, net of tax benefit of CHF 124 m	—		(489	)	—		—		(489	)	—
Less reclassification adjustment for gains included in net income, net of tax benefit of CHF 260 m	—		(358	)	—		—		(358	)	—
Unrealized holding gains arising during period, net of tax of CHF 1 m	—		—		221		—		221		—
Minimum pension liability adjustment, net of tax benefit of CHF 142 m	—		—		—		(365	)	(365	)	—
Changes in other comprehensive income	(2,303	)	(847	)	221		(365	)	(3,294	)	(3,294	)
As of December 31, 2002	(2,004	)	1,661		123		(581	)	(801	)	—
Total comprehensive income 2002	—		—		—		—		—		(7,974	)

¹⁾

Net of certain amounts allocated to policyholders.

F-30

49.4    Recently issued US accounting standards

Accounting for business combinations, goodwill and other intangible assets

In July 2001, the FASB issued SFAS No. 141, Business Combinations (SFAS 141), and SFAS No. 142, Goodwill and Other Intangible Assets (SFAS 142).

SFAS 141 requires that the purchase method of accounting be used for all business combinations. The use of the pooling of interests method is prohibited. This statement is effective for business combinations initiated after June 30, 2001 and for purchase method of accounting business combinations completed after June 30, 2001. In addition, SFAS 141 requires certain intangible assets to be recognized apart from goodwill and sets forth specific criteria relating to the recognition of intangible assets acquired in business combinations.

SFAS 142 changes the accounting for goodwill and intangible assets with indefinite lives from an amortization method to an impairment-only approach. Accordingly, amortization of goodwill and intangible assets with indefinite lives, including goodwill recorded in prior business combinations, has ceased upon adoption of SFAS 142. Other intangible assets with finite lives will continue to be amortized over their assigned useful lives. For the Group and other calendar year companies, this statement is effective for financial years beginning after December 15, 2001.

Effective July 1, 2001, the Group adopted the provisions of SFAS 141 and certain provisions of SFAS 142 as required for goodwill and intangible assets resulting from business combinations consummated after June 30, 2001. Effective January 1, 2002, the Group adopted the remaining provisions of SFAS 142.

The Group completed the required transitional impairment test of goodwill and indefinite life intangible assets as of January 1, 2002, and determined that there was no impairment to goodwill or intangible assets and no effect on the Group's consolidated financial condition or results of operations as of January 1, 2002. Additionally, upon adoption, the Group reclassified certain intangible assets as follows: CHF 1,946 million from finite life intangibles to goodwill and CHF 71 million from goodwill to finite life intangibles. See note 49.5 for additional information on goodwill and identifiable intangible assets.

Accounting for the impairment or disposal of long-lived assets

In October 2001, the FASB issued SFAS No. 144, Accounting for the Impairment or Disposal of Long-Lived Assets (SFAS 144).

SFAS 144 supersedes SFAS No. 121, Accounting for the Impairment of Long-Lived Assets and Long-Lived Assets to Be Disposed Of (SFAS 121), and the accounting and reporting provisions of APB opinion No. 30, Reporting the Results of Operations—Reporting the Effects of Disposal of a Segment of a Business, and Extraordinary, Unsual and Infrequently Occuring Events and Transactions (APB 30). SFAS 144 also amends ARB 51, Consolidated Financial Statements (ARB 51), to eliminate the exception to consolidation for a temporarily controlled subsidiary.

SFAS 144 requires all long-lived assets to be disposed of and discontinued operations to be measured at the lower of the carrying amount or fair value less costs to sell. SFAS 144 establishes additional criteria for determining when a long-lived asset is held-for-sale. It also broadens the definition of discontinued operations but does not allow for the accrual of future operating losses, as was previously permitted.

F-31

The Group adopted SFAS 144 on January 1, 2002. Generally, the provisions of the new standard are to be applied prospectively. Other than the presentation of discontinued operations in the condensed consolidated income statement for operations which the Group initiated disposition activities subsequent to January 1, 2002, and the classification of related assets and liabilities as held-for-sale on the condensed consolidated balance sheet, adoption of SFAS 144 did not have a material impact on the Group's consolidated financial condition or results of operations.

EITF 02-3

In November 2002, the Emerging Issues Task Force released EITF Issue No. 02-3, Issues Involved in Accounting for Derivative Contracts Held for Trading Purposes and Contracts Involved in Energy Trading and Risk Management Activities (EITF 02-3). In EITF 02-3 the FASB staff clarified that, in the absence of (a) quoted market prices in an active market, (b) observable prices of other current market transactions or (c) other observable data supporting a valuation technique, the transaction price represents the best information available with which to estimate fair value at the inception of the arrangement for all derivatives. With respect to these criteria, the Group is currently evaluating the impact on its consolidated financial statements of EITF 02-3.

Future Application of Accounting Standards

In April 2002, the FASB issued SFAS No. 145, Rescission of FASB Statements No. 4, 44 and 64, Amendment of FASB Statement No. 13, and Technical Corrections (SFAS 145). SFAS 145 rescinds SFAS No. 4, Reporting Gains and Losses from Extinguishment of Debt (SFAS 4) and an amendment of that statement, SFAS No. 64, Extinguishments of Debt Made to Satisfy Sinking-Fund Requirements (SFAS 64). SFAS 145 also amends SFAS No. 13, Accounting for Leases (SFAS 13), to eliminate an inconsistency between the required accounting for sale-leaseback transactions and the required accounting for certain lease modifications that have economic effects that are similar to sale-leaseback transactions. The statement is effective for fiscal years beginning after May 15, 2002. The Group believes that the adoption of SFAS 145 will not have a significant impact on the Group's consolidated financial condition or results of operations.

In June 2002, the FASB issued SFAS No. 146, Accounting for Costs Associated with Exit or Disposal Activities (SFAS 146), which requires companies to recognize costs associated with exit or disposal activities when they are incurred, rather than at the date of a commitment to an exit or disposal plan. In addition, SFAS 146 requires that the liability be measured at fair value and be adjusted for changes in estimated cash flows. Examples of costs covered by the standard include lease termination costs and certain employee severance costs that are associated with restructuring, a discontinued operation, plant closing, or other exit or disposal acitivity. The statement is effective for exit or disposal activities initiated after December 31, 2002. The Group believes that the adoption of SFAS 146 will not have a significant impact on the Group's consolidated financial condition or results of operations.

In November 2002, the FASB began drafting SFAS No. 149, Accounting for Certain Instruments with Characteristics of Liabilities and Equity (SFAS 149). SFAS 149 would establish standards for issuers' classification as liabilities in the statement of financial condition certain financial instruments that have characteristics of both liabilities and equity. The final statement is expected to be issued in the second quarter of 2003. SFAS 149 would be effective upon issuance for all contracts created or modified after

F-32

the date the statement is issued and otherwise effective at the beginning of the first interim period beginning after March 15, 2003. The Group is evaluating the impact of adopting SFAS 149.

In November 2002, the FASB issued FASB Interpretation No. 45, Guarantor's Accounting and Disclosure Requirements for Guarantees, Including Indirect Guarantees of Indebtedness of Others — an Interpretation of FASB Statements No. 5, 57, and 107 and Rescission of FASB Interpretation No. 34 (FIN 45). FIN 45 elaborates on the disclosures to be made by a guarantor in its financial statements about its obligations under certain guarantees it has issued. It also clarifies that a guarantor is required to recognize, at the inception of a guarantee, a liability for the fair value of the obligation undertaken in issuing the guarantee. The initial recognition and measurement provisions of this interpretation are applicable on a prospective basis to guarantees issued or modified after December 31, 2002. The disclosure requirements of FIN 45 are effective for financial statements ending after December 15, 2002 and can be found in "Consolidated Off-Balance Sheet and Fiduciary Business." The Group believes that the adoption of the initial recognition and measurement provisions of FIN 45 will not have a significant impact on the Group's consolidated financial condition or results of operations.

FASB Interpretation No. 46, Consolidation of Variable Interest Entities (FIN 46), an interpretation of ARB No. 51, Consolidated Financial Statements, was issued on January 17, 2003. FIN 46 provides guidance for determining whether a company must consolidate entities where identifying the majority holdings of voting equity is not adequate for making the determination of control, either because voting equity does not exist or the entities' decisions are so restricted that decisions are an irrelevant indicator. The FASB has named these entities "variable interest entities", or VIEs. The guidance in FIN 46 is applicable for many special-purpose entities and any other entity not explicitly excluded from the scope of FIN 46 or that do not satisfy the criteria for assessing consolidation based on a majority holding of voting equity.

Under FIN 46, a party has to consolidate a VIE if it has either the majority of expected losses or expected residual returns, or both. Generally, FIN 46 does not require consolidation for parties involved with qualifying special purpose entities (QSPEs) that meet the requirements of FAS 140.

The consolidation requirements of FIN 46 are applicable to all VIEs created after January 31, 2003. Entities that existed before February 1, 2003, must be reviewed under FIN 46 by July 1, 2003. The Group is currently reviewing the impact of FIN 46 on the consolidated financial statements of the Group.

FIN 46 also imposes immediate disclosure requirements, the most significant of which relate to entities for which the Group believes it is "reasonably possible" that consolidation or disclosure will be required on July 1, 2003. The information disclosed about VIEs in note 49.10 is based on the status of the Group's review of the impact of FIN 46 on current structures to date. Accordingly, the actual impact may differ as the Group completes its review, considers restructuring alternatives, and to the extent further clarification on the application of FIN 46 is obtained.

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NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

49.5    Goodwill and intangible assets

See also note 49.4 for additional information.

The following table presents the net profit and earnings per share for 2002, 2001 and 2000 adjusted to exclude amortization expense (net of taxes) related to goodwill which is no longer amortized. For the periods presented there was no amortization of indefinite life intangible assets which, under SFAS 142, are no longer amortized.

in CHF m, except per share amounts		2002		2001		2000
Net profit/(loss)
	Reported net profit/(loss) under US GAAP	(4,680	)	(687	)	4,487
	Goodwill amortization	0		1,587		671
	Adjusted net profit/(loss) under US GAAP	(4,680	)	900		5,158
Basic earnings per share
	Reported basic earnings per share	(4.05	)	(0.61	)	4.27
	Goodwill amortization	0.00		1.40		0.64
	Adjusted basic earnings per share	(4.05	)	0.79		4.91
Diluted earnings per share
	Reported diluted earnings per share	(4.05	)	(0.61	)	4.12
	Goodwill amortization	0.00		1.40		0.62
	Adjusted diluted earnings per share	(4.05	)	0.79		4.74

During 2002, a goodwill write-off of CHF 1,297 million was recorded in connection with the disposal of Pershing, CSFBdirect and Autranet, Inc. A CHF 195 million write-off resulted from the disposals of our insurance operations in France and Austria. The Group recorded goodwill of CHF 472 million during 2002 in connection with CSFB's acquisition of Holt Value Associates, L.P. and Warburg Pincus Asset Management and other acquisitions.

The changes in goodwill during 2002 were as follows:

in CHF m	Balance at January 1, 2002	Goodwill acquired during the period	Goodwill disposed/ impaired during the period		Other 1)		Balance at December 31, 2002
Private Banking	582	18	(59	)	(25	)	516
Corporate & Retail Banking	182	30	(13	)	0		199
Life & Pensions	2,216	23	(17	)	(24	)	2,198
Insurance	2,540	76	(178	)	(37	)	2,401
Institutional Securities	11,560	79	(391	)	(1,549	)	9,699
CSFB Financial Services	2,792	246	(906	)	(481	)	1,651
Total	19,872	472	(1,564	)	(2,116	)	16,664

¹⁾

Includes foreign exchange impact on non-CHF denominated goodwill and other reclassifications.

F-34

At December 31, 2002, CHF 5 million of the Group's acquired intangible assets were considered to be indefinite life and not subject to amortization. All other acquired intangible assets are subject to amortization. During 2002, the Group recorded CHF 146 million of intangible assets with amortization periods from three to thirteen years. The components of intangible assets were as follows:

	31.12.02			31.12.01
in CHF m	Gross carrying amount	Accumulated amortization	Net carrying amount	Gross carrying amount	Accumulated amortization	Net carrying amount
Present value of future profits	5,523	1,742	3,781	5,904	1,155	4,749
Capitalization of software	2,837	1,394	1,443	3,886	997	2,889
Trade names / Trademarks	80	10	70	721	44	677
Client relationships	944	139	805	4,066	288	3,778
Other	155	76	79	1,130	271	859
Total amortizing intangible assets	9,539	3,361	6,178	15,707	2,755	12,952
Indefinite life intangible assets			5			6
Total intangible assets			6,183			12,958

Intangible assets amortization expense was CHF 1,459 million and CHF 1,304 million for 2002 and 2001, respectively. Intangible assets amortization expense is estimated to be CHF 1,095 million in 2003, CHF 909 million in 2004, CHF 767 million in 2005, CHF 730 million in 2006, and CHF 637 million in 2007.

49.6    Discontinued operations

The following note includes details on discontinued operations that are considered to be material.

On January 7, 2003, the Group entered into a definitive agreement to sell its Pershing unit to The Bank of New York Company, Inc. For additional information please refer to note 5.

In accordance with SFAS 144, the Company presented the assets and liabilities of its Pershing unit as of December 31, 2002 as Discontinued operations — assets and Discontinued operations — liabilities, respectively, in the US GAAP condensed consolidated balance sheets. As a result, the US GAAP condensed consolidated balance sheets for prior periods may not be comparable. The operating results of the Pershing unit for all periods presented were reported as Discontinued operations in the US GAAP condensed consolidated statements of income.

F-35

The following table summarizes the results of operations of Pershing for the years ended December 31, 2002, 2001 and 2000.

In CHF m	2002		2001		2000
Total revenues	1,136		2,129		545
Total expenses	(1,201	)	(2,268	)	(520	)
Profit/(loss) before taxes from discontinued operations	(65	)	(139	)	25
Loss on disposal of stock	(532	)	—		—
Provision for income taxes	20		32		(10	)
Profit/(loss) from discontinued operations, net	(577	)	(107	)	15

The following table sets forth Pershing's assets and liabilities at December 31, 2002.

In CHF m	31.12.02
Assets
Cash and cash equivalents	1,693
Brokerage receivables	6,246
Trading account assets	239
Federal funds sold, securities purchased under resale agreements ad securities borrowing transactions	7,476
Tangible fixed assets	247
Goodwill	867
Other assets	1,396
Discontinued operations — assets	18,164
Liabilities
Deposits	349
Brokerage payables	11,194
Trading account liabilities	45
Federal funds purchased, securities sold under repurchase agreements, and securities lending transactions	892
Other liabilities	3,136
Discontinued operations — liabilities	15,616

49.7    Investments

The following tables are based on the consolidated Swiss GAAP balance sheet as held-to-maturity or available-for-sale based on US GAAP criteria. Additional information regarding investments can be found in note 22 for Financial investments from the banking business, note 23 for Investments from the

F-36

insurance business and note 24 for own shares included in the investments from the banking and insurance business.

Money market papers

December 31, 2002 (in CHF m)	Book value	Amortized cost	Gross unrealized gains	Gross unrealized losses	Fair value
Debt securities issued by foreign governments	2,138	2,138	0	0	2,138
Securities held-to-maturity	2,138	2,138	0	0	2,138
Debt securities issued by Swiss Federal Government, cantonal or local governmental entities	123	123	0	0	123
Debt securities issued by foreign governments	185	185	0	0	185
Corporate debt securities	278	278	0	0	278
Other	0	0	0	0	0
Securities available-for-sale	586	586	0	0	586
Other money market papers 1)	22,401	—	—	—	—
Total money market papers	25,125	—	—	—	—

December 31, 2001 (in CHF m)	Book value	Amortized cost	Gross unrealized gains	Gross unrealized losses	Fair value
Debt securities issued by foreign governments	3,401	3,401	0	0	3,401
Securities held-to-maturity	3,401	3,401	0	0	3,401
Debt securities issued by the Swiss Federal Government, cantonal or local governmental entities	1,266	1,266	0	0	1,266
Debt Securities issued by foreign governments	1,594	1,594	0	0	1,594
Corporate debt securities	292	292	0	0	292
Other	0	0	0	0	0
Securities available-for-sale	3,152	3,152	0	0	3,152
Other money market papers1)	25,474	–	–	–	–
Total money market papers	32,027	–	–	–	–

¹⁾

Not considered debt securities under US GAAP criteria but rather cash and other liquid assets, interest bearing deposits due from banks and trading assets.

F-37

Financial investments from the banking business

December 31, 2002 (in CHF m)	Book value	Amortized cost	Gross unrealized gains	Gross unrealized losses	Fair value
Debt securities issued by foreign governments	5,267	5,267	1	0	5,268
Corporate debt securities	1	1	0	0	1
Other	0	0	0	0	0
Debt securities held-to-maturity	5,268	5,268	1	0	5,269
Debt securities issued by Swiss Federal Government, cantonal or local governmental entities	473	473	30	0	503
Debt securities issued by other foreign governments	10,531	10,530	164	1	10,693
Corporate debt securities	839	986	5	151	840
Other	2,951	2,951	14	1	2,964
Debt securities available-for-sale	14,794	14,940	213	153	15,000
Equity securities	1,456	1,442	39	14	1,467
Equity securities available-for-sale	16,250	16,382	252	167	16,467
Own shares	58
Own bonds	19	—	—	—	—
Investments in venture capital	11,029	—	—	—	—
Real estate	760	—	—	—	—
Other	10	—	—	—	—
Total financial investments from the banking business	33,394

December 31, 2001 (in CHF m)	Book value	Amortized cost	Gross unrealized gains	Gross unrealized losses	Fair value
Debt securities issued by foreign governments	5,691	5,691	5	2	5,694
Corporate debt securities	3	3	0	0	3
Other	0	0	0	0	0
Debt securities held-to-maturity	5,694	5,694	5	2	5,697
Debt securities issued by the Swiss Federal Government, cantonal or local governmental entities	502	502	22	18	506
Debt securities issued by foreign governments	8,441	8,446	80	5	8,521
Corporate debt securities	1,206	1,204	14	1	1,217
Other	422	422	2	1	423
Debt securities available-for-sale	10,571	10,574	118	25	10,667
Equity securities	3,694	3,731	2,199	38	5,892
Securities available-for-sale	14,265	14,305	2,317	63	16,559
Own shares	773	—	—	—	—
Own bonds	31	—	—	—	—
Investments in venture capital	14,458	—	—	—	—
Real estate	2,070	—	—	—	—
Other	15	—	—	—	—
Total financial investments from the banking business	37,306

F-38

The following table presents proceeds from sales of securities and realized gains and losses, on both Swiss GAAP and US GAAP bases, for the years ended December 31:

		Available-for-sale securities
in CHF m		Debt securities 2002	Debt securities 2001	Debt securities 2000	Equity securities 2002	Equity securities 2001	Equity securities 2000
Proceeds from sales		50,701	29,161	13,880	20,849	22,952	15,050
Realized gains
	Swiss GAAP basis	1,482	1,280	611	3,061	4,396	5,335
	US GAAP basis	1,310	1,004	409	2,645	2,610	4,014
Realized losses
	Swiss GAAP basis	586	303	251	3,226	2,919	1,055
	US GAAP basis	598	303	241	3,282	2,923	1,069

Transfers of equity securities and securities classified as available-for-sale to trading account assets resulted in realized gross gains of CHF 2 million, CHF 0 million and CHF 25 million during 2002, 2001 and 2000, respectively, and gross losses of CHF 0 million, CHF 17 million and CHF 0 million in 2002, 2001, and 2000, respectively.

The Group recognized other than temporary impairments on investment securities held as available-for-sale of CHF 3,864 million, CHF 1,152 million and CHF 357 million in 2002, 2001 and 2000 respectively.

The following table presents the amortized cost and fair value of securities classified as available-for-sale and held-to-maturity by contractual maturity dates as of December 31, 2002:

Debt securities (in CHF m)	Securities held-to-maturity amortized cost	Securities held-to-maturity fair value	Securities available-for-sale amortized cost	Securities available-for-sale fair value
From the banking business
Due in one year or less	1,968	1,969	8,731	8,651
Due from one to five years	3,082	3,082	4,785	4,820
Due from five to ten years	218	218	1,129	1,233
Due after ten years	0	0	295	296
Total debt securities from the banking business	5,268	5,269	14,940	15,000
From the insurance business
Due in one year or less	0	0	2,860	3,041
Due from one to five years	0	0	22,351	23,550
Due from five to ten years	0	0	33,523	34,922
Due after ten years	0	0	14,189	15,138
Total debt securities from the insurance business	0	0	72,923	76,651

At December 31, 2002, money market papers held by the Group which are classified as either
available-for-sale or held-to-maturity primarily mature within one year.

F-39

At December 31, 2002, financial investments from the insurance business with the fair value and book value of CHF 116 million and CHF 104 million, respectively, were on deposit with regulatory authorities. The Group retains ownership of all securities on deposit and receives the related investment income.

The net change in unrealized gains and losses for financial investments from the insurance business were as follows for the years ended December 31:

in CHF m		2002	2001	]2000
Debt securities		2,643	(127)	512
Equity securities		(347)	(7,240)	(2,762)
Other investments		59	314	16
Change in unrealized investment gains (losses)		2,355	(7,053)	(2,234)
Adjustments
	Deferred policy acquisition costs	(191)	543	158
	Present value of future profits	(25)	31	(3)
	Policyholder liabilities	(955)	1,517	418
Deferred income taxes		(303)	670	1,168
Net change in unrealized investment gains and losses from the insurance business		881	(4,292)	(493)

At December 31, 2002, the aggregate investments in debt securities from three specific counterparties were each in excess of 10% of consolidated shareholders' equity, excluding minority interests. Aggregate investments in debt securities issued by two European governments and a European financial institution represented approximately 33.1%, 30.4% and 14.9%, respectively, of the December 31, 2002 balance of consolidated shareholders' equity, excluding minority interests. The Standard & Poor's ratings for these were AA, AAA and AAA, respectively.

49.8    Real estate held for investment from the insurance business

Amounts shown are Swiss GAAP reformatted to US GAAP presentation.

The following table shows real estate held for investment from the insurance business as of:

in CHF m	31.12.02	31.12.01
Land	1,965	1,978
Buildings and improvements	7,120	7,283
Total cost	9,085	9,261
Accumulated depreciation	(1,710)	(1,718)
Net book value	7,375	7,543
Estimated fair value	9,983	10,367

F-40

49.9    Brokerage receivables and brokerage payables

The Group has receivables and payables from transactions in financial instruments purchased from and sold to banks, customers, brokers and dealers. The Group is exposed to risk of loss from the inability of its counterparty to pay for a purchase or to deliver the financial instruments sold, in which case the Group would have to sell or purchase the financial instruments at prevailing market prices. To the extent an exchange or clearing organization acts as a counterparty to a transaction, credit risk is generally reduced. The Group requires customers to maintain margin collateral in compliance with applicable regulatory and internal guidelines. Amounts shown below are Swiss GAAP reformatted to US GAAP presentation.

Brokerage receivables and brokerage payables, which arise in the normal course of business, consisted of the following as of:

in CHF m	31.12.02	31.12.01
Receivables due from customers	15,622	23,425
Receivables due from banks, brokers and dealers	14,215	12,176
Total brokerage receivables	29,837	35,601
Payables due to customers	25,111	28,860
Payables due to banks, brokers and dealers	12,337	9,213
Total brokerage payables	37,448	38,073

49.10    Securities borrowed, lent and subject to repurchase agreements

See also note 39 for additional information.

Amounts shown below are Swiss GAAP reformatted to US GAAP presentation. Securities borrowed or purchased under agreements to resell, at their respective balance sheet values, consisted of the following as of:

in CHF m	31.12.02	31.12.01
Federal funds sold and securities purchased under resale agreements	197,960	206,964
Deposits paid for securities borrowed – cash only	29,953	23,640
Total funds and securities	227,913	230,604

Certain restatements have been made to prior-year amounts to conform to the current presentation.

Securities lent or sold under agreements to repurchase, at their respective balance sheet values, consisted of the following as of:

in CHF m	31.12.02	31.12.01
Federal funds purchased and securities sold under agreements to repurchase	183,034	185,320
Deposits received for securities lent – cash only	22,026	23,699
Total funds and securities	205,060	209,019

The maximum month end amount of securities purchased under agreements to resell was CHF 197,960 million, CHF 225,482 million and CHF 201,972 million in 2002, 2001 and 2000, respectively. The average amount of securities purchased under agreements to resell during the year was

F-41

CHF 181,786 million, CHF 209,790 million and CHF 164,632 million in 2002, 2001 and 2000, respectively.

The resale and repurchase agreements represent collateralized financing transactions used to earn net interest income, increase liquidity or facilitate trading activity. These instruments are collateralized principally by government securities and money market instruments and generally have terms ranging from overnight to a longer or unspecified period of time. It is the Group's policy to take possession of the underlying collateral, monitor its market value relative to the amounts due under the agreements and, when necessary, require prompt transfer of additional collateral or reduction in the loan balance in order to maintain contractual margin protection. In the event of counterparty default, the financing agreement provides the Group with the right to liquidate the collateral held. In the Group's normal course of business, substantially all of the collateral received that may be sold or repledged has been sold or repledged at December 31, 2002.

Deposits paid for securities borrowed and deposits received for securities lent are recorded at the amount of cash advanced or received and are collateralized principally by cash or marketable securities. Securities borrowed transactions require the deposit of cash or securities collateral with the lender. For securities lent transactions, the Group receives cash or securities collateral in an amount generally in excess of the market value of securities lent. The Group monitors the market value of securities borrowed and securities lent on a daily basis and additional collateral is obtained as necessary.

Securitization Activity

The Group enters into various transactions whereby commercial and residential mortgages and corporate bonds are sold to qualifying trusts or special purpose trusts and beneficial interest in those trusts are sold to investors. The investors and the securitization trusts have no recourse to the Group's other assets for failure of the debtors to pay when due. The Group does not retain servicing responsibilities from its securitization transactions.

In 2002, the Group recognized pre-tax gains of CHF 226 million on the securitization of the commercial mortgages, CHF 164 million pre-tax gain on the securitzation of residential mortgages and CHF 108 million pre-tax gain on the securitization of corporate bonds. Gains and losses on securitization transactions depend in part on the carrying values of mortgages and bonds involved in the transfer, and are allocated between the mortgages and bonds sold and any retained interests according to the relative fair values at the date of sale.

The following table summarizes cash flows received from securitization trusts for the year ended December 31:

	2002				2001
in CHF m	Commercial Mortgages	Residential Mortgages		Bonds	Commercial Mortgages	Residential Mortgages	Bonds
Proceeds from new securitizations	7,928	39,184		16,108	14,583	28,692	18,815
Other cash flows received (gains/losses)	226	(164	)	108	163	99	158

The fair value of retained interests from securitizations are estimated using discounted cash flow analysis based on key economic assumptions including prepayment spreads, discount rates and credit losses.

F-42

The fair value, key economic assumptions used to value as of December 31, 2002 and sensitivity of the fair value to immediate adverse changes in those assumptions are as follows:

	Commercial Mortgage Loans	Residential Mortgage Loans	Bonds
Carrying amount/fair value of retained interests (in CHF m)	903	1,328	1004
Weighted-average life (in years)	0.4 to 9.7	1 to 15.3	4.4 to 11.2
Weighted-average CHF value change for one basis point movement	0.061	0.396	0.158
Prepayment Speed Assumption 2)	N/A 1)	200 PSA to 325 PSA	N/A 4)
Impact on fair value of 10% adverse change	N/A	11.1	N/A
Impact on fair value of 20% adverse change	N/A	12.2	N/A
Floating Interest Rate/Cash Flow Discount rate	Libor +/- Spread	4.9	6.6
Impact on fair value of 10% adverse change	8.9	17.9	19.5
Impact on fair value of 20% adverse change	17.8	35.7	38.7
Expected credit losses 3)
Impact on fair value of 2% adverse change	0	0	0
Impact on fair value of 5% adverse change	1	0	0

¹⁾

These mortgages typically have prepayment fees associated with them and have balloon payments at the end of the term and as such, prepayments are not considered key assumptions.

²⁾

Prepayment Speed Assumption (PSA) is an industry standard prepayment speed model used in the calculation of the fair value of the retained interest. PSA utilizes the Constant Prepayment Rate (CPR) assumptions. A 100% prepayment assumption assumes a prepayment rate of 0.2% per annum of the outstanding principal balance of mortgage loans in the first month of life. This increases by 0.2% thereafter during the life of the mortgage loan leveling off to a constant prepayment rate of 6.0% per annum beginning in the thirtieth month and each month thereafter during the life of the mortgage loan. 100 PSA equals 100 CPR.

³⁾

Expected credit losses for mortgage loans are assumed to be zero as, generally, the underlying mortgages are secured by real property and substantially all beneficial interest retained represents investment-grade interests.

⁴⁾

The majority of the portfolio consists of high-yield and investment-grade corporate bonds. These obligations are not prepayable. The remainder of the portfolio consists of commercial and residential loans. Commercial obligations typically have balloon payments and as such prepayments are not considered key assumptions.

These sensitivities are hypothetical and should be used with caution. Changes in fair value based on a 10 percent variation in assumptions generally cannot be extrapolated because the relationship of the change in assumption to the change in fair value may not be linear. Also, the effect of a variation in a particular assumption on the fair value of the retained interests is calculated without changing any other assumption. Therefore, changes in one assumption may result in changes in other assumptions which might magnify or counteract the sensitivities.

Variable Interest Entities

For additional information on FIN 46, please refer to note 49.4, "Recently Issued US Accounting Standards."

The Group is the administrator and liquidity and credit enhancement provider for several asset-backed commercial paper (ABCP), conduits that purchase assets, typically receivables, from corporate counterparties and issue commercial paper backed by these assets. The assets purchased by the conduits have first risk of loss protection provided by the transferors, typically through

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overcollateralization. Notwithstanding the retention of the first risk of loss by the sellers, the Group believes, based on current structures, it is reasonably possible that the Group will be required to consolidate the ABCP conduits under the provisions of FIN 46.

As of December 31, 2002, the total assets outstanding in these ABCP conduits were CHF 10.8 billion, funded by the issuance of commercial paper. The Group's commitments to these conduits consist of obligations under liquidity agreements and program-wide credit enhancement. Liquidity is provided through asset purchase agreements relating to each asset held by the conduits. The Group's commitments under the liquidity agreements cover the inability to access the commercial paper markets and can be drawn at any time, resulting in ownership of the underlying assets. As of December 31, 2002, the Group's total liquidity commitment was CHF 18.5 billion on CHF 10.8 billion of funded assets and commitments to purchase CHF 7.7 billion of additional assets. The Group also provides program-wide credit enhancement in the form of a letter of credit or purchase commitment totaling CHF 484 million as of December 31, 2002.

In the unlikely event that all of the liquidity and credit support provided by the Group were drawn and all of the underlying assets defaulted, the Group's maximum exposure to loss would be CHF 10.8 billion as of December 31, 2002. Any amounts provided under these commitments would be recoverable to the extent of the value of the assets. The Group believes the likelihood of incurring a loss equal to the maximum exposure is remote, as asset quality must be investment-grade when purchased by the conduits.

The Group structures various fund-linked products to provide clients with investment opportunities in alternative investments. For certain product offerings, a VIE holds the underlying investments and issues a note that provides investors a return based on the performance of those investments. The Group may provide principal protection on the notes to limit the investors' exposure to downside risk.

Upon adoption of FIN 46, the Group believes it is reasonably possible that the VIEs used in the offering of fund-linked products will be disclosed or consolidated. If required to consolidate these VIEs, the Group estimates an increase in total assets and liabilities as of December 31, 2002 of approximately CHF 904 million. This amount also represents the Group's maximum exposure to loss. The Group considers the likelihood of incurring a loss equal to the maximum exposure to be remote, as the risk is significantly mitigated by provisions that automatically require a reallocation of investments into cash instruments should the asset value decrease below predefined parameters.

The Group is involved with VIEs that issue collateralized debt obligations (CDOs) as asset manager and/or investor in retained interests. As of December 31, 2002, the total assets in these CDO VIEs were approximately CHF 15.8 billion. At this time, the Group believes it is reasonably possible that approximately CHF 9.8 billion of the total COD VIE assets as of December 31, 2002 will be consolidated upon adoption of FIN 46. As of December 31, 2002, the Group's maximum exposure to loss from these CDO VIEs is approximately CHF 634.8 million, which represents the current carrying value of the retained interests held by the Group.

With respect to other CDO VIEs with total assets of CHF 6.0 billion as of December 31, 2002, the Group believes it is reasonably possible that its investments will be considered significant variable interests under FIN 46, which would not be consolidated but would require disclosure. The Group's investments in these CDO VIEs, which include equity (less than a majority) and debt securities and

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reflect the Group's maximum exposure to loss, totaled CHF 111.5 million as of December 31, 2002. These investments are included in trading assets and carried at fair value.

49.11    Income taxes

See note 14 for additional information on taxes.

The Group is incorporated in Switzerland and operates in various countries with differing tax laws and rates. A substantial amount of the Group's income before taxes and related taxes are generated outside of Switzerland. Consequently, the effective tax rate may vary from period to period to reflect the generation of taxable income in tax jurisdictions.

A reconciliation of taxes computed at the statutory rate of 25% to the actual taxes is shown in the following table.

	2002 in CHF m		2001 in CHF m		2000 in %
Tax benefit/(expense) computed at the statutory tax rate	813		(575	)	(1,843	)
(Increases)/decreases in taxes resulting from:
Effects of different tax rates	517		680		710
Net operating losses (NOL) for which no deferred tax asset is recognized1)	0		(846	)	(326	)
Utilization of NOL	(34	)	181		562
Changes in deferred tax valuation allowance	(657	)	(64	)	155
Lower taxed income	615		487		104
Non deductible expenses, allowances and deductions2)	(1,834	)	(616	)	(274	)
Other	(16	)	267		(437	)
Tax benefit/(expense)	(596	)	(486	)	(1,349	)

¹⁾

As of January 1, 2002 the deferred tax assets in respect of net operating loss carryforwards are recognized when it is more likely than not that future taxable profit will be available against which those losses can be utilized. For additional information see note 2.

²⁾

In Germany, releases from policyholder bonus reserves are not offset by a corresponding deferred tax benefit from the losses on the equity investments, as capital gains/losses on equities are not taxable. The non-recognition of a tax effect on losses on equity investments is shown under "Non deductible expenses, allowances and deducations" and amounts to CHF 874 million in 2002.

At December 31, 2002, 2001 and 2000, deferred tax assets based on Swiss GAAP totaled CHF 7,975 million, CHF 6,910 million and CHF 6,883 million, respectively, while deferred tax liabilities based on Swiss GAAP totaled CHF 6,620 million, CHF 5,740 million and CHF 6,659 million at December 31, 2002, 2001 and 2000, respectively.

At December 31, 2002, 2001 and 2000, the Group had accumulated undistributed earnings from foreign subsidiaries, which are subject to unrecoverable withholding tax of, CHF 6,246 million, CHF 8,754 million and CHF 6,055 million, respectively. No deferred tax has been recorded as these earnings are considered indefinitely reinvested. If these earnings were distributed, the Group would be subject to unrecoverable withholding tax of CHF 407 million, CHF 539 million and CHF 344 million at December 31, 2002, 2001 and 2000, respectively.

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49.11    Income taxes (continued)

Foreign income/(loss) before tax expense was CHF (3,835) million, CHF (630) million and CHF 2,347 million at December 31, 2002, 2001 and 2000, respectively. Foreign income is defined as income generated by operations located outside Switzerland.

Presented below in accordance with SFAS No. 109Accounting for Income Taxes, is the tax effect of temporary differences that give rise to significant portions of the US GAAP deferred tax assets and deferred tax liabilities valued in accordance with US GAAP as of:

in CHF m	31.12.02		31.12.01
Insurance technical provisions	1,678		2,092
Employment benefits	1,866		2,254
Investment securities	1,072		317
Deferred policy acquisition costs	31		0
Provisions	2,644		1,908
Derivatives	626		120
Real estate	334		339
NOL carry-forwards	3,943		1,862
Other	2,230		1,364
Deferred tax asset before valuation allowance	14,424		10,256
Less valuation allowance	(1,931	)	(1,400	)
Deferred tax assets net of valuation allowance	12,493		8,856
Insurance technical provisions	(648	)	(525	)
Employee benefits	(219	)	(85	)
Investment securities	(2,867	)	(1,184	)
Present value of future profits	(1,384	)	(1,576	)
Deferred policy acquisition costs	(728	)	(698	)
Business combinations	(2,377	)	(1,863	)
Derivatives	(569	)	(69	)
Software capitalization	(148	)	(211	)
Leasing	(139	)	(169	)
Real estate	(558	)	(599	)
Other	(1,246	)	(1,126	)
Deferred tax liabilities	(10,883	)	(8,105	)
Net deferred tax assets/(liabilities)	1,610		751

Certain foreign branches and subsidiaries of the Group have deferred tax assets related to net operating loss carry-forwards and other items. A US GAAP valuation allowance has been recognized because it is "more likely than not" that some portion of the deferred tax will not be realized due to limited carry-forward periods and expected taxable profits in certain tax jurisdictions. The net change during 2002 in the total valuation allowance was CHF (531) million. This change was due to utilization of tax carry-forwards. Based on management's assessment, it is more likely than not that all the net deferred tax assets will be realized through future taxable income or implementation of tax planning strategies.

At December 31, 2002, the Group had available net operating loss carry-forwards totalling CHF 13,260 million.

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49.12    Reinsurance

Reinsurance

See also note 16 for additional information on reinsurance.

The Group's non-life and life insurance companies cede some of their insurance risks to third-parties in order to provide greater diversification of their businesses, provide additional capacity for future growth, effect business-sharing arrangements, protect against catastrophe events and limit the potential for losses arising from large risks. The reinsurance arrangements do not relieve the Group from its direct obligation to its policyholders. Thus, a credit exposure exists to the extent that any reinsurer is unable to meet the obligations assumed under the reinsurance arrangements. The Group evaluates the financial condition of its reinsurers and monitors concentrations of credit risk to reinsurers to minimize its exposure to significant losses from reinsurers' insolvencies. The Group's current policy is generally to place its reinsurance with companies rated either A or better by Standard & Poor's. A balance sheet provision has been recorded for estimated unrecoverable reinsurance of CHF 25 million and CHF 23 million for 2002 and 2001, respectively. In addition, the Group's policy is generally to hold collateral in the form of cash, securities and letters of credit as security under the related reinsurance agreements. Concentrations with individual reinsurers are not material to the Group and the Group is not substantially dependent upon any reinsurance contract.

Non-life reinsurance

Over the past several years, the Group has gradually been replacing its proportional reinsurance treaties with non-proportional treaties. Retention limits are based generally on the line of business and the jurisdiction of coverage. The Group has a global catastrophe reinsurance protection program providing coverage for losses arising from any one incident in excess of CHF 50 million and CHF 50 million per year for all losses (incidents) between CHF 50 million and CHF 100 million (USD 25 million and 75% of the losses (incidents) between USD 25 million and USD 50 million in North America). Reinsurance assumed by the Group from other companies is primarily done on a facultative basis.

H.S. Weavers was an underwriting agent that wrote business on behalf of Insurance through year-end 1983. The agency accepted commercial umbrella and excess casualty business from US companies, and, as a result, has significant exposure to asbestos, pollution and other health hazard claims. Effective July 1, 2000, Winterthur Insurance purchased retroactive reinsurance coverage from the National Indemnity Corporation to limit the exposure from this book of business. The reinsurance provides coverage up to USD 800 million against an estimated undiscounted exposure of USD 584 million. As a result of this retroactive reinsurance transaction, Winterthur Insurance recorded a net deferred gain in 2000 in the amount of USD 233 million (CHF 381 million). The net deferred gain is amortized to operating income over the estimated settlement period of the underlying portfolio. At December 31, 2002 and 2001, the remainder of the deferred gain to be amortized in future years was USD 199 million (CHF 277 million) and USD 203 million (CHF 340 million), respectively.

Life reinsurance

The Group limits its exposure to losses on any single life. For ordinary insurance, Life & Pensions retains a maximum coverage of approximately CHF 4 million per individual life. There are smaller retentions for certain geographic regions and other products. Life reinsurance is entered into principally under surplus agreements on yearly renewable term or modified co-insurance basis. Amounts recoverable from life

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reinsurers are estimated in a manner consistent with the assumptions used for the underlying policy benefits.

49.13    Present value of future profits

The following table represents the activity in the PVFP for the years ended December 31:

in CHF m	2002		2001		2000
Balance at beginning of financial year	2,335		2,522		1,505
Additions arising from acquisitions	17		59		1,150
Interest accrued during the year	98		157		156
Eliminated due to impairment or disposals	(22	)	0		(44	)
Amortization expense	(342	)	(394	)	(126	)
Foreign currency translation impact	(96	)	(40	)	(116	)
Carrying value at end of year before adjustments	1,990		2,304		2,525
Adjustment for unrealized gains and losses on available-for-sale securities	(24	)	31		(3	)
Carrying value at end of financial year	1,966		2,335		2,522

For the year ended December 31, 2002, additions arising from acquisitions relate to the acquisition of Premier Life Ltd. Luxembourg. For the year ended December 31, 2001, the additions relate to the acquisition of VOPF, one of the largest Czech pension funds. For the year ended December 31, 2000, the addition was related to the acquisitions of Colonial UK on July 1, 2000 and Nicos Life on April 1, 2000.

The estimated amount of the December 31, 2002 balance, before the effect of unrealized gains and losses, to be amortized over each of the next five years is as follows:

in CHF m
2003	235
2004	218
2005	219
2006	220
2007	202

Under US GAAP the acquisition of "Winterthur" Swiss Insurance Company is required to be accounted for as an acquisition rather than as a pooling of interests as for Swiss GAAP. As a result, any PVFP existing before the date of acquisition is eliminated and a new PVFP is calculated as of the acquisition date. The carrying value of PVFP computed in conformity with US GAAP is CHF 3,781 million, CHF 4,749 million and CHF 4,937 million at December 31, 2002, 2001 and 2000, respectively. These amounts are net of the impact of unrealized gains of CHF 401 million, CHF 144 million and CHF 410 million at December 31, 2002, 2001 and 2000, respectively.

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49.14    Deferred policy acquisition costs

Amounts shown are Swiss GAAP reformatted to US GAAP presentation. The following table summarizes the balances of and changes in deferred policy acquisition costs for the years ended December 31:

in CHF m	Non-Life 2002		Non-life 2001		Non-life 2000		Life 2002		Life 2001		Life 2000		Total 2002		Total 2001		Total 2000
At beginning of financial year	2,109		1,454		1,191		3,553		2,511		2,369		5,662		3,965		3,560
Changes arising from acquisitions/dispositions	(46	)	(26	)	162		(130	)	265		0		(176	)	239		162
Deferred policy acquisition costs for the year	3,791		2,978		1,978		587		595		375		4,378		3,573		2,353
Amortization	(2,411	)	(2,272	)	(1,828	)	(450	)	(307	)	(452	)	(2,861	)	(2,579	)	(2,280	)
Foreign currency translation impact	(179	)	(25	)	(49	)	(133	)	(52	)	61		(312	)	(77	)	12
Subtotal	3,264		2,109		1,454		3,427		3,012		2,353		6,691		5,121		3,807
Adjustment for unrealized gains/(losses) on available-for-sale securities	0		0		0		(193	)	541		158		(193	)	541		158
At end of financial year	3,264		2,109		1,454		3,234		3,553		2,511		6,498		5,662		3,965

49.15    Real estate

Real estate held for sale

Amounts shown are Swiss GAAP reformatted to US GAAP presentation. The following table summarizes the real estate held for sale as of:

in CHF m	31.12.02	31.12.01
Real estate acquired for sale	290	1,243
Real estate repossessed and held for sale	91	131
Real estate held for sale	381	1,374

Reclassifications have been made to the prior-year amounts as a result of the adoption of SFAS 144. The properties are primarily commercial and residential real estate properties and in most cases are listed for sale, depending on market conditions. These properties are primarily related to the activities of Credit Suisse First Boston.

Real estate held for sale is presented net of valuation adjustments. Valuation adjustments for foreclosed real estate represent management's best estimate of the expected value to be realized in a normal sale transaction.

The reduction of real estate held for sale is the consequence of CSFB's ongoing efforts to reduce its non-continuing real estate portfolio.

Own use real estate

See also note 26 for additional information on tangible fixed assets.

There were no significant impairments identified in 2002.

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In 2001, the Group recognized an impairment loss for long-lived assets to be held and used of CHF 20 million. Impairment of long-lived assets losses totaled CHF 92 million in 2000 and resulted from other than temporary declines in the market values of certain buildings, which continue to be held and used, in Switzerland and Brazil. As a result principally of a significant decrease in market values of certain properties in Switzerland, the Group performed an impairment evaluation on own use real estate in both 2000 and 2001. Certain properties were identified as impaired in cases where the properties' carrying values exceeded the expected future cash flows computed undiscounted and without interest charges. The carrying values of the impaired properties were written down to fair value and this established a new cost basis. For these properties, fair values were measured based on either discounted cash flow analyses or appraisals. Accordingly, in 2000, an impairment loss of CHF 77 million was recorded in Depreciation and write-offs on non-current assets, net. Additionally, the Group purchased own use real estate in Brazil and translated the Brazilian currency at the date of purchase into USD, the reporting currency of the Group's subsidiary holding this property. Due to the significant devaluation of the Brazilian currency against the USD in 2000, the Group believed it could no longer realize the dollar value reported for financial statement purposes. In October 2000, the Group obtained a building appraisal and converted the estimated value into USD at the October 2000 exchange rate. The real estate was written-down for the difference between this amount and the carrying amount. An impairment loss of CHF 15 million was recorded in the line item Depreciation and write-offs on non-current assets, net.

49.16    Fair value of financial instruments

The table below presents the fair value and the Swiss GAAP carrying values of financial instruments in accordance with SFAS No.107, Disclosures about Fair Value of Financial Instruments (SFAS 107). This statement requires the disclosure of fair value information about financial instruments, whether or not the fair values are recognized in the balance sheet.

Quoted market prices, when available, are used as the measure of fair value. In cases where quoted market prices are not available, fair values are determined using present value estimates or other valuation techniques. The calculated fair values are significantly affected by the assumptions used, principally the timing of future cash flows and the discount rate. Because assumptions are inherently subjective in nature, the estimated fair values cannot be substantiated by comparison to independent market quotes and, in many cases, the estimated fair values would not necessarily be realized in an immediate sale or settlement of the instrument. The disclosure requirements of this statement exclude all non-financial instruments such as lease transactions, real estate and premises, equity method

F-50

investments and pension and benefit obligations. Accordingly, the fair value amounts presented do not represent management's estimation of the underlying value of the Group.

in CHF m	Book value 31.12.02	Estimated Fair value 31.12.02	Book value 31.12.01	Estimated Fair value 31.12.01
On balance sheet financial assets
Cash and other liquid assets	2,551	2,551	3,092	3,092
Money market papers	25,125	25,136	32,027	32,026
Due from banks	195,778	195,826	203,785	203,801
Receivables from the insurance business	12,290	12,290	11,823	11,823
Due from customers 1)	179,683	179,749	183,685	183,953
Mortgages 1)	94,238	96,047	92,034	92,830
Securities and precious metals trading portfolios	173,133	173,133	208,374	208,374
Financial investments from the banking business 2)	32,547	32,788	34,417	36,745
Investments from the insurance business 2)	121,020	121,801	123,742	123,415
Non-consolidated participations	319	366	367	482
Positive replacement values of derivative instruments	236,931	236,931	155,340	155,340
On balance sheet financial liabilities
Money market papers issued	22,178	22,306	19,252	19,286
Due to banks 1)	287,884	287,856	335,932	335,901
Payables from the insurance business	10,218	10,218	11,864	11,864
Due to customers in savings and investment deposits	39,739	39,739	38,547	38,547
Due to customers, other 1)	258,045	257,932	261,513	261,620
Medium-term notes (cash bonds)	2,599	2,727	3,019	3,115
Bonds and mortgage-backed bonds	81,839	83,978	81,505	82,268
Negative replacement values of derivative instruments	237,338	237,338	157,504	157,504

Certain reclassifications have been made to prior-year amounts to conform to the current presentation.

¹⁾

Lease transactions have been excluded from these book and estimated fair values in accordance with SFAS 107.

²⁾

Real estate and premises have been excluded from these book and estimated fair values in accordance with SFAS 107.

The following is a description of the significant methods and assumptions used in calculating the fair values presented above.

For cash and other liquid assets and money market papers maturing within three months, the fair value, is assumed to approximate book value, given the short-term nature of these instruments. This assumption also is applied to receivables and payables from the insurance business. For those items with a stated maturity exceeding three months, fair value is calculated using a discounted cash flow analysis.

The following describes the methods of determining the fair value of loans that are primarily included in Due from banks, Due from customers, and Mortgages. For non-impaired loans where no quoted market prices are available, contractual cash flows are discounted using the market interest rates for loans with similar characteristics. For impaired loans, the book value, net of valuation adjustments approximates fair value.

The securities and precious metals trading portfolio is carried on the balance sheet at fair value. Fair value is determined using quoted market prices.

The fair values of positive replacement values of derivative instruments, negative replacement values of derivative instruments, Financial investments from the banking business, Investments from the insurance

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business, and Non-consolidated participations are based on quoted market prices. Where these are not available, fair values are based on the quoted market prices of comparable instruments, or are estimated by discounting anticipated future cash flows or using other valuation techniques.

For deposit instruments, which are included in due to banks, due to customers in savings and investment accounts and due to customers, other, the fair value is calculated as follows: for deposit instruments with no stated maturity and those with original maturities less than three months, the book value is assumed to approximate fair value due to the short-term nature of these liabilities. For deposit instruments with a stated maturity exceeding three months, fair value is calculated using a discounted cash flow analysis.

For medium-term notes, bonds and mortgage-backed bonds, fair values are estimated by using quoted market prices or by discounting the remaining contractual cash flows using a rate at which the Group could issue debt with a similar remaining maturity as of the balance sheet date.

The unfunded portion of commitments to extend credit and standby and other letters of credit have been reviewed. The Group has determined, based on market prices observed at the balance sheet date as compared to the rate charged to the customer, that the fair value of such financial instruments is not material.

49.17    Derivative financial instruments

See also the consolidated off-balance sheet business table for additional information on derivative financial instruments.

A derivative instrument is a financial instrument or other contract with all three of the following characteristics:

(1)    (a) One or more underlyings and (b) one or more notional amounts or payment provisions or both,

(2)    Little or no initial net investment, and

(3)    Terms requiring or permitting net settlement.

Derivatives are generally either privately negotiated over-the-counter (OTC) contracts or standard contracts transacted through regulated exchanges. The Group enters into derivative contracts for trading and risk management purposes.

The Group's most frequently used derivative products are interest rate, cross-currency and commodity swaps, foreign exchange forward contracts, interest rate and foreign currency options, forward rate agreements, and foreign currency and interest rate futures.

Swaps

Swaps are contractual agreements between two parties to exchange a series of cash flows on a specified notional amount for a predetermined period.

Interest rate swaps are used to adjust exposure to interest rate risk by modifying the repricing or maturity characteristics of assets and liabilities.

Cross-currency swaps involve the exchange of fixed or floating rate interest payments in one currency for the receipt of fixed or floating interest payments in another currency.

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Forwards and futures

Forwards and futures are contractual agreements to either buy or sell a specified currency, commodity or financial instrument at a specific price and date in the future. Forwards are customized contracts transacted in the OTC market. Futures are transacted in standardized amounts on regulated exchanges and are subject to daily margining.

Options

Options are contractual agreements that convey the right but not the obligation to either buy or sell a specific amount of a currency, commodity or financial instrument at a fixed price either at a fixed future date or at any time within a fixed future period.

Options also include caps, collars and floors, which are contractual agreements where the writer agrees to pay the purchaser, based on a specified notional amount, the agreed upon difference between the market rate and the prescribed rate of the cap, collar or floor.

Collateral and netting

To reduce credit risk specifically related to its derivative transactions, the Group enters into master netting agreements whenever possible and, when appropriate, obtains collateral from counterparties. These agreements provide that, in the event of default, all outstanding transactions with the counterparty will be terminated and all amounts outstanding will be settled on a net basis. The Group holds collateral in respect of credit related instruments where this is considered desirable, given the customer's assets. This provides the Group with a claim on these assets for both existing and future liabilities.

Adoption of SFAS 133

The Group adopted SFAS 133, as amended by SFAS 138 in 2001 for US GAAP reporting purposes. In accordance with the transition provisions of SFAS 133, the Group recorded in its US GAAP financial statements the following:

•

A net-of-tax cumulative-effect-type adjustment of CHF 123 million gain in earnings to recognize the difference (attributable to the hedged risks) between the carrying values and fair values of related hedged assets and liabilities; and


•

A net-of-tax cumulative-effect-type adjustment of CHF 17 million in Accumulated other comprehensive income to recognize at fair value all derivatives that are designated as cash flow hedging instruments.

The Group reclassified CHF 14 million from the transition adjustment that was recorded in accumulated other comprehensive income into US GAAP earnings during the twelve months following initial application to December 31, 2001.

Accounting for derivative and hedging activities

Under US GAAP, all derivatives are recognized on the balance sheet at their fair value. The fair values of derivatives are determined using various methodologies, including quoted market prices where available, prevailing market rates for instruments with similar characteristics and maturities, net present value analysis or other pricing models, as appropriate.

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On the date the derivative contract is entered into, the Group designates the derivative as one of the following for US GAAP purposes:

(1)

A trading instrument,

(2)

A risk management transaction not qualifying for US GAAP hedge accounting,

(3)

A hedge of the fair value of a recognized asset or liability, or a fair value hedge,

(4)

A hedge of a forecasted transaction or of the variability of cash flows to be received or paid related to a recognized asset or liability, or a cash flow hedge, or

(5)

A hedge of a net investment in a foreign operation.

Trading derivatives are reported in Trading account assets or Trading account liabilities with changes in their fair value recognized as they occur in Trading revenue. All other derivatives are reported in Other assets or Other liabilities.

Changes in the fair value of derivatives which have been designated and qualify as fair value hedges are recorded in current-period earnings in the same line item as the gain or loss on the hedged assets or liabilities that is attributable to the hedged risk. The ineffective portion of the change in the fair value hedge is recorded in Other revenue or Other expenses as it occurs.

The effective portion of the change in the fair value of a derivative that is designated and qualifies as a cash flow hedge is recorded in Other comprehensive income. These amounts are reclassified into earnings when the variable cash flow from the hedged item impacts earnings (e.g., when periodic settlements on a variable rate asset or liability are recorded in earnings). The ineffective portion of the change in the fair value of a cash flow hedging derivative is recorded in Other revenue or Other expenses as the change occurs.

Foreign currency hedges, which are used to hedge the variability of functional currency-equivalent cash flows, are accounted for as cash flow hedges as described above. Derivatives that are designated and qualify as foreign currency hedges of the fair value of a foreign currency-denominated asset or liability are accounted for as fair value hedges as described above.

The effective portion of the change in the fair value of a derivative used as a hedge of a net investment in a foreign operation is recorded in the cumulative translation adjustments account within Other comprehensive income. The ineffective portion of the change is recorded as Other revenue or Other expenses as it occurs.

The Group formally documents all relationships between hedged instruments and hedged items, and its risk-management objectives and strategy for undertaking hedge transactions. All derivatives that are designated as fair value, cash flow, or foreign currency hedges are linked to specific assets and liabilities on the balance sheet or specific forecasted transactions. The Group also formally assesses, at the hedge's inception and on an ongoing basis, whether the derivatives that are used in hedging transactions are highly effective in offsetting changes in fair values or cash flows of hedged items attributable to the hedged risk. When it is determined that a derivative is not highly effective as a hedge or that it has ceased to be a highly effective hedge, the Group discontinues hedge accounting prospectively as discussed below. The effectiveness of hedging relationships is determined by evaluating correlation between the hedged item and hedging instrument.

The Group discontinues hedge accounting prospectively in the following circumstances for the following reasons:

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(1)

It is determined that the derivative is no longer effective in offsetting changes in the fair value or cash flows of a hedged item (including forecasted transactions);

(2)

The derivative expires or is sold, terminated, or exercised;

(3)

The derivative is no longer designated as a hedge instrument, because it is unlikely that the forecasted transaction will occur; or

(4)

The Group determines that designation of the derivative as a hedge instrument is no longer appropriate.

When hedge accounting is discontinued because it is determined that the derivative no longer qualifies as an effective fair value hedge, the derivative will continue to be carried on the balance sheet at its fair value, and the hedged asset or liability will no longer be adjusted for changes in fair value attributable to the hedged risk. When hedge accounting is discontinued on a cash flow hedge, the net gain or loss shall remain in Accumulated other comprehensive income and be reclassified into earnings in the same period or periods during which the formerly hedged transaction affects earnings. When hedge accounting is discontinued because it is probable that a forecasted transaction will not occur within the original specified time period or with the additional time period as specified in SFAS 133, the derivative will continue to be carried on the balance sheet at its fair value, and gains and losses that were accumulated in Accumulated other comprehensive income will be recognized immediately in earnings. In all other situations in which hedge accounting is discontinued, the derivative will be carried at its fair value on the balance sheet, with changes in its fair value recognized in current period earnings, unless redesignated as a hedging instrument.

Use of derivative instruments

The Group maintains an overall interest rate risk management strategy that incorporates the use of derivative instruments to minimize significant unplanned fluctuations in earnings that are caused by interest rate volatility. The Group's goal is to manage interest rate sensitivity by modifying the repricing or maturity characteristics of certain assets and liabilities so that the net interest margin is not, on a material basis, adversely affected by movements in interest rates. As a result of interest rate fluctuations, hedged assets and liabilities will appreciate or depreciate in market value. Income or loss on the derivative instruments that are linked to the hedged assets and liabilities will generally offset the effect of this unrealized appreciation or depreciation. The Group views this strategy as a prudent management of interest rate sensitivity, such that earnings are not exposed to undue risk presented by changes in interest rates.

The Group uses various hedging strategies that are developed through a review of potential hedging techniques and using analysis from financial simulation models and other internal and industry sources to identify the most cost effective method to hedge the risk exposure.

Trading activities

The Group is active in most of the principal trading markets of the world, using the majority of the popular trading and hedging products. This includes the use of swaps, futures, options and structured products (custom transactions using combinations of derivatives) in connection with its sales and trading activities. As a dealer, the Group's sales activities include acting as principal in structuring and marketing derivative products to customers at competitive prices to enable them to transfer, modify or reduce current or expected risks. Trading activities include market-making, positioning and arbitrage activities,

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including derivative transactions entered into for risk management purposes that do not otherwise qualify for hedge accounting. These derivatives are presented in Other assets. The majority of the Group's derivatives held at December 31, 2002, were used for trading activities.

Fair value hedges

The Group typically enters into interest rate swaps to manage its exposure to interest rate risk. The Group will generally use these swaps to convert fixed rate assets or liabilities to variable rates. The Group uses cross currency swaps to convert foreign currency denominated fixed rate assets or liabilities to floating rate functional currency assets or liabilities. The Group uses forward contracts and option contracts to hedge its exposure to changes in the fair value of equity instruments. The Group uses foreign currency forwards to hedge the foreign currency risk associated with available-for-sale securities.

For the years ended December 31, 2002 and 2001, the Group recognized net losses on derivative instruments of CHF 6 million and CHF 14 million, respectively (reported as Other expenses in the consolidated income statement), which represented the sum of the ineffective portion of all fair value hedges and the amount excluded from the assessment of hedge effectiveness.

Cash flow hedges

The Group generally uses interest rate swaps to convert floating rate assets or liabilities to fixed rates. The Group uses cross currency swaps to convert foreign currency denominated fixed and floating rate assets or liabilities to fixed rate functional currency assets or liabilities. For the years ended December 31, 2002 and 2001, there was no related profit or loss.

Net losses associated with cash flow hedges expected to be reclassified from Accumulated other comprehensive income to earnings within twelve months of December 31, 2002 are CHF 5 million, compared to CHF 8 million as of December 31, 2001.

Hedges of net investments in foreign operations

The Group typically uses forward exchange contracts and foreign currency denominated debt to hedge selected net investments in foreign operations. The purpose of this hedge is to protect against adverse movements in exchange rates. For the years ended December 31, 2002 and 2001, there were no net gains or losses related to these derivatives included in the cumulative translation adjustment within Other comprehensive income.

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49.18    Litigation

We are involved in a number of judicial, regulatory and arbitration proceedings, including those described below, concerning matters arising in connection with the conduct of our businesses. These actions have been brought on behalf of various classes of claimants and, unless otherwise specified, seek damages of material and/or indeterminate amounts. We believe, based on currently available information, that the results of such proceedings, in the aggregate, will not have a material adverse effect on the financial condition of Credit Suisse Group as a whole, but could be material to our operating results for any particular period. For additional information about legal proceedings involving CSFB (USA), Inc., our indirectly wholly owned subsidiary, please refer to the Annual Report on Form 10-K, Quarterly Reports on Form 10-Q and Current Reports on Form 8-K filed by CSFB (USA), Inc. with the SEC.

World War II settlement

Swiss banking settlement

In October 1996, several class action lawsuits were brought against us and another Swiss bank in the United States District Court for the Eastern District of New York. In January 1999, an agreement was signed with various Jewish groups and the lawyers representing the US class action plaintiffs on a global settlement that would resolve all claims against all Swiss businesses with the exception of certain named life insurance carriers, including our subsidiary Winterthur Life, relating to the World War II era. On July 26, 2000, the court approved the global settlement, and on November 22, 2000, the court adopted a plan for distributing the settlement funds. The full and conclusive settlement committed the defendant Swiss banks to pay USD 1.25 billion under certain terms and conditions. We committed to pay up to one-third of this sum. On November 23, 2000, we paid the final installment into an escrow fund. A small number of persons have elected to opt out of the settlement and not to participate in the class action. Such persons' claims were not released by the settlement. In addition, a number of appeals challenging the fairness of the settlement, or the distribution plan, were filed by purported class members, but all of those appeals have been denied; therefore, the settlement is fully effective. Accordingly, the settlement money paid into the escrow fund has been transferred to a settlement fund that is fully under the control of the court and class plaintiffs' counsel. We and another bank have filed an appeal challenging a ruling by the court that seeks to narrow in two respects the scope of the releases given to Swiss companies and their affiliates who are alleged to have used slave labor during World War II. The court of appeals issued a favorable ruling with respect to one such issue and an unfavorable one with respect to the other. An agreement in principle to resolve this aspect of the dispute has now been reached, subject to approval by the district court.

Claims against Winterthur Life

In 1997, a class action lawsuit, referred to as the Cornell case, was filed against 16 European insurance companies, including Winterthur Life, in the United States District Court for the Southern District of New York. Winterthur Life did not receive a release under the Swiss banking settlement described above. The plaintiffs claimed that these companies failed or refused to pay out benefits, particularly in connection with life policies, to which victims or survivors of the Holocaust were entitled. In January 1999, Winterthur Life was named as a defendant in a second class action, also in the Southern District of New York, referred to as the Winters/Schenker case, which asserts the same or similar claims. In January 2000, the Cornell case was dismissed. In July 2002, the Winters/Schenker case was dismissed as well.

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In addition to the litigation and in response to actions by various American insurance regulators, in August 1998 an agreement was reached with the regulators, Jewish organizations and other European insurers, establishing a common procedure for the filing and processing of life insurance claims related to the Holocaust. The organization established for this purpose, the International Commission on Holocaust Era Insurance Claims, or ICHEIC, has initiated procedures for claims outreach, claims handling, the publication of lists of policy holders, the auditing of the insurers, and similar matters. Winterthur Life is taking an active part in ICHEIC.

The American Insurance Association, and certain of the Winterthur legal entity's US-domiciled insurance subsidiaries, along with several other US-domiciled insurance companies affiliated with non-US entities have challenged in court proceedings legislation in the State of California purporting to suspend the licenses of California insurers if the State determines that the insurers (or their non-US affiliates) have not followed certain procedures for insurance claims relating to the Holocaust, the outcome of which challenge is at the present time uncertain.

South Africa

Two purported class actions have been filed against us in the United States District Court for the Southern District of New York and another case that is not a class action has been filed against us in the United States District Court for the Eastern District of New York alleging that we and numerous other defendants are liable under international and US law by virtue of doing business in South Africa during the apartheid era prior to 1995. Efforts are under way to consolidate these and other similar cases against others in the Southern District of New York. We have not been properly served with process in any of the three cases. We intend to defend ourselves vigorously against all of the claims asserted.

Governmental/Regulatory Inquiries Relating to IPO Allocation/Research-related Practices

In early 2002, in connection with industry-wide investigations into research analyst practices and certain IPO allocation practices, CSFB received subpoenas and/or requests for information from the following governmental and regulatory bodies: (1) the NYAG; (2) the MSD; (3) the SEC; (4) the NASDR; (5) the NYSE; and (6) the United States Attorneys' Office for the Southern District of New York. The SEC, NASDR and NYSE have conducted a joint investigation.

CSFB has cooperated fully with these investigations, and has produced a significant volume of documents, consisting primarily of e-mails, compensation-related information and research reports. During these investigations, the NASDR, NYAG and MSD have taken testimony from various present and former employees of CSFB. The investigations have focused on equity research independence and the allocation of certain IPO shares to senior executives of the firm's clients (a practice that regulators have referred to as "spinning").

On September 19, 2002, the MSD referred certain aspects of its investigation to the NYAG to determine whether CSFB or any of its employees engaged in activity that would constitute a violation of New York criminal laws. The NYAG is continuing its investigation in response to the referral.

On October 21, 2002, the MSD filed an administrative complaint against CSFB, alleging violations of the Massachusetts Uniform Securities Act and seeking the imposition of a USD 1.9 million fine and

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various administrative remedies; CSFB filed an answer denying these charges on November 25, 2002. CSFB expects the MSD's allegations to be settled as part of a recently announced global agreement in principle, discussed below.

On December 20, 2002, CSFB and other financial services firms reached an agreement in principle with a coalition of state and federal regulators and self-regulatory organizations to resolve pending investigations. Pursuant to the agreement in principle, CSFB agreed, without admitting or denying the allegations, among other things, (i) to pay USD 150 million, of which USD 75 million is a civil penalty and USD 75 million is for restitution for investors, (ii) to adopt internal structural and operational reforms that will further augment the steps it has already taken to ensure research analyst independence and promote investor confidence, (iii) to contribute USD 50 million over five years to provide third-party research to clients and (iv) to adopt restrictions on the allocation of shares in IPOs to corporate executives and directors.

Several governmental and regulatory authorities have recently issued subpoenas to, and/or made requests for documents and information from, CSFB concerning the firm's preservation and production of documents in 2000 in response to then-pending investigations into the firm's allocation of shares in IPOs and subsequent transactions and commissions, including an investigation by the U.S. Attorney's Office for the Southern District of New York, which was concluded in December 2001 without charges being filed, and SEC and NASDR investigations that were settled in January 2002. CSFB is cooperating with the authorities in their investigations.

Litigation Relating to IPO Allocation/Research-related Practices

Since January 2001, CSFB LLC, an affiliate of CSFB LLC and several other investment banks, have been named as defendants in several putative class action complaints filed in the US District Court for the Southern District of New York concerning IPO allocation practices. On April 19, 2002, the plaintiffs filed consolidated amended complaints alleging various violations of the federal securities law resulting from alleged material omissions and misstatements in registration statements and prospectuses for the IPOs, and in some cases follow-on offerings, and with respect to transactions in the aftermarket. The complaints contain allegations that the registration statements and prospectuses either omitted or misrepresented material information about commissions paid to investment banks and aftermarket transactions by certain customers that received allocations of shares in the IPOs. The complaints also allege that misleading analyst reports were issued to support the issuers' allegedly manipulated stock price and that such reports failed to disclose the alleged allocation practices or that analysts were allegedly subject to conflicts of interest. On July 1, 2002, CSFB moved to dismiss the consolidated class action complaints. Oral argument on the motion was held on November 1, 2002, and on February 19, 2003, the court denied the motion as to the defendant investment banks and certain issuer and individual defendants.

Since March 2001, CSFB LLC and several other investment banks have been named as defendants in several putative class actions filed with the US District Court for the Southern District of New York, alleging violations of the federal and state antitrust laws in connection with alleged practices in allocation of shares in IPOs in which such investment banks were a lead or co-managing underwriter. The amended complaint in these lawsuits, which have now been consolidated into a single action, alleges that the underwriter defendants have engaged in an illegal antitrust conspiracy to require customers, in

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exchange for IPO allocations, to pay non-competitively determined commissions on transactions in other securities, to purchase an issuer's shares in follow-on offerings, and to commit to purchase other less desirable securities. The complaint also alleges that the underwriter defendants conspired to require customers, in exchange for IPO allocations, to agree to make aftermarket purchases of the IPO securities at a price higher than the offering price, as a precondition to receiving an allocation. These alleged "tie-in" arrangements are further alleged to have artificially inflated the market price for the securities. On May 24, 2002, CSFB moved to dismiss the amended complaint. Oral argument was held on January 17, 2003, and we are now awaiting the court's decision.

On May 25, 2001, CSFB LLC was sued in the US District Court for the Southern District of Florida by a putative class of issuers in IPOs in which CSFB LLC acted as lead manager. The complaint alleged that CSFB LLC underpriced IPOs, accepted excessive brokerage commissions in exchange for allocations in IPOs, required investors to give CSFB LLC a share of IPO profits, and used IPO allocations to obtain additional investment banking business, all in breach of the underwriting agreements. This case was subsequently transferred to the US District Court for the Southern District of New York. An amended complaint was filed on February 4, 2002 in this matter alleging, among other things, a claim for indemnification in the initial public offerings matter. On March 29, 2002, CSFB LLC moved to dismiss this complaint. On June 25, 2002, the court denied CSFB LLC's motion to dismiss. In December 2002, prior to a motion for class certification being filed, MDCM Holdings, Inc., the putative class representative, informed the court that it wished to withdraw from the action. Notice of MDCM Holdings' decision has been provided to the putative class and a March 26, 2003 deadline has been set for a putative class member to substitute as the putative class representative. If no member of the putative class seeks to substitute for MDCM Holdings, the action will be dismissed.

On November 15, 2002, CSFB (USA), Inc., as alleged successor-in-interest for a subsidiary then known as Donaldson, Lufkin & Jenrette Securities Corporation (now Pershing LLC), was sued in the US District Court for the Southern District of New York on behalf of a putative class of issuers in IPOs for which it acted as underwriter. The complaint alleges that the issuers' IPO's were underpriced, and that Pershing LLC allocated the underpriced IPO stock to certain of its favored clients and subsequently shared in portions of the profits of such favored clients pursuant to side agreements or understandings. This purported conduct is alleged to have been in breach of the underwriting agreements.

Several putative class action lawsuits have been filed against CSFB LLC in the wake of publicity surrounding various governmental and regulatory investigations into the practices of equity research analysts. Thus far, cases have been brought against CSFB LLC in US District Courts for the Southern District of New York and the District of Massachusetts on behalf of purchasers of shares of Agilent Technologies, Inc., AOL Time Warner Inc., Covad Communications Co. and Razorfish, Inc. An individual action has been filed in the Superior Court of the State of California by a purchaser of shares of Clarent Corporation. The complaints generally assert claims under Section 10(b) of the Exchange Act and Rule 10b-5 promulgated thereunder, and Section 20(a) of the Exchange Act. The actions relating to Covad Communications Co. have been consolidated in the US District Court for the Southern District of New York, and CSFB and its co-defendants have filed a motion to dismiss the complaint. The actions related to Agilent Technologies, Inc., AOL Time Warner Inc. and Razorfish, Inc. have not yet been consolidated and no lead plaintiff or lead counsel has been appointed in any of those cases.

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Investigations of regulators relating to Japan and the United Kingdom

In 1999, the Securities and Futures Authority of the United Kingdom, or UK SFA, the principal regulator of our broker-dealer operations in the United Kingdom, commenced an inquiry into the activities that were the subject of examination by the Financial Supervisory Agency of Japan, which was disclosed in previous SEC filings, as well as other activities associated with our operations in Tokyo. On December 1, 2001, the UK SFA ceased to exist, and the UK SFA's successor regulator, the FSA, assumed the investigation. On March 8, 2002, Credit Suisse First Boston International, or CSFBi, our derivatives business subsidiary, received the FSA's "Preliminary Findings Letter," setting forth the FSA's findings of fact upon which a decision to institute disciplinary proceedings against CSFBi would be based. On December 19, 2002, the FSA and CSFBi reached a full and final settlement of this matter. In connection therewith, the FSA found that between 1995 and 1998, CSFBi's conduct, primarily in Japan, violated certain UK regulatory rules regarding internal organization and controls and relationships with regulators and other authorities. CSFBi has accepted these findings and paid a fine to the FSA. In the four years since the conduct that forms the basis of these findings took place, CSFB has implemented changes in senior management and made extensive organizational, personnel and structural reforms to address the conduct.

Securities and Exchange Board of India investigation

On April 18, 2001, the Securities and Exchange Board of India, or SEBI, issued an interim order requiring that Credit Suisse First Boston (India) Securities Private Limited, or CSFB India, not undertake any new stock broking business until further orders were passed by SEBI. The interim order, which was issued following a preliminary inquiry by SEBI but prior to any hearing on the matter, was based on a preliminary determination by SEBI that (i) certain purchase and sale transactions in certain shares executed by CSFB India for a client in 2001 were financing transactions that were structured to give a misleading appearance of active trading in such shares, leading to the creation of an artificial market and (ii) CSFB India had entered into unauthorized lending of securities. Subsequently, the scope of the inquiry was expanded to include transactions entered into from April 1, 2000 to March 31, 2001. On June 13, 2002, SEBI entered a final order and suspended the stockbroker registration of CSFB India for two years, with the term of the suspension beginning on April 18, 2001.

Enron-related litigation and inquiries

Numerous actions have been filed against CSFB LLC and its affiliates relating to Enron Corp. or its affiliates, or Enron. On April 8, 2002, CSFB LLC and certain other investment banks were named as defendants along with, among others, Enron, Enron executives and directors, lawyers and accountants in two putative class action complaints filed in the US District Court for the Southern District of Texas. The first, Newby v. Enron Corp., et al., was filed by purchasers of Enron securities and alleges claims against CSFB LLC for violations of the federal securities laws. The second, Tittle, et al. v Enron Corp., et al., was filed by Enron employees who participated in various Enron employee savings plans and alleges violations of the Employee Retirement Income Security Act and the Racketeer Influenced and Corrupt Organizations Act and asserts state law negligence and civil conspiracy claims. A motion by CSFB LLC to dismiss the complaint in Newby was denied in December 2002, and CSFB LLC has since answered the complaint, denying all liability. On May 8, 2002, CSFB LLC moved to dismiss the Tittle complaint, and that motion is pending before the court. In both matters, plaintiffs have filed motions for class

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certification that are pending before the court. Several actions filed against CSFB LLC and certain CSFB-related affiliates, along with other parties, have been consolidated with the Newby action and stayed pending the court's decision on certain motions to dismiss by other defendants in Newby that are still pending. Two of the consolidated actions have duplicate proceedings in the US District Court for the Southern District of New York.

Additional actions have been filed in various US federal and state courts against CSFB LLC and/or certain CSFB-related affiliates, along with other parties, including (i) a series of putative class actions by purchasers of NewPower Holdings common stock alleging violations of the federal securities law, including Section 11 of the Securities Act of 1933 and Section 10(b) of the Exchange Act; (ii) an action filed by The Retirement Systems of Alabama alleging violations of state and federal securities laws and Alabama statutory and common law; (iii) a complaint by two investment funds that purchased certain Enron-related securities alleging claims of insider trading and other violations of California law; (iv) a complaint by investment funds or fund owners that purchased senior secured notes issued by Osprey Trust and Osprey Trust I alleging violations of California law and fraud, deceit and negligent misrepresentation; (v) an action by AUSA Life Insurance Company, Inc. and eleven other insurance company plaintiffs alleging violations of state securities law, common law fraud and civil conspiracy in connection with offerings of notes and certificates by certain Enron special purpose entities, including Osprey Trust; (vi) a complaint by purchasers of Enron, Marlin, Osprey and Montclare Trust securities alleging violations of state securities law, fraud and deceit, and civil conspiracy; (vii) an action by CalPERS, California's state pension fund, alleging violations of federal securities law, California law and fraud and concealment in connection with CalPERS' investment in certain notes issued by Enron; (viii) an action filed by an individual purchaser of Enron notes alleging violations of California law, fraud and concealment and breach of fiduciary duty in connection with offerings of those notes; and (ix) four actions against Arthur Andersen, in which Andersen has brought a claim for contribution against CSFB LLC and CSFB-related affiliates and other parties as third-party defendants.

In December 2001, Enron filed a petition for Chapter 11 relief in the US Bankruptcy Court for the Southern District of New York. On September 12, 2002, the court entered an order allowing discovery from more than 100 institutions, including CSFB LLC. We have produced documents on a rolling basis, subject to a confidentiality order. The bankruptcy examiner has requested additional discovery, including depositions, and CSFB LLC is voluntarily cooperating with such requests.

CSFB LLC and its affiliates have received requests for information from certain US Congressional committees and requests for information and/or subpoenas from certain governmental and regulatory agencies regarding certain transactions and business relationships with Enron and its affiliates, including certain Enron-related special purpose entities. We are cooperating fully with such inquiries and requests.

NASD anti-tying investigation

In September 2002, the NASD began an inquiry into the services provided by investment banks to customers that maintained a commercial banking relationship with any affiliates of the investment bank at the time such services were provided. It is our understanding that the NASD is investigating the question of whether improper "tying" of these various services took place. The NASD sent requests for information on this topic to CSFB and to a number of other financial institutions. CSFB is cooperating

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fully with this investigation and has produced and will continue to produce the requested documents and information.

Litigation provisions

The Group recorded a pre-tax provision of CHF 702 million at December 31, 2002 for the estimated costs of private litigation involving research analyst independence, certain IPO allocation practices, Enron and other related litigation. This provision is in addition to a pre-tax charge of CHF 234 million with respect to the agreement in principle with various US regulators involving research analyst independence and the allocation of IPO shares to corporate executive officers.

49.19    Deposits

The following table presents information concerning domestic and foreign deposits as of December 31. Designation of Switzerland versus foreign is based upon the location of the office receiving and recording the deposit. Amounts shown are Swiss GAAP reformatted to US GAAP presentation.

in CHF m	Switzerland	Foreign	Total 31.12.02	Switzerland	Foreign	Total 31.12.01
Non-interest bearing demand	5,338	1,231	6,569	9,570	2,467	12,037
Interest bearing demand	36,479	6,436	42,915	30,926	3,227	34,153
Savings deposits	39,730	9	39,739	38,536	11	38,547
Time deposits	40,705	125,610	166,315	47,974	136,365	184,339
Total deposits	122,252	133,286	255,538	127,006	142,070	269,076

At December 31, 2002, the remaining maturities of time deposits are as follows:

in CHF m
2003	150,055
2004	4,287
2005	207
2006	8,424
2007	162
Thereafter	3,180
Total time deposits	166,315

The aggregate amount of deposits that have been reclassified as loan balances at December 31, 2002 and 2001 were CHF 419 million and CHF 657 million, respectively.

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49.20    Liabilities for loss and loss adjustment expenses for the non-life insurance business

The following table reconciles the gross non-life reserves in the reconciliation of loss and loss adjustment expenses, or LAE, presented below to that presented in note 34 within the provision for unpaid claims and claim adjustment expenses and provisions for annuities at:

in CHF m	31.12.02	31.12.01	31.12.00
Gross loss and LAE reserves presented below	19,374	19,588	20,604
Winterthur Reinsurance business 1)	282	377	493
German Health 2)	194	198	195
Loss and LAE reserves	19,850	20,163	21,292

¹⁾

The Winterthur Reinsurance business was divested in 1998. A 100% reinsurance contract was entered into for those contracts that were not novated.

²⁾

German health business, which is included in the non-life business segment, has been excluded as it is not a property-casualty business.

The following table is a summary reconciliation of the beginning and ending loss and LAE reserves, including the effect of reinsurance ceded, for the non-life insurance business for each of the years ended December 31:

in CHF m	2002		2001		2000
Loss and LAE reserves at beginning of financial year	19,588		20,604		19,072
Less reinsurance recoverables on unpaid losses at beginning of financial year	(2,892	)	(3,914	)	(2,650	)
Net loss and LAE reserves at beginning of financial year	16,696		16,690		16,422
Current accident year	11,038		10,707		9,608
Prior accident years 1)	(175	)	79		100
Provision for losses and LAE for claims incurred	10,863		10,786		9,708
Current accident year	(5,212	)	(4,796	)	(4,550	)
Prior accident years	(3,983	)	(4,750	)	(4,835	)
Loss and LAE payments for claims incurred	(9,195	)	(9,546	)	(9,385	)
Unrealized foreign exchange loss/(gain)	(661	)	(234	)	(317	)
Other 2)	(672	)	(1,000	)	262
Net loss and LAE reserves at end of financial year	17,031		16,696		16,690
Reinsurance recoverables on unpaid losses at end of financial year	2,343		2,892		3,914
Loss and LAE reserves at end of financial year 3)	19,374		19,588		20,604

¹⁾

The profit on prior years in 2002 is primarily due to subsidiaries in Italy and the UK. The loss on prior accident years in 2001 is primarily due to subsidiaries in USA and Spain. In 2000, this was primarily due to subsidiaries in Spain and Portugal and adverse development related to the December 1999 winter storms in Europe.

²⁾

In 2002, this included loss and loss expense reserves of the French Portfolio and the Austrian subsidiary of CHF 681 million in total, which Winterthur sold in 2002. In 2001, this included loss and loss expense reserves of CGU of CHF 513 million and Prudential Plc portfolio of CHF 417 million, which Winterthur Insurance acquired in 2001, and of Winterthur International, Winterthur Swiss Insurance (Asia), Hong Kong and the Czech non-life portfolio of CHF 1,944 million, which Winterthur sold in 2001. In 2000, this included loss and expense reserves of NIG of CHF 633 million, which Winterthur Insurance acquired in 2000, and the deferred gain of CHF 381 million on the H.S. Weavers retroactive reinsurance contract.

³⁾

Reserves for businesses disposed of have been excluded from the above table.

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Liabilities for gross losses and LAE for asbestos and environmental claims were CHF 742 million and CHF 936 million at December 31, 2002 and 2001, respectively. CHF 639 million in 2002 and CHF 799 million in 2001 relate to claims in North America. The change in reserves in 2002 of CHF 194 million predominately relates to foreign exchange differences of CHF 135 million.

Liabilities for net losses and LAE for asbestos and environmental claims were CHF 192 million and CHF 268 million at December 31, 2002 and 2001, respectively. Of this amount, CHF 107 million in 2002 and CHF 157 million in 2001 relate to claims in North America. The change in reserves in 2002 of CHF 76 million includes foreign exchange differences of CHF 25 million. Included in this exposure are policies written by H.S. Weavers.

H.S. Weavers was an underwriting agent that wrote business on behalf of Winterthur Insurance through year-end 1983. The agency accepted commercial umbrella and excess casualty business from US companies, and, as a result, has significant exposure to asbestos, pollution and other health hazard claims. Effective July 1, 2000, Insurance purchased reinsurance coverage up to USD 800 million to limit exposure from this book of business. In addition, during 2000, Insurance also sold Republic Insurance Company, which eliminated a significant amount of the Group's exposure to asbestos, pollution and other health hazard risks related to this book of business. Due to uncertainties such as changes in legislation, additional liabilities may arise for amounts in excess of the current reserves, which cannot be reasonably estimated. However, the Group believes it is not likely that the additional claims, if any, will have a material adverse effect on the Group's financial condition and results of operations.

At December 31, 2002 and 2001 the carrying value of certain annuity type non-life reserves that are discounted, on a gross basis, amounts to CHF 3,636 million and CHF 3,472 million, respectively. The discount amounts were CHF 1,758 million and CHF 1,708 million for 2002 and 2001, respectively. The discount rates used were between 3% and 5% in both years.

49.21    Participating policies of insurance business

Participating policies are policies where policyholders participate in the profits and the policies are expected to pay dividends based on the experience of the insurer.

Participating business for non-life insurance represents approximately 8% of the total non-life insurance premium income each of for the years ended December 31, 2002 and 2001.

Participating business for life insurance represents approximately 75% and 67% of the total life insurance premiums in force at December 31, 2002 and 2001, respectively, and approximately 67% and 69% of life insurance premium income for the years ended December 31, 2002 and 2001, respectively.

The amount of dividends to be paid is determined annually by the board of directors of the respective companies where the dividends are paid. Amounts allocable to participating policyholders are based on company practice, legal requirements and/or market conditions, depending on the jurisdiction. At December 31, 2002 and 2001, the amount of policyholder dividends incurred for non-life was an income of CHF 209 million and an expense of CHF 193 million, respectively. The amount of policyholder dividends incurred for life insurance was CHF 1,230 million and CHF 1,558 million at December 31, 2002 and 2001, respectively.

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49.22    Related party transactions

Information on loans made by Credit Suisse Group or any of its subsidiaries to members of the Board of Directors and the Group Executive Board or to companies in which a member holds more than 50% of the voting rights, is available in note 37.

The majority of loans outstanding with the above-mentioned group of individuals are either mortgages or loans against securities. All mortgage loans are granted either with variable interest rates or with fixed interest rates over a certain period. Typically, fixed mortgages are granted for periods of up to five years. Interest rates applied are based on refinancing costs plus a margin and are consistent with those applicable to other employees. When granting a loan to these individuals the same credit approval and risk assessment procedures apply as for loans to all employees. Loans against securities are granted at interest rates applicable to similar loans granted to other employees. Interest rates applied are based on refinancing costs plus a margin. In principle, members of the Board of Directors are not granted employee conditions on any loans extended to them, but are normally subject to conditions applied to customers with a comparable credit standing. In addition, some of the members of the Group Executive Board have outstanding loans in connection with certain private equity investment opportunities that Credit Suisse First Boston offers to some of its employees. Interest rates applied are based on refinancing cost plus an adequate margin. Such loans are no longer extended.

In addition, banking subsidiaries of Credit Suisse Group have entered into financing and other banking agreements with companies in which current members of the Board of Directors or the Group Executive Board have a significant influence. As of December 31, 2002, the total exposure to such related parties amounted to CHF 147 million, including all advances, committed but undrawn credit lines and contingent liabilities. The highest exposure to such related parties for any of the years in the three-year period ended December 31, 2002 did not exceed CHF 147 million.

Credit Suisse Group has reviewed all outstanding loans for compatibility with the Sarbanes-Oxley Act and has taken the necessary measures to ensure compliance.

49.23    Pension and post-retirement benefits

Refer to note 36 for additional information on pension and post retirement benefits. The provisions of SFAS No. 87, Employers Accounting for Pensions (SFAS 87) have been applied only to the Group's main plans. Both the assets and covered employees within these main plans comprise in excess of 97% of the respective assets and covered employees in all of the Group's defined benefit plans. The measurement date for the Group's main plans is September 30, 2002. Amounts shown below are in accordance with US GAAP.

Swiss pension plans

The pension funds of the Group in Switzerland are defined benefit plans and are set up as trusts domiciled in Zurich and Winterthur. All employees in Switzerland are covered by these plans. The pension plan benefits exceed the minimum benefits required under Swiss law.

Contributions are paid for by the Group and the employees. The employee contributions are calculated as a percentage of the annual salary and are deducted monthly. The percentages deducted from the

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salary depend upon the employee's age and salary, and vary between 7.5% and 12%. The employer's matching contributions are 167% of the employees' contributions.

Foreign pension plans

Various pension schemes exist in the foreign locations of Credit Suisse Group, including both defined benefit and defined contribution plans. The plans' retirement benefits depend on age, contributions and salary. The funding policy for these plans is consistent with local government and tax requirements. The assumptions used are derived using local economic conditions. Material defined benefit plans exist in the US, the UK and Germany. These retirement plans provide benefits in the event of retirement, death, disability, or employment termination.

Post-retirement benefits other than pensions

In the United States and Canada, the Group sponsors post-retirement life insurance plans and provides health care benefits for certain retirees and employees when they retire.

Defined benefit plans

The following table shows the components of net periodic pension expense for the Swiss and foreign defined benefit plans for the years ended December 31:

		Pension benefits
in CHF m		2002		2001		2000
Benefits earned during the year		504		423		406
Interest cost on benefit obligation		684		634		591
Expected return on plan assets		(935	)	(861	)	(824	)
Amortization of
	Unrecognized transition obligation/(asset)	68		67		68
	Prior service cost	36		3		2
	Unrecognized (gains)/losses	21		(28	)	(1	)
Net periodic pension cost		378		238		242
Settlement loss		62		59		18
Total US GAAP pension cost		440		297		260

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The following table shows the changes in the benefit obligation and the fair value of plan assets during 2002 and 2001 and the amounts included in the Group's condensed consolidated US GAAP balance sheet for the Group's defined benefit pension and other post-retirement benefit plans at:

		Pension benefits				Post retirement benefits
in CHF m		31.12.02		31.12.01		31.12.02		31.12.01
Benefit obligation at the beginning of the year		16,070		13,857		70		69
Benefit obligation of countries added in current year		96		314		—		—
Plan participants contribution		286		254		1		0
Service cost		504		423		2		2
Interest cost		684		634		5		5
Plan amendments		162		233		—		(4	)
Settlement loss		(59	)	59		—		—
Actuarial (gains)/losses		117		953		7		1
Business combinations		32		(7	)	5		—
Benefit payments		(837	)	(632	)	(5	)	(5	)
Exchange rate (gains)/losses		(329	)	(18	)	(13	)	2
Benefit Obligation at the end of year		16,726		16,070		72		70
Fair value of assets at beginning of year		14,702		14,984		—		—
Assets of countries added in current year		81		262		—		—
Actual return on plan assets		(369	)	(989	)	—		—
Group contributions		758		782		5		5
Plan participants' contributions		286		254		—		—
Settlements		(72	)	29		—		—
Business combinations		25		—		—		—
Benefit payments		(837	)	(632	)	(5	)	(5	)
Exchange rate gain/(loss)		(210	)	12		—		—
Fair value of assets at end of year  1)		14,364		14,702		—		—
Funded status of the plan		(2,362	)	(1,368	)	(72	)	(70	)
Unrecognized
	Net transition obligation/(asset)	58		123		—		—
	Prior service cost	378		255		(2	)	(4	)
	Net actuarial (gains)/losses	2,225		962		1		(7	)
4th quarter employer contributions		284		146		1		1
Net amount recognized		583		118		(72	)	(80	)
Amounts recognized in the US GAAP balance sheet consist of 2)
Prepaid benefit costs		524		428		—		—
Accrued benefit liability		(1,056	)	(665	)	(72	)	(80	)
Intangible asset		329		79		—		—
Accumulated other comprehensive income		786		276		—		—
Net amount recognized		583		118		(72	)	(80	)

¹⁾

At December 31, 2002 and 2001, the total value of Group securities included in plan assets was CHF 395 million and CHF 697 million, respectively. In 2002, the majority of these assets were invested in Credit Suisse Group bonds and in 2001 were invested in Credit Suisse Group shares. In addition, the majority of the plan assets of the Winterthur Pension Plan of Switzerland are fully insured with Winterthur Life Switzerland. The plan assets covered by this agreement amount to CHF 3,926 million and CHF 3,476 million at December 31, 2002 and 2001, respectively.

²⁾

For those plans whose accumulated benefit obligation exceeds plan assets, the aggregate accumulated benefit obligation was CHF 11,606 million and CHF 2,691 million, the projected benefit obligation was CHF 12,774 millions and CHF 3,095 million and the aggregate fair value of plan assets was CHF 10,327 million and CHF 2,015 million for the year 2002 and 2001, respectively.

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The weighted-average assumptions used in calculating the above amounts were:

in %	2002	2001	2002	2001
	Pension benefits		Post retirement benefits
Discount rate	4.1	4.4	6.3	7.0
Salary increases	2.6	3.5	—	—
Expected long-term rate of return on assets	5.9	6.0	—	—
Assumed health care cost increase	—	—	4.7	4.8

A 1% increase or decrease in the health care cost trend rate assumption would not have had a material impact on the accumulated post-retirement benefit obligation or expense for 2002 and 2001.

The valuation of the defined benefit plans results in significant pension benefit costs that are calculated based on actuarial valuation methods. Inherent in these valuations are key assumptions, including discount rate and expected return on plan assets.

The discount rates used reflect the rates at which the pension benefits could be effectively settled. For the determination of discount rates, the Group takes several factors into consideration. Depending on the availability of adequate statistical data the discount rate is either based upon high quality corporate bond rates or upon government bond rates plus a premium to approximate high quality corporate bond rates. Additionally, the change of the reference rates since the last measurement date is taken into consideration.

The expected rate of return on plan assets is determined on a plan-by-plan basis, taking into consideration the asset mix of the plan and observed historical returns. The rate of return on plan assets observed is compared to the long-term rate of return for those asset classes and, if available, also to benchmark indices for pension plan asset developments. Some plans are insured with a life insurance. The assumption made to determine the expected rate of return for insured plans are derived from the guaranteed interest of the insurance contract plus an estimate for the expected participation of the pension fund in the investment returns of the insurer in excess of the minimal contractual interest rate (policy holder dividends). The expected return on plan assets is calculated based upon a market-related value of plan assets that recognizes changes in fair value of the plan assets in a systematic and rational manner over five years.

Gains and losses due to changes in the amount of the projected benefit obligation or plan assets resulting from experience different from that assumed and from changes in assumptions (e.g., change in discount rate) are included as a component of net periodic pension and postretirement cost for a year if, as of the beginning of the year, that unrecognized gain or loss exceeds 10% of the greater of the projected benefit obligation or the market-related value of plan assets. The amount included in the net periodic pension and postretirement cost is the excess divided by the average remaining service period of active employees expected to receive benefits of the plan.

Defined Contribution Plans

The Credit Suisse Group also contributes to various defined contribution plans primarily in the US and the UK but also in other countries throughout the world. The contribution to these plans during 2002, 2001 and 2000 were CHF 164 million, CHF 109 million and CHF 102 million, respectively.

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49.24    Capital requirements

Banking operations

The Group, on a consolidated basis, is subject to risk-based capital and leverage guidelines, under the Swiss Federal Banking Commission, or FBC, and the Bank for International Settlements, or BIS, guidelines. These guidelines are used to evaluate risk-based capital adequacy. For purposes of complying with FBC and BIS capital requirements, total capital is divided into three categories:

•

Tier 1 capital (core capital);



•

Tier 2 capital (supplementary capital); and



•

Tier 3 capital (additional capital).

Tier 1 capital primarily includes paid-in share capital, reserves (defined to include retained earnings), capital participations of minority shareholders in fully consolidated subsidiaries, the reserve for general banking risks and audited current-year profits or losses, less anticipated dividends. Among other items, this is reduced by the Group's holdings of its own shares outside the trading book and goodwill. Tier 1 capital is supplemented for capital adequacy purposes by Tier 2 capital, which consists primarily of hybrid capital and subordinated debt instruments. A further supplement is Tier 3 capital, which consists of certain unsecured subordinated debt obligations with repayment restrictions. The sum of all three capital tiers, less non-consolidated participations in the industries of banking, finance and insurance, equals total capital. Under both FBC law and BIS guidelines, a bank must have a ratio of total eligible capital to aggregate risk-weighted assets of at least 8%, of which the Tier 1 capital element must be at least 4%.

For information regarding the key capital figures and ratios under the BIS guidelines, please refer to note 44.

The ratios measure capital adequacy by comparing eligible capital with risk-weighted assets positions, which include balance sheet assets, net positions in securities not held in the trading portfolio, off-balance sheet transactions converted into credit equivalents and market positions in the trading portfolio.

At December 31, 2002 and 2001, the Group was adequately capitalized under the regulatory provisions outlined under both FBC and BIS guidelines.

Broker-dealer operations

The Group's principal wholly owned subsidiaries, CSFB LLC and Pershing LLC, are registered broker-dealers, registered futures commission merchants and member firms of The New York Stock Exchange, Inc., or the "NYSE", As such, they are subject to the NYSE's net capital rule, which conforms to the Uniform Net Capital Rule pursuant to Rule 15c3-1 of the Securities Exchange Act of 1934, as amended. Under the alternative method permitted by this rule, the required net capital may not be less than two percent of aggregate debit balances arising from customer transactions or four percent of segregated funds, whichever is greater. If a member firm's net capital is less than four percent of aggregate debit balances, the NYSE may require the firm to reduce its business. If a member firm's net capital is less than five percent of aggregate debit balances, the NYSE may prevent the firm from expanding its

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business and declaring cash dividends. At December 31, 2002, CSFB LLC's and Pershing LLC's net capital of approximately USD 3.0 billion and USD 1.2 billion, respectively, was 156.5% and 25.9%, respectively, of aggregate debit balances, and in excess of the minimum requirement by approximately USD 2.9 billion and USD 1.1 billion, respectively. The Group's OTC Derivatives Dealer subsidiary, Credit Suisse First Boston Capital LLC, is also subject to the Uniform Net Capital Rule, but calculates its net capital requirements under Appendix F of Rule 15c3-1.

Certain other subsidiaries are subject to capital adequacy requirements. At December 31, 2002 and 2001, the Group and its subsidiaries complied with all applicable regulatory capital adequacy requirements.

Pershing LLC will be sold to The Bank of New York Company, Inc. in connection with the sale of Pershing, which is expected to close in the first half of 2003, subject to regulatory approvals and other conditions.

Insurance operations

The Group is required to maintain minimum solvency margins for its insurance business under the Swiss Code of Obligations. All insurance companies granted an insurance license in Switzerland are required to adhere to the following capital requirements:

in CHF m	Non-life	Life
Capital	0.6-10.0	5.0-10.0
Organization fund  1)	up to 50% of capital	3.0-5.0

¹⁾

The use of the organization fund is restricted. It can be used to cover incorporation and start-up extraordinary growth, and any losses.

The solvency margin for non-life is the greater of two calculations: (1) the premium margin based on the net premium income for the latest financial year; and (2) the claims margin, based on the net average claims expense for the last three financial years. The premium margin is calculated by taking 16-18% of the appropriate premium income less a deduction of up to 50% for the gross claims incurred in the previous financial year that were reinsured. The claims margin is calculated by multiplying 23-26% by the appropriate claims expense of up to 50% for the gross claims incurred in the previous financial year that were reinsured. The required solvency margin is the higher of the above two margins.

Life insurance companies are required to maintain a margin of approximately 4% of insurance reserves (1% of separate account reserves) plus 0.03% of the amount at risk under insurance policies. Required safety margin is calculated as: (1) the total of commitments for policies issued, provisions for claims outstanding and policyholders surplus; plus (2) 1% of the total of clause (1), but at least CHF 100,000.

The minimum solvency margin requirements in Switzerland are similar to the requirements for European Union member countries in accordance with European Union directives. Regulators outside the EU impose various capital and solvency requirements on insurers operating within their jurisdiction. Additionally, some local regulators require companies to maintain solvency margins which are higher than the solvency margins provided for by the regulations.

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49.24    Capital requirements (continued)

Based on a review of the Group's principal insurance subsidiaries at December 31, 2002, these subsidiaries were in compliance with all applicable solvency requirements.

Dividend restrictions

Certain of the Group's subsidiaries are subject to legal restrictions on the amount of dividends they can pay. For example, article 675 in conjunction with article 671 of the Swiss Code of Obligations restricts the amount of dividends that "Winterthur" Swiss Insurance Company and the Credit Suisse First Boston and Credit Suisse legal entities can pay.

At December 31, 2002, the Group was not subject to significant restrictions on its ability to pay dividends.

49.25    Credit Suisse Group (parent company only)

Condensed statement of income in CHF m	2002		2001	2000
Interest income and income from securities	1,624		1,343	1,620
Income from investments in Group companies 1)	1,820		3,141	4,091
Other income	335		555	270
Income	3,779		5,039	5,981
Interest expenses	471		423	376
Personnel expenses and directors' fees	105		115	112
Other expenses	134		182	154
Depreciation, write-offs and provisions	851		655	0
Taxes	(2	)	66	92
Expenses	1,559		1,441	734
Net profit for the year	2,220		3,598	5,247

¹⁾

Recognized on a cost basis, pursuant to Swiss Company law.

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Condensed balance sheet in CHF m	31.12.02	31.12.01
Assets
Liquid assets held at Group companies	2,639	1,497
Securities	605	1,438
Other receivables from third-parties	4	39
Receivables from Group companies	3	490
Accrued income and prepaid expenses	976	1,272
Total current assets	4,227	4,736
Investments in Group companies 1)	34,297	32,204
Long-term loans to Group companies	4,328	3,024
Securities	655	3,039
Total long-term assets	39,280	38,267
Total assets	43,507	43,003
Liabilities and shareholders' equity
Payables to third-parties	257	9
Payables to Group companies	1,056	1,161
Accrued expenses and deferred income	831	1,119
Total current liabilities	2,144	2,289
Bonds	3,400	3,650
Long-term loans from Group companies	4,399	3,827
Provisions	579	817
Total long-term liabilities	8,378	8,294
Share capital	1,190	3,590
Legal reserve	13,081	11,817
Reserve for own shares	1,950	2,469
Free reserves	14,540	14,100
Retained earnings:
Retained earnings brought forward	4	(3,154	)
Net profit for the year	2,220	3,598
Total shareholders' equity	32,985	32,420
Total liabilities and shareholders' equity	43,507	43,003

¹⁾

Recognized on a cost basis, pursuant to Swiss Company law

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Condensed cash flow statement in CHF m	2002		2001		2000
Cash flows from operating activities
Net profit	2,220		3,598		5,247
Net adjustments to reconcile net profit to net cash provided by operating activities	81		(531	)	(444	)
Net cash provided by operating activities	2,301		3,067		4,803
Cash flows from investing activities
Purchases of securities	3,814		(3,799	)	(4,158	)
Sales of securities	(805	)	4,469		2,648
Investments in and advances to subsidiaries	(3,907	)	(1,282	)	(11,407	)
Repayment of advances to subsidiaries	0		139		0
Net cash used in investing activities	(898	)	(473	)	(12,917	)
Cash flows from financing activities
Advances from subsidiaries	840		848		1,455
Issuance of bonds	1,250		0		600
Repayments of bonds	0		(500	)	(600	)
Proceeds from issuance of common shares	28		175		8,717
Dividends paid/repayment out of share capital	(2,379	)	(2,392	)	(1,917	)
Net cash provided by/(used in) financing activities	(261	)	(1,869	)	8,255
Net increase/(decrease) in liquid assets	1,142		725		141
Liquid assets at beginning of financial year	1,497		772		631
Liquid assets at end of financial year	2,639		1,497		772
Supplemental disclosure of cash flow information
Cash paid during the year for income taxes	53		31		78
Cash paid during the year for interest	483		429		364
Cash dividends received from subsidiaries	1,819		3,141		4,091

F-74

	Assurance
	KPMG Klynveld Peat Marwick Goerdeler SA		Telephone +41 1 249 31 31
	Badenerstrasse 172 CH-8004 Zurich	P.O. Box CH-8026 Zurich	Fax +41 1 249 30 41 www.kpmg.ch

Report of the Independent Auditors
The Board of Directors of Credit Suisse Group

Under date of February 21, 2003, we reported on the consolidated balance sheets of Credit Suisse Group and subsidiaries as of December 31, 2002 and 2001 and the related consolidated statements of income and cash flows for each of the years in the three year period ended December 31, 2002, which are included in the Form 20-F. In connection with our audits of the aforementioned consolidated financial statements, we also audited the related consolidated financial statement schedules I, III and IV in the Form 20-F. These financial statement schedules are the responsibility of Credit Suisse Group management. Our responsibility is to express an opinion on these financial statement schedules based on our audits.

In our opinion, such financial statement schedules, when considered in relation to the basic consolidated financial statements taken as a whole, present fairly, in all material respects, the information set forth therein.

As discussed in note 2 of the consolidated financial statements, Credit Suisse Group has modified for the financial year 2002 its accounting policies in relation to deferred taxation.

KPMG Klynveld Peat Marwick Goerdeler SA

/s/  BRENDAN R. NELSON    
Brendan R. Nelson
Chartered Accountant
Auditors in Charge
/s/  PETER HANIMANN    
Peter Hanimann
Certified Accountant

Zurich, February 21, 2003

Schedule I

Summary of investments — other than investments in related parties from the insurance business

December 31, 2002 in CHF m		Cost 1)	Fair value	Amount shown in the balance sheet
Debt securities
	Swiss Federal Government, cantonal or local governmental entities	10,269	10,974	10,974
	United States Government and government agencies and authorities	1,958	1,973	1,973
	Foreign governments	24,344	25,121	25,121
	Public utilities	1,156	1,185	1,185
	Convertibles and bonds with warrants attached	12	12	12
	All other corporate bonds	35,429	37,631	37,631
Time deposits		1	1	1
Fixed maturities		73,169	76,897	76,897
Public utilities		168	87	87
	Banks, trust and insurance companies	3,006	2,988	2,988
	Industrial, miscellaneous and all other	6,028	6,008	6,008
Equity securities		9,202	9,083	9,083
Other investments
	Mortgage loans on real estate	10,175	10,236	10,175
	Real estate	7,431	10,057	7,431
	Policy loans	738	738	738
	Separate account investments	13,395	13,395	13,395
	Other long-term investments	4,305	4,396	4,305
	Short-term investments	6,288	6,288	6,288
Other investments		42,332	45,110	42,332
Total investments		124,703	131,090	128,312
Own shares				44
Policy loans (excluded from investments from the insurance business)				(738	)
Derivatives (included in investments from the insurance business)				832
Total investments from the insurance business				128,450

¹⁾

Original cost of equity securities and, as to fixed maturities, original cost reduced by repayments and adjustment for amortization of premiums and discounts.

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Schedule III

Supplementary insurance information

Segment in CHF m	Deferred policy acquisition costs	Future policy benefits, losses, claims, and loss expenses	Unearned premiums	Other policy and claims benefits payable	Premium revenue	Net investment income		Benefits, claims, losses and settlement expenses		Amortisation of deferred policy acquisition costs		Other operating expenses		Premiums written
2002
Non-life	3,264	21,025	6,451	1,269	15,703	(16	)	(11,749	)	(2,411	)	(860	)	17,241
Life	3,234	100,498	15	5,425	18,975	(308	)	(14,692	)	(450	)	(639	)	18,979
Total	6,498	121,523	6,466	6,694	34,678	(324	)	(26,441	)	(2,861	)	(1,499	)	36,220
2001
Non-life	2,109	20,308	5,987	1,443	15,007	2,217		(11,509	) 1)	(2,272	)	(873	)	16,840
Life	3,553	102,818	13	7,785	17,188	3,651		(12,167	)	(307	)	(673	)	17,203
Total	5,662	123,126	6,000	9,228	32,195	5,868		(23,676	)	(2,579	)	(1,546	)	34,043
2000
Non-life	1,454	19,955	4,996	1,702	13,519	2,385		(10,432	) 1)	(1,828	)	(822	)	14,632
Life	2,511	95,198	21	10,303	15,171	6,051		(9,734	)	(452	)	(544	)	15,172
Total	3,965	115,153	5,017	12,005	28,690	8,436		(20,166	)	(2,280	)	(1,366	)	29,804

¹⁾

Includes benefit claims, losses and settlement expenses from health business and divested businesses.

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Schedule IV

Reinsurance

in CHF m		Gross amount	Ceded to other companies		Assumed from other companies	Net amount	Amount assumed to net in %
2002
Life insurance in force		342,967	—		—	—	—
Premiums
	Non-life	15,839	(1,144	)	1,008	15,703	6.4	%
	Life	18,774	(41	)	242	18,975	1.3	%
Total premiums		34,613	(1,185	)	1,250	34,678	3.6	%
2001
Life insurance in force		351,726	—		—	—	—
Premiums
	Non-life	16,162	(1,679	)	524	15,007	3.5	%
	Life	17,190	(210	)	208	17,188	1.2	%
Total premiums		33,352	(1,889	)	732	32,195	2.3	%
2000
Life insurance in force		333,859	–		–	–	–
Premiums
	Non-life	14,711	(1,532	)	340	13,519	2.5	%
	Life	15,438	(281	)	14	15,171	0.1	%
Total premiums		30,149	(1,813	)	354	28,690	1.2	%

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EX-1.1

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Exhibit 1.1

Statuten

der

Credit Suisse Group

I.    Firma, Sitz, Dauer und Zweck der Gesellschaft

Art. 1

Unter der Firma Credit Suisse Group besteht eine Aktiengesellschaft mit Sitz in Zürich. Ihre Dauer ist unbeschränkt. Firma, Sitz und Dauer

Art. 2

1	Zweck der Gesellschaft ist die direkte oder indirekte Beteiligung an Unternehmen aller Art in der Schweiz und im Ausland, insbesondere an Unternehmen im Bank-, Finanz-, Vermögensverwaltungs- und Versicherungsbereich. Sie kann Unternehmen gründen, sich an bestehenden mehr- oder minderheitlich beteiligen und sie finanzieren.	Zweck
2	Die Gesellschaft ist berechtigt, Liegenschaften im In- und Ausland zu erwerben, zu belasten und zu verkaufen.

II.    Aktienkapital und Aktien

Art. 3

1	Das voll liberierte Aktienkapital beträgt Fr. 1 189 891 720 und ist eingeteilt in 1 189 891 720 Namenaktien von je Fr. 1 Nennwert.	Aktienkapital
2	Sämtliche Aktien tragen die Faksimile-Unterschriften des Präsidenten oder der Präsidentin und eines Mitgliedes des Verwaltungsrates.
3	Die Gesellschaft kann Zertifikate über eine Mehrzahl von Aktien ausgeben.
4	Die Gesellschaft anerkennt nur einen Vertreter oder eine Vertreterin für jede Aktie.
5	Durch Beschluss der Generalversammlung können Namenaktien in Inhaberaktien umgewandelt werden.

Art. 4

1	Im Verhältnis zur Gesellschaft wird als Namenaktionär oder Namenaktionärin anerkannt, wer im Aktienregister eingetragen ist.	Aktien, Aktienübertragung und Aktienregister
2	Erwerber oder Erwerberinnen von Namenaktien werden auf Gesuch hin ohne Begrenzung als Aktionäre oder Aktionärinnen mit Stimmrecht im Aktienregister eingetragen, falls sie ausdrücklich erklären, die entsprechenden Namenaktien im eigenen Namen und für eigene Rechnung erworben zu haben.
3	Personen, die im Eintragungsgesuch nicht ausdrücklich erklären, die Aktien für eigene Rechnung zu halten (nachstehend: Nominees), werden ohne weiteres bis maximal 2% des jeweils ausstehenden Aktienkapitals mit Stimmrecht im Aktienregister eingetragen. Über diese Limite hinaus werden Namenaktien von Nominees nur dann mit Stimmrecht eingetragen, wenn sich der betreffende Nominee schriftlich bereit erklärt, gegebenenfalls die Namen, Adressen und Aktienbestände derjenigen Personen offenzulegen, für deren Rechnung er 0,5% oder mehr des jeweils ausstehenden Aktienkapitals hält; Art. 10 Abs. 2 gilt sinngemäss für Nominees, die untereinander kapital- oder stimmenmässig, durch einheitliche Leitung oder auf andere Weise verbunden sind.
4	Der Verwaltungsrat trifft die zur Einhaltung der vorstehenden Bestimmungen notwendigen Anordnungen.
5	Vorbehalten bleibt die zwingende gesetzliche Regelung von Art. 685d Abs. 3 OR.
6	Die Gesellschaft kann auf Druck und Auslieferung von Aktienurkunden verzichten und mit der Zustimmung des Aktieneigentümers oder der Aktieneigentümerin ausgegebene Urkunden, die bei der Gesellschaft eingeliefert werden, ersatzlos annullieren. Der Aktionär oder die Aktionärin kann jederzeit kostenlos den Druck und die Auslieferung von Urkunden für seine Namenaktien verlangen, und die Gesellschaft kann jederzeit nicht verurkundete Namenaktien ausdrucken lassen.
7	Nicht verurkundete Namenaktien, einschliesslich daraus entspringende, nicht verurkundete Rechte, können nur durch Zession übertragen werden. Die Zession bedarf zur Gültigkeit der Anzeige an die Gesellschaft. Das Recht auf die Urkunde geht mit der rechtsgültigen Zession auch ohne Zustimmung der Gesellschaft auf den Erwerber oder die Erwerberin über. Die Gesellschaft kann der Bank, bei welcher der Aktionär oder die Aktionärin die abgetretenen Namenaktien buchmässig führen lässt, von der Zession Mitteilung machen.
8	Nicht verurkundete Namenaktien und die daraus entspringenden Vermögensrechte können nur zugunsten der Bank, bei welcher der Aktionär oder die Aktionärin dieselben buchmässig führen lässt, durch schriftlichen Pfandvertrag verpfändet werden. Eine Anzeige an die Gesellschaft ist nicht erforderlich.

2

	Der Anspruch auf Auslieferung der Urkunde kann auf die pfandnehmende Bank übertragen werden. Im übrigen setzt die Verpfändung von Namenaktien zu ihrer Gültigkeit zwingend die Übergabe der zedierten oder indossierten Aktienurkunden nach Massgabe von Art. 901 Abs. 2 ZGB voraus.
9	Die vorstehend genannten Übertragungsbeschränkungen gelten auch in bezug auf die Übertragung von nicht verurkundeten Namenaktien.

III.    Fremdkapital

Art. 5

Die Gesellschaft kann Obligationenanleihen mit oder ohne Sicherheit, insbesondere auch Wandel- und Optionsanleihen ausgeben und solche von Tochtergesellschaften garantieren. Anleihen

IV.    Die Gesellschaftsorgane

Art. 6

Die Gesellschaftsorgane sind:

1.	Die Generalversammlung der Aktionäre und Aktionärinnen;
2.	Der Verwaltungsrat;
3.	Die Revisionsstelle und die Konzernprüfungsgesellschaft.

1.    Die Generalversammlung

Art. 7

1	Die Generalversammlung wird ordentlicherweise durch den Verwaltungsrateinberufen.	Recht und Pflicht der Einberufung
2	Die ordentliche Generalversammlung findet alljährlich innerhalb von sechs Monaten nach Schluss des Geschäftsjahres statt.
3	Ausserordentliche Generalversammlungen werden je nach Bedürfnis einberufen. Die Einberufung einer Generalversammlung kann auch von einem oder mehreren Aktionären oder Aktionärinnen, die zusammen mindestens 10 Prozent des Aktienkapitals vertreten, verlangt werden.
4	Aktionäre oder Aktionärinnen, die Aktien im Nennwert von 1 Million Franken vertreten, können die Traktandierung eines Verhandlungsgegenstandes verlangen.

3

5

Das Begehren um Einberufung einer Generalversammlung hat schriftlich unter gleichzeitiger Hinterlegung von Aktien der Gesellschaft von mindestens 10 Prozent des Aktienkapitals zu erfolgen. Das Begehren um Traktandierung eines Verhandlungsgegenstandes mit den Anträgen hat schriftlich unter gleichzeitiger Hinterlegung von Aktien der Gesellschaft im Nennwert von mindestens 1 Million Franken zu erfolgen. Die Aktien sind bis am Tag nach der Generalversammlung zu hinterlegen.

6

Das Begehren um Traktandierung eines Verhandlungsgegenstandes und die Anträge sind dem Verwaltungsrat spätestens 45 Tage vor einer Generalversammlung mitzu teilen.

Art. 8

Der Generalversammlung stehen die folgenden unübertragbaren Befugnisse zu: Änderung der Statuten; Wahl der Mitglieder des Verwaltungsrates, der Revisionsstelle, der Konzernprüfungsgesellschaft und der besonderen Revisionsstelle; Genehmigung des Jahresberichts, der konsolidierten Jahresrechnung sowie der statutarischen Jahresrechnung; Beschlussfassung über die Verwendung des Bilanzgewinnes; Entlastung der Mitglieder des Verwaltungsrates; Beschlussfassung über die Gegenstände, die der Generalversammlung durch das Gesetz oder die Statuten vorbehalten sind oder ihr durch den Verwaltungsrat vorgelegt werden. Befugnisse

Art. 9

1	Die Generalversammlung ist mindestens zwanzig Tage vor dem Versammlungstag einzuberufen. Die Einberufung erfolgt durch Veröffentlichung im Schweizerischen Handelsamtsblatt.	Form der Einberufung
2	In der Einberufung sind die Verhandlungsgegenstände sowie die Anträge des Verwaltungsrates und der Aktionäre oder Aktionärinnen bekannt zu geben, welche die Durchführung einer Generalversammlung oder die Traktandierung eines Verhandlungsgegenstandes verlangt haben.
3	Über Anträge zu nicht gehörig angekündigten Verhandlungsgegenständen können keine Beschlüsse gefasst werden; ausgenommen sind Anträge auf Einberufung einer ausserordentlichen Generalversammlung oder auf Durchführung einer Sonderprüfung.

Art. 10

1 Vorbehältlich Art. 4 Abs. 3 berechtigt an der Generalversammlung jede Aktie zu einer Stimme. Ein Aktionär oder eine Aktionärin kann jedoch direkt oder indirekt für eigene und vertretene Aktien zusammen nur das Stimmrecht von höchstens 2% des ausstehenden Aktienkapitals ausüben; Abs. 3-5 bleiben vorbehalten. Stimmrecht

4

2	Im Hinblick auf die Stimmrechtsbeschränkung gemäss Abs. 1 gelten juristische Personen und Personengesellschaften oder andere Personenzusammenschlüsse oder Gesamthandsverhältnisse, die untereinander kapital- oder stimmenmässig, durch eine einheitliche Leitung oder auf andere Weise verbunden sind, sowie natürliche oder juristische Personen oder Personengesellschaften, die im Hinblick auf eine Umgehung der Stimmrechtsbeschränkung (insbesondere als Syndikat) koordiniert vorgehen, als ein Aktionär oder eine Aktionärin.
3	Die Stimmrechtsbeschränkung findet keine Anwendung auf die Ausübung des Stimmrechts durch von der Gesellschaft bezeichnete Organvertreter (Art. 689c OR), durch von der Gesellschaft bezeichnete unabhängige Stimmrechtsvertreter (Art. 689c OR) sowie durch Depotvertreter (Art. 689d OR), soweit diese von Aktionären oder Aktionärinnen zur Stimmrechtsvertretung beauftragt worden sind.
4	Die Stimmrechtsbeschränkung findet auch keine Anwendung auf Aktien, für welche der Aktionär oder die Aktionärin im Eintragungsgesuch gegenüber der Gesellschaft bestätigt, dass er oder sie diese Aktien im eigenen Namen und für eigene Rechnung erworben hat und für welche die Meldepflicht gemäss Abs. 6 erfüllt worden ist.
5	Die Stimmrechtsbeschränkung findet überdies keine Anwendung auf Aktien, welche auf den Namen eines Nominee eingetragen sind, sofern der Nominee gegenüber der Gesellschaft die Namen, Adressen und Aktienbestände derjenigen Personen (gemäss Definition in Abs. 2) bekannt gibt, für deren Rechnung er 0,5 Prozent oder mehr des jeweils ausstehenden Aktienkapitals hält und für welche er, beziehungsweise die wirtschaftlich berechtigte Person, die Meldepflicht gemäss Abs. 6 erfüllt hat. Der Verwaltungsrat ist ermächtigt, mit Nominees Vereinbarungen über deren Meldepflichten und die Stimmrechtsausübung abzuschliessen.
6	Die Meldepflicht richtet sich nach Art. 20 des Bundesgesetzes über die Börsen und den Effektenhandel vom 24. März 1995 und den gestützt darauf erlassenen Verordnungen und Rundschreiben.
7	Der Verwaltungsrat erlässt Vorschriften über den zur Erlangung von Stimmkarten erforderlichen Nachweis des Aktienbesitzes.

Art. 11

1	Den Vorsitz in der Generalversammlung führt der Präsident oder die Präsidentin des Verwaltungsrates, in dessen oder deren Verhinderung ein Vizepräsident oder eine Vizepräsidentin oder ein anderes vom Verwaltungsrat bezeichnetes Mitglied.	Vorsitz, Stimmenzähler oder Stimmenzählerin, Protokollführer oder Protokollführerin
2	Die Stimmenzähler und Stimmenzählerinnen werden von der Generalversammlung in offener Abstimmung gewählt. Mitglieder des Verwaltungsrates, der Revisionsstelle, der Konzernprüfungsgesellschaft sowie Mitarbeiter und Mitarbeiterinnen der Gesellschaft sind als Stimmenzähler oder Stimmenzählerinnen nicht wählbar.
3	Der Verwaltungsrat bestellt den Protokollführer oder die Protokollführerin.

5

Art. 12

1	Die Generalversammlung ist grundsätzlich ohne Rücksicht auf die Zahl der anwesenden Aktionäre und Aktionärinnen oder der vertretenen Aktien beschlussfähig.	Beschlussfähigkeit/ Präsenzquorum
2	Die Vertretung von mindestens der Hälfte des Aktienkapitals ist erforderlich für die
	— Umwandlung der Namenaktien in Inhaberaktien
	— Abänderung von Art. 4 Abs. 3
	— Abänderung von Art. 10 Abs. 1-6
	— Auflösung der Gesellschaft
3	Vorbehalten bleiben weitergehendes zwingendes Recht sowie anderslautende Bestimmungen dieser Statuten.

Art. 13

1	Die Generalversammlung fasst ihre Beschlüsse und vollzieht ihre Wahlen, soweit nicht zwingendes Recht oder anders lautende Bestimmungen dieser Statuten entgegenstehen, mit der absoluten Mehrheit der vertretenen Aktienstimmen. Bei Stimmengleichheit haben der oder die Vorsitzende den Stichentscheid.	Beschlussfassung/ Beschluss- fassungsquorum
2	Die Umwandlung von Namenaktien in Inhaberaktien, die Auflösung der Gesellschaft und die Abänderung von Art. 4 Abs. 3 dieser Statuten kann nur mit mindestens drei Vierteln, die Abänderung von Art. 10 Abs. 1-6 kann nur mit mindestens sieben Achteln der abgegebenen Stimmen beschlossen werden.
3	Der Vorsitzende kann das offene, schriftliche oder elektronische Abstimmungs- und Wahlverfahren anordnen. Es wird schriftlich abgestimmt, wenn 50 anwesende Aktionäre oder Aktionärinnen es verlangen.

Art. 14

Das Protokoll ist vom Vorsitzenden oder der Vorsitzenden mit dem Protokollführer oder der Protokollführerin zu unterzeichnen. Protokoll

2. Der Verwaltungsrat

Art. 15

1	Der Verwaltungsrat besteht aus mindestens sieben Mitgliedern.	Wahl und Amtsdauer
2	Jedes Verwaltungsratsmitglied wird auf die Dauer von drei Jahren individuell gewählt; Wiederwahl ist zulässig. Unter einem Amtsjahr ist die Zeitdauer von einer ordentlichen Generalversammlung bis zum Schluss der nächsten ordentlichen Generalversammlung zu verstehen.

6

Art. 16

1	Der Verwaltungsrat entscheidet über alle Angelegenheiten, die nicht durch Gesetz, Statuten oder Reglemente einem anderen Organ der Gesellschaft vorbehalten oder übertragen sind.	Befugnisse und Pflichten
2	Der Verwaltungsrat bestimmt die Zeichnungsberechtigten und die Art der Zeichnung. Zur verbindlichen Zeichnung namens der Gesellschaft sind die Unterschriften von zwei Zeichnungsberechtigten notwendig.

Art. 17

Der Verwaltungsrat kann die Geschäftsführung nach Massgabe eines Organisationsreglements ganz oder zum Teil an Ausschüsse, einzelne Mitglieder oder an Dritte übertragen. Übertragung von Befugnissen

Art. 18

1	Zur Beschlussfähigkeit des Verwaltungsrates ist die Anwesenheit der Mehrheit der Mitglieder erforderlich. Kein Präsenzquorum ist erforderlich, wenn die Durchführung einer Kapitalerhöhung festzustellen und die anschliessend vorzunehmende Statutenänderungen zu beschliessen sind. Bei der Beschlussfassung auf dem Zirkulationsweg ist die Stimmabgabe der Mehrheit der Mitglieder erforderlich.	Beschlussfähigkeit
2	Der Verwaltungsrat fasst seine Beschlüsse mit der absoluten Mehrheit der abgegebenen Stimmen. Bei Stimmengleichheit hat der oder die Vorsitzende den Stichentscheid.

Art. 19

Über die Verhandlungen und Beschlüsse ist ein Protokoll zu führen, das vom Vorsitzenden oder der Vorsitzenden mit dem Sekretär oder der Sekretärin unterzeichnet wird. Protokoll

Art. 20

Der Verwaltungsrat erhält für seine Leistungen eine angemessene Entschädigung, die von ihm selber festgelegt wird. Entschädigung des
Verwaltungsrates

7

3. Die Revisionsstelle, die Konzernprüfungsgesellschaft und die besondere Revisionsstelle

Art. 21

1	Der von der Generalversammlung jeweils für ein Jahr gewählten Revisionsstelle und der Konzernprüfungsgesellschaft obliegen die ihnen vom Gesetz zugewiesenen Befugnisse und Pflichten.	Bestellung und Aufgabe
2	Einer von der Generalversammlung jeweils für ein Jahr gewählten besonderen Revisionsstelle obliegt die im Rahmen von Kapitalerhöhungen vorgeschriebene besondere Prüfung (Art. 652f OR).

V.    Geschäftsjahr und Verwendung des Bilanzgewinnes

Art. 22

Das Geschäftsjahr wird vom Verwaltungsrat festgesetzt. Geschäftsjahr

Art. 23

Die Generalversammlung entscheidet über die Verwendung des Bilanzgewinnes. Sie beschliesst unter Berücksichtigung der gesetzlichen Vorschriften von Art. 671 ff OR über die Ausschüttung einer Dividende sowie allenfalls die Errichtung und Verwendung von speziellen Reserven. Verwendung des
Bilanzgewinnes

VI.    Auflösung und Liquidation der Gesellschaft

Art. 24

Wird die Gesellschaft aufgelöst, so führt der Verwaltungsrat die Liquidation durch, sofern die Generalversammlung nicht etwas anderes beschliesst.

VII.    Bekanntmachungen

Art. 25

1	Publikationsorgan ist das Schweizerische Handelsamtsblatt.	Publikationsorgane
2	Die Bekanntmachungen und Mitteilungen der Gesellschaft an die Aktionäre und Aktionärinnen erfolgen durch Veröffentlichung im Schweizerischen Handelsamtsblatt, soweit das Gesetz nicht zwingend etwas anderes bestimmt.

8

VIII.    Übergangsbestimmungen

Art. 26

Gestrichen Bedingtes Kapital

Art. 26a

1

Das Aktienkapital der Gesellschaft gemäss Art. 3 der Statuten wird im Maximalbetrag von Fr. 50 000 000 erhöht durch Ausgabe von höchstens 50 000 000 vollständig zu liberierenden Namenaktien von je Fr. 1 Nennwert durch Ausübung von Wandel- und Optionsrechten, die in Verbindung mit Anleihens- oder ähnlichen Obligationen der Credit Suisse Group oder einer ihrer Konzerngesellschaften eingeräumt werden. Das Bezugsrecht der Aktionärinnen und Aktionäre ist ausgeschlossen. Das Vorwegzeichnungsrecht der Aktionäre kann bezüglich dieser höchstens 50 000 000 neuen Namenaktien durch Beschluss des Verwaltungsrates eingeschränkt oder ausgeschlossen werden zur Finanzierung des Erwerbs von Unternehmen, Unternehmensteilen, Beteiligungen, neuen Investitionsvorhaben oder zur Begebung von Wandel- und/oder Optionsanleihen am nationalen oder am internationalen Kapitalmarkt. Soweit das Vorwegzeichnungsrecht ausgeschlossen ist, sind (1) die Anleihensobligationen zu Marktbedingungen im Publikum zu platzieren, (2) die Ausübungsfrist der Optionsrechte auf höchstens fünf Jahre und jene der Wandelrechte auf höchstens zehn Jahre ab dem Zeitpunkt der Anleihensemission anzusetzen und (3) der Wandel- oder Ausübungspreis für die neuen Aktien mindestens entsprechend den Marktbedingungen im Zeitpunkt der Anleihensemission festzulegen.

2

Der Erwerb der Namenaktien durch Ausübung von Wandel- oder Optionsrechten und die weitere Übertragung von Namenaktien unterliegen den Übertragungsbeschränkungen gemäss Art. 4 der Statuten.

Art. 26b

1 Das Aktienkapital gemäss Art. 3 der Statuten wird durch Ausgabe von höchstens 117 200 000 voll zu liberierenden Namenaktien von je Fr. 1 Nennwert im Umfang von höchstens Fr. 117 200 000 durch Ausübung von Bezugsrechten erhöht. Die neuen Aktien unterliegen nach der Begebung den Übertragungsbeschränkungen von Art. 4 der Statuten.

9

2
Das Bezugsrecht der bisherigen Aktionäre und Aktionärinnen ist zu Gunsten der Mitarbeiter und Mitarbeiterinnen aller Stufen sowie der Mitglieder des Verwaltungsrates der Credit Suisse Group und deren Gruppengesellschaften ausgeschlossen. Die Ausgabe von Aktien erfolgt gemäss einem Reglement des Verwaltungsrates, der dieses von Zeit zu Zeit anpasst. Die Ausgabe von Aktien unter dem Börsenpreis ist zulässig.

Art. 26c

1

Das Aktienkapital gemäss Art. 3 der Statuten wird durch Ausgabe von höchstens 18 715 540 voll zu liberierenden Namenaktien von je Fr. 1 Nennwert im Umfang von höchstens Fr. 18 715 540 durch die Ausübung von Optionen erhöht, die Mitarbeiterinnen und Mitarbeitern aller Stufen von Donaldson, Lufkin & Jenrette, Inc. und deren Gruppengesellschaften zustehen und die entsprechend dem Vertrag über den Zusammenschluss vom 30. August 2000 zwischen der Credit Suisse Group, Diamond Acquisition Corp. und Donaldson, Lufkin & Jenrette, Inc. übernommen worden sind. Bezugsverhältnis, zeitliche Begrenzung und weitere Einzelheiten werden vom Verwaltungsrat entsprechend den Bestimmungen über den Zusammenschluss vom 30. August 2000 festgelegt. Der Erwerb von Aktien durch die Ausübung von Optionsrechten sowie jede nachfolgende Übertragung der neuen Aktien unterliegen nach der Begebung den Übertragungsbeschränkungen von Art. 4 der Statuten.

2

Das Bezugsrecht der bisherigen Aktionäre und Aktionärinnen ist zu Gunsten von Mitarbeiterinnen und Mitarbeitern aller Stufen von Donaldson, Lufkin & Jenrette, Inc. und deren Gruppengesellschaften ausgeschlossen.

Art. 27

1 Der Verwaltungsrat ist ermächtigt, jederzeit bis zum 1. Juni 2003 das Aktienkapital gemäss Art. 3 der Statuten im Maximalbetrag von Fr. 45 480 000 durch Ausgabe von höchstens 45 480 000 vollständig zu liberierenden Namenaktien von je Fr. 1 Nennwert zu erhöhen. Erhöhungen auf dem Wege der Festübernahme und Erhöhungen in Teilbeträgen sind gestattet. Der Ausgabebetrag, der Zeitpunkt der Dividendenberechtigung und die Art der Einlagen werden vom Verwaltungsrat bestimmt. Die neuen Namenaktien unterliegen nach dem Erwerb den Übertragungsbeschränkungen gemäss Art. 4 der Statuten. Genehmigtes
Kapital

10

2

Der Verwaltungsrat ist berechtigt, das Bezugsrecht der Aktionäre und Aktionärinnen auszuschliessen und Dritten zuzuweisen, wenn die neuen Namenaktien für die Übernahme von Unternehmen, Unternehmensteilen oder Beteiligungen im Bank-, Finanz-, Vermögensverwaltungs-oder Versicherungsbereich durch Aktientausch oder zur Finanzierung des Erwerbs von Unternehmen, Unternehmensteilen oder Beteiligungen aus diesen Bereichen verwendet werden. Werden im Zusammenhang mit Unternehmensübernahmen Verpflichtungen zur Bedienung von Wandel- oder Optionsanleihen übernommen, ist der Verwaltungsrat berechtigt, zwecks Erfüllung von Lieferverpflichtungen unter solchen Anleihen neue Aktien unter Ausschluss des Bezugsrechts der Aktionäre und Aktionärinnen auszugeben.

3

Namenaktien, für welche Bezugsrechte eingeräumt, aber nicht ausgeübt werden, sind zu Marktkonditionen am Markt zu veräussern.

Art. 27a

Gestrichen

Art. 28

Gestrichen

Art. 28a

1	Die Gesellschaft hat von der Watt AG, Glarus, gemäss Sacheinlagevertrag vom 7. April 1993 13 178 500 Namenaktien der Schweizerischen Volksbank von je Fr. 50 Nennwert im Gesamtwert und zum Gesamtpreis von Fr. 1 549 791 600 erworben. Der Preis ist dadurch getilgt worden, dass der Watt AG 3 953 550 voll liberierte Namenaktien von je Fr. 100 Nennwert der Gesellschaft zuerkannt worden sind.
2	Der Ausgabebetrag je Aktie beträgt Fr. 392. Der den Nominalwert der neuen Aktien von Fr. 395 355 000 übersteigende Betrag von insgesamt Fr. 1 154 436 600 verbleibt der Gesellschaft als Agio.
3	Die Gesellschaft hat von der Watt AG, Glarus, gemäss Sacheinlagevertrag vom 1. Juni 1993 1 914 000 Namenaktien der Schweizerischen Volksbank von je Fr. 50 Nennwert im Gesamtwert und zum Gesamtpreis von Fr. 252 935 100 erworben. Der Preis ist dadurch getilgt worden, dass der Watt AG 574 200 voll liberierte Namenaktien von je Fr. 100 Nennwert der Gesellschaft zuerkannt worden sind.
4	Der Ausgabebetrag je Aktie beträgt Fr. 440.50. Der den Nominalwert der neuen Aktien von Fr. 57 420 000 übersteigende Betrag von insgesamt Fr. 195 515 100 verbleibt der Gesellschaft als Agio.

11

5	Die Gesellschaft hat von der Watt AG, Glarus, gemäss Sacheinlagevertrag vom 10. Januar 1994 200 000 Namenaktien der Schweizerischen Volksbank, Bern, von je Fr. 50 Nennwert im Gesamtwert und zum Gesamtpreis von Fr. 28 000 000.— erworben. Der Preis ist dadurch getilgt worden, dass der Watt AG 191 781 voll liberierte Namenaktien von je Fr. 20 Nennwert der Gesellschaft zuerkannt worden sind.
6	Der Ausgabebetrag je Aktie beträgt Fr. 146. Der den Nennwert der neuen Aktien von Fr. 3 835 620 übersteigende Betrag von insgesamt Fr. 24 164 380 verbleibt der Gesellschaft als Agio.

Art. 28b

1	Die Gesellschaft hat von der Watt AG, Glarus, gemäss Sacheinlagevertrag vom 14. Dezember 1993 1 762 434 Inhaberaktien der Leu Holding AG, Zug, von je Fr. 100 Nennwert im Gesamtwert und zum Gesamtpreis von Fr. 992 837 820 erworben. Der Preis ist dadurch getilgt worden, dass der Watt AG 1 468 695 voll liberierte Inhaberaktien von je Fr. 100 Nennwert der Gesellschaft zuerkannt worden sind.
2	Der Ausgabebetrag je Aktie beträgt Fr. 676. Der den Nennwert der neuen Aktien von Fr. 146 869 500 übersteigende Betrag von insgesamt Fr. 845 968 320 verbleibt der Gesellschaft als Agio.
3	Die Gesellschaft hat von der Watt AG, Glarus, gemäss Sacheinlagevertrag vom 10. Januar 1994 126 318 Inhaberaktien der Leu Holding AG, Zug, von je Fr. 100 Nennwert im Gesamtwert und zum Gesamtpreis von Fr. 71 159 140 erworben. Der Preis ist dadurch getilgt worden, dass der Watt AG 105 265 voll liberierte Inhaberaktien von je Fr. 100 Nennwert der Gesellschaft zuerkannt worden sind.
4	Der Ausgabebetrag je Aktie beträgt Fr. 676. Der den Nennwert der neuen Aktien von Fr. 10 526 500 übersteigende Betrag von insgesamt Fr. 60 632 640 verbleibt der Gesellschaft als Agio.

Art. 28c

1 Die Gesellschaft hat von der Credit Suisse First Boston, Zürich, gemäss Sacheinlagevertrag vom 8. Dezember 1997, 9 651 170 Namenaktien der "Winterthur" Schweizerische Versicherungs-Gesellschaft, Winterthur, von je Fr. 20 Nennwert und 35 694 Anrechte auf neue Namenaktien entstehend aus der Kraftloserklärung der restlichen 35 694 Namenaktien "Winterthur" Schweizerische Versicherungs-Gesellschaft (Art. 54 und 33 BEHG) im Gesamtwert und zum Gesamtpreis von Fr. 1 414 282 140 erworben. Der Preis ist dadurch getilgt worden, dass der Credit Suisse First Boston 70 714 107 voll liberierte Namenaktien von je Fr. 20 Nennwert der Gesellschaft zuerkannt worden sind. Der Ausgabebetrag je Aktie beträgt Fr. 20.

12

Art. 28d

Die Gesellschaft hat von der Credit Suisse (Bahamas) Limited, in Nassau (Bahamas), gemäss Sacheinlagevertrag vom 31. Juli 1998 16 916 518 Aktien Common Stock von je US$ 1.00 Nennwert der Garantia Banking Limited, in Nassau (Bahamas), im Gesamtwert und zum Gesamtpreis von Fr. 706 325 400 erworben. Der Preis ist dadurch getilgt worden, dass der Credit Suisse (Bahamas) Limited als Umtauschstelle 1 938 708 voll liberierte Namenaktien von je Fr. 20 Nennwert der Gesellschaft zuerkannt worden sind. Der Ausgabebetrag je Aktie beträgt Fr. 364.3278. Der den Nominalwert der neuen Aktien von Fr. 38 774 160 übersteigende Betrag von Fr. 667 551 240 verbleibt der Gesellschaft als Agio.

Art. 28e

Die Gesellschaft hat von der Reinsurance Derivatives Holding AG, Zürich, gemäss Sacheinlagevertrag vom 15. April 1999 30 470 235 Perpetual Non-Cumulative Class A Preference Shares von je USD 1.00 Nennwert und 83 162 370 Participating Shares von je USD 1.00 Nennwert der Credit Suisse Financial Products, London, im Gesamtwert und zum Gesamtpreis von Fr. 486 000 000 erworben. Der Preis ist dadurch getilgt worden, dass der Reinsurance Derivatives Holding AG, Zürich, 1 800 000 voll liberierte Namenaktien von je Fr. 20 Nennwert der Gesellschaft zuerkannt worden sind. Der Ausgabebetrag je Aktie beträgt Fr. 270. Der den Nominalwert der neuen Aktien von Fr. 36 000 000 übersteigende Betrag von Fr. 450 000 000 verbleibt der Gesellschaft als Agio.

Art. 28f

Die Gesellschaft hat von AXA, Paris, AXA Financial, Inc., New, York, The Equitable Life Assurance Society of the United States, New York, und AXA Participations Belgium, Brüssel gemäss Sacheinlageverträgen vom 3. November 2000 insgesamt 64 029 782 Common Shares der Donaldson, Lufkin & Jenrette Inc., Delaware, von je USD 0.10 Nennwert im Gesamtwert und zum Gesamtpreis von Fr.8'502'828'693.50 erworben. Der Preis ist dadurch getilgt worden, dass der AXA, AXA Financial, Inc., Equitable Life Assurance Society of the United States und AXA Participations Belgium insgesamt 25 727 167 voll liberierte Namenaktien der Gesellschaft von je Fr. 20 Nennwert zuerkannt worden sind. Der Ausgabepreis je Aktie beträgt Fr. 330.50. Der den Nominalwert der neuen Aktien von Fr. 514 543 340 übersteigende Betrag von Fr. 7'988'285'353.50 verbleibt der Gesellschaft als Agio.

Art. 29

Gestrichen

13

Zürich, 30. Januar 2003

Walter B. Kielholz,
Präsident des Verwaltungsrates Beatrice Fischer,
Sekretär des Verwaltungsrates

14

ARTICLES OF
ASSOCIATION

Articles of Association
Credit Suisse Group

Version as of January 30, 2003

	I.	Corporate Name, Registered Office, Duration and Purpose
	Art. 1
Corporate Name, Registered Office and Duration	A stock corporation under the name Credit Suisse Group (the "Company") is established with its registered office in Zurich, Switzerland. Its duration is unlimited.
	Art. 2
Purpose	1	The purpose of the Company is to hold direct or indirect interests in all types of businesses in Switzerland and abroad, in particular in the areas of banking, finance, asset management and insurance. The Company has the power to establish new businesses, acquire a majority or minority interest in existing businesses and provide related financing.
	2	The Company has the power to acquire, mortgage and sell real estate properties, both in Switzerland and abroad.
	II.	Share Capital and Shares
	Art. 3
Share Capital	1	The fully paid-in share capital amounts to CHF 1,189,891,720 and is divided into 1,189,891,720 registered shares with a par value of CHF 1 each.
	2	All share certificates shall bear the facsimile signatures of the Chairman or Chairwoman of the Board of Directors and one Member of the Board.
	3	The Company may issue certificates representing more than one share each.
	4	The Company recognises only one representative for each share.
	5	Upon a resolution being passed by the General Meeting of Shareholders, registered shares may be converted into bearer shares.
	Art. 4
Shares, Transfer of Shares and Share Register	1	The Company recognises as a shareholder the person whose name is entered in the Share Register.
	2	A person who has acquired registered shares will, upon application, be entered without limitation in the Share Register as having voting rights provided that he or she expressly states that he or she has acquired the shares concerned in his or her own name for his or her own account.
	3	Any person not expressly stating in his or her application for registration that the shares concerned have been acquired for his or her own account hereinafter "nominees") may be entered for a maximum of 2% of the total outstanding share capital with voting rights in the Share Register. In excess of this limit, registered shares held by a nominee will only be granted voting rights if such nominee declares in writing that he or she is prepared to disclose the name, address and shareholding of any person for whose account he or she is holding 0.5% or more of the outstanding share capital. Art.10, Section 2 shall apply correspondingly to nominees who are related to one another through capital ownership or voting rights or have a common management or are otherwise interrelated.

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4	The Board of Directors will issue the necessary directives to ensure that the aforementioned provisions are complied with.
5	This Article is subject to the mandatory provisions of Art. 685d, Section 3 of the Swiss Code of Obligations.
6	In the case of registered shares, the Company may forego the printing and delivery of share certificates and, with the agreement of the owner of the shares, may cancel issued certificates when these are returned to the Company and not replace the same. Shareholders may request at any time, at no cost to them, the printing and delivery of certificates representing their registered shares, and the Company may at any time print certificates of registered shares not physically represented by certificates.
7	Registered shares not physically represented by certificates and the rights arising therefrom can only be transferred by assignment. Such assignment shall not be valid unless notice is given to the Company. Title to the certificate of the transferred share is passed on to the transferee through legal and valid assignment and does not need the explicit consent of the Company. The bank which handles the book entries of the assigned registered shares on behalf of the shareholders may be notified by the Company of the assignment.
8	Registered shares not physically represented by certificates and the financial rights arising from these shares may be pledged only to the bank which handles the book entries of such shares on behalf of the shareholder. The pledge must be made by means of a written pledge agreement. Notice to the Company is not required.
	The claim to delivery of the certificate may be transferred to the bank accepting the pledge. Otherwise the pledge of registered shares is valid when the assigned or endorsed share certificates are transferred in accordance with provisions of Art. 901, Section 2 of the Swiss Civil Code.

2

	9	All the above-mentioned restrictions regarding transfer also apply to the transfer of registered shares not physically represented by certificates.
	III.	Debt Capital
	Art. 5
Bond Issues	The Company may issue bonds, with or without security, including warrants and convertible issues, and may guarantee such issues by its subsidiaries.
	IV.	The Governing Bodies of the Company
	Art. 6
	The governing bodies of the Company shall be the following:
	1.	The General Meeting of Shareholders;
	2.	The Board of Directors;
	3.	The Independent Auditors and the Group's Independent Auditors.
	1.	The General Meeting of Shareholders
	Art. 7
Authority and Duty to call a Meeting	1	The General Meeting of Shareholders shall ordinarily be called by the Board of Directors.
	2	The ordinary General Meeting of Shareholders shall take place annually within six months after the close of the business year.
	3	Extraordinary General Meetings of Shareholders shall take place as necessary. One or more shareholders whose combined holdings represent at least 10% of the share capital can also request that a meeting be called.
	4	Shareholders representing shares with a par value of CHF 1 million may require that a particular item appear on the agenda of the meeting.
	5	The request to call a General Meeting of Shareholders must be submitted in writing and at the same time shares of the Company representing at least 10% of the share capital are to be deposited. The request to include a particular item on the agenda of the meeting, together with the relevant proposals, must be submitted in writing and at the same time shares of the Company with a par value of at least CHF 1 million are to be deposited for safekeeping. The shares are to remain in safekeeping until the day after the General Meeting of Shareholders.
	6	The request to include a particular item on the agenda, together with the relevant proposals, must be submitted to the Board of Directors not later than 45 days before the date of the meeting.

3

	Art. 8
	The General Meeting of Shareholders has the following powers which may not be delegated. It may amend the articles of association, elect the Members of the Board of Directors, elect the Independent Auditors, the Group's Independent Auditors and Special Auditors approve the annual report, the consolidated financial statements and the annual statutory statements, determine the allocation of the disposable profit, formally approve the actions of the Member of the Board of Directors and pass resolutions on all matters which have been reserved to its authority by law or by these articles of association or which have been submitted to the meeting by the Board of Directors.		Powers
	Art. 9
	1	Notice of the General Meeting of Shareholders must be given at least 20 days before the meeting takes place. Notice of the meeting is to be published in the Swiss Gazette of Commerce (Schweizerisches Handelsamtsblatt).	Notice of Meetings
	2	The notice of the meeting must include the items on the agenda, the proposals submitted by the Board of Directors and by shareholders who have required that a meeting be held or that a particular item be included on the agenda.
	3	No resolutions can be passed on proposals of which due notice has not been given, with the exception of those concerning the calling of an extraordinary General Meeting or the carrying out of a special audit.
	Art. 10
Voting Rights	1	Subject to the provisions of Art. 4, Section 3 every share carries one vote at the General Meeting of Shareholders. However, except as set out in Sections 3-5 below, the shares for which a single shareholder can directly or indirectly exercise voting rights for his or her own shares or as a proxy may not exceed 2% of the total outstanding share capital.
	2	For the purposes of the restrictions on voting rights as laid down in Section 1 above, legal entities, partnerships or groups of joint owners or other groups in which individuals or legal entities are related to one another through capital ownership or voting rights or have a common management or are otherwise interrelated shall be regarded as being a single shareholder. The same shall apply to individuals, legal entities or partnerships that act in concert (especially as a syndicate) with intent to evade the limitation on voting rights.

4

3	The restrictions on voting rights do not apply to the exercise of voting rights by representatives of a governing or executive body of the company who are designated by the Company as proxies (Art. 689c of the Swiss Code of Obligations [CO]), or by persons designated by the Company as independent proxies (Art. 689c CO), or by persons acting as proxies for deposited shares (Art. 689d CO), provided all such persons have been instructed by shareholders to act as proxies.
4	Nor do the restrictions on voting rights apply to shares in respect of which the shareholder confirms to the Company in the application for registration that he or she has acquired the shares in his or her name for his or her own account and in respect of which the disclosure requirement set out in Section 6 below has been satisfied.
5	In addition, the restrictions on voting rights do not apply to shares which are registered in the name of a nominee, provided that this nominee furnishes the Company with the name, address and shareholding of the person(s) (as per definition in Section 2 above) for whose account he or she holds 0.5% or more of the total share capital outstanding at the time and for which he or she (or the beneficial owner, as appropriate) has satisfied the disclosure requirement set out in section 6 below. The Board of Directors has the right to conclude agreements with nominees concerning both their disclosure requirement and the exercise of voting rights.
6	The disclosure obligation must be discharged in accordance with Art. 20 of the Federal Act on Stock Exchange and Securities Trading of 24 March 1995 and the relevant ordinances and regulations.
7	The Board of Directors shall issue regulations regarding the proof of share ownership which is necessary in order to obtain voting cards.
Art. 11
1	The Chairman/Chairwoman of the Board of Directors shall chair the General Meeting of Shareholders, and, in his or her absence, a Deputy Chairman/Chairwoman or another member designated by the Board shall take the chair.	Chairman/ Chairwoman, Secretary
2	The General Meeting of Shareholders shall elect by a show of hands the tellers to count the votes at the meeting. Members of the Board of Directors, the Independent Auditors, the Group's Independent Auditors and employees of the Company shall not be eligible to act as tellers.
3	The Board of Directors shall nominate a secretary to take the minutes.

5

	Art. 12
	1	The General Meeting of Shareholders may in principle pass resolutions without regard to the number of shareholders present at the meeting or represented by proxy.	Quorums
	2	Representation of at least half of the share capital is required for:
		—  conversion of registered shares into bearer shares;
		—  amendments to Art. 4, Section 3
		—  amendments to Art. 10, Sections 1-6
		—  dissolution of the Company.
	3	This Article is subject to the mandatory provisions of the law and other provisions of these articles of association.
	Art. 13
Resolutions/Required Majorities	1	Resolutions and elections by the General Meeting of Shareholders require the approval of an absolute majority of the votes represented at the meeting, except as otherwise prescribed by mandatory provisions of law or by other provisions of these articles of association. In the case of an equality of votes, elections and resolutions shall be decided by the casting vote of the person chairing the meeting.
	2	The conversion of registered shares into bearer shares, the dissolution of the Company and amendments to Art. 4, Section 3 of these articles of association require the approval of at least three-quarters of the votes cast. Amendments to Art. 10, Sections 1-6 require the approval of at least seven-eighths of the votes cast.
	3	The Chairman may allow elections and ballots to be conducted by a show of hands, by written ballot or by electronic means. A written ballot is held if requested by 50 of the shareholders present.
	Art. 14
Minutes	The person chairing the meeting and the secretary of the meeting are to sign the minutes of the meeting.
	2.	The Board of Directors
	Art. 15
Election and Term of Office	1	The Board of Directors shall consist of a minimum of seven Members.
	2	Each Member of the Board of Directors shall be elected individually for a period of three years and shall be eligible for re-election. One year of office is understood to be the period of time from one ordinary General Meeting of Shareholders to the close of the next ordinary General Meeting.

6

	Art. 16
	1	The Board of Directors shall decide on all matters which have not been reserved for or conferred on another governing body of the Company by law by these articles of association or by other regulations.	Powers and Responsibilities
	2	The Board of Directors determines those who have signatory power and the nature of the signatory power required. A document signed on behalf of the Company is binding on the Company only when it carries the signatures of two authorised signatories.
	Art. 17
	The Board of Directors may delegate the management of the Company wholly or partly to committees of the Board, individual Members of the Board or third parties, in accordance with the regulations governing the conduct of business of the Company.		Delegation of Powers
	Art. 18
	1	A majority of the Members of the Board of Directors must be present in person in order to pass resolutions; there is no quorum requirement for the acknowledgement of capital increases and the subsequent changes to the articles of association which must be carried out. For resolutions carried out by circular letter, a majority of the Members of the Board of Directors must cast their votes.	Quorum/Required Majorities
	2	Resolutions of the Board of Directors require the approval of an absolute majority of the votes cast. In the case of an equality of votes, decisions shall be determined by the casting vote of the person chairing the meeting.
	Art. 19
	Minutes shall be kept of the proceedings and resolutions of the Board of Directors. The minutes shall be signed by the person chairing the meeting and the secretary.		Minutes
	Art. 20
Remuneration of Directors	The Board of Directors shall be appropriately remunerated for its services in an amount to be determined by itself.
	3.	The Independent Auditors, the Group's Independent Auditors and the Special Auditors
	Art. 21
Appointment and Duties	The Independent Auditors and the Group's Independent Auditors shall be elected by the General Meeting of Shareholders for one year and shall be responsible for carrying out all functions and duties incumbent upon them by law.

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	The special auditors shall be elected by the General Meeting of Shareholders for the term of one year and shall be responsible for the special audit reports in connection with qualified capital increases (Art. 652f CO).
	V.	Financial Year and Allocation of the Net Profit
	Art. 22
Financial Year	The Company's financial year shall be determined by the Board of Directors.
	Art. 23
Allocation of disposable Profit	The allocation of the disposable profit shall be made by the General Meeting of Shareholders. The distributions of a dividend and the establishment and utilisation of special reserves, if any, shall be decided by the General Meeting of Shareholders in accordance with Art. 671 ff of the Swiss Code of Obligations.
	VI.	Dissolution and Liquidation of the Company
	Art. 24
	Should the Company be dissolved, the Board of Directors shall carry out the liquidation unless the General Meeting of Shareholders decides otherwise.
	VII.	Official Notices and Announcements
	Art. 25
Publication	1	The Swiss Commercial Gazette (Schweizerisches Handelsamtsblatt) shall be the official medium for publication of the Company's notices and announcements.
	2	Notices and announcements to the shareholders shall be made in the Swiss Commercial Gazette (Schweizerisches Handelsamtsblatt), insofar as the law does not prescribe some other manner of publication.
	VIII.	Transitional Regulations
	Art. 26
Conditional Capital	Deleted
	Art. 26a
	1	The share capital pursuant to Art. 3 of the articles of association shall be increased by no more than CHF 50,000,000 through the issue of no more than 50,000,000 registered shares with a par value of CHF 1 each, to be fully paid in, through the exercise of conversion and option rights granted in connection with bonds or similar debt instruments issued by Credit Suisse Group or any of its Group companies. Shareholders' preemption rights are excluded. Shareholders' preferential subscription rights with regard to these at most 50,000,000 new registered shares may be restricted or excluded by decision of the Board of Directors in order to finance or refinance the acquisition of companies, parts of companies, equity stakes, or new investments, or in order to issue convertible bonds and/or warrants on domestic and international capital markets. If preferential subscription rights are excluded, then (1) the bonds are to be placed with the public at market conditions, (2) the exercise period is not to exceed five years from the date of issue for option rights or ten years for conversion rights, and (3) the conversion or exercise price for the new shares is to be set at least in line with the market conditions prevailing on the date on which the bonds are issued.

8

2	The acquisition of registered shares through the exercise of conversion or option rights and any further transfers of registered shares is subject to the transfer restrictions laid down in Art. 4 of the articles of association.
Art. 26b
1	The share capital as per Art. 3 of the articles of association is to be increased by not more than CHF 117,200,000 through the issue of a maximum of 117,200,000 registered shares with a par value of CHF 1 each, to be fully paid up. Upon acquisition, the new registered shares will be subject to the transfer restrictions pursuant to Art. 4 of the articles of association.
2	The preferential subscription right of present shareholders is excluded in favour of the staff, at all levels, and of Members of the Board of Directors of Credit Suisse Group and its Group companies. The shares shall be issued in accordance with the guidelines adopted by the Board of Directors, as amended from time to time. They may be issued at a price which is below their market value.
Art. 26c
1	The conditional share capital as per Art. 3 of the Articles of Association is to be increased, by a maximum amount of CHF 18,715,540 corresponding to a maximum of 18,715,540 registered shares, to be fully paid up, with a nominal value of CHF 1 each, through the exercise of option rights granted to employees of all levels of Donaldson, Lufkin & Jenrette, Inc. and its Group companies, which were rolled over according to the merger agreement between Credit Suisse Group, Diamond Acquisition Corp and Donaldson Lufkin & Jenrette, Inc., dated 30 August, 2000. The subscription ratio, time limits and further terms will be determined by the Board of Directors in accordance with the merger agreement dated August 30, 2000. The new registered shares will be subject to the transfer restrictions pursuant to Art. 4 of the Articles of Association.

9

2	The preemptive rights of the current shareholders are excluded in favor of staff at all levels of Donaldson Lufkin & Jenrette and its Group companies.
Art. 27
1	The Board of Directors is authorized, at any time until June 1, 2003, to increase the share capital, as per Art. 3 of the articles of association, in the maximum amount of CHF 45,480,000 through the issuance of a maximum of 45,480,000 registered shares, to be fully paid up, with a par value of CHF 1 each. Increases by underwriting as well as partial increases are permissible. The issue price, the time of effect of the right to a dividend, and the type of contribution will be determined by the Board of Directors. Upon acquisition, the new shares will be subject to the transfer restrictions pursuant to Art. 4 of the articles of association.	Authorized Capital
2	The Board of Directors is authorised to exclude the preferential subscription rights of the shareholders in favour of third parties if the new shares are used for the acquisition of companies, segments of companies or participations in the banking, finance, asset management or insurance industries through an exchange of shares or for financing the acquisition of companies, segments of companies or participations in these industries. If, in connection with company takeovers, commitments to service convertible bonds or bonds with warrants are assumed, the Board of Directors is authorised, for the purpose of fulfilling delivery commitments under such bonds, to issue new shares excluding the subscription rights of shareholders.
3	Registered shares for which subscriptions rights have been granted but not exercised, are to be sold on the market at market conditions.
Art. 27a
Deleted
Art. 28
Deleted		Non-Cash Capital Contribution

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Art. 28a
1	In accordance with the agreement on non-cash capital contributions dated 7 April 1993, the Company has acquired from Watt AG, Glarus, 13,178,500 registered shares of Swiss Volksbank, with a par value of CHF 50 each, with a total value and at a total price of CHF 1,549,791,600. Settlement has been effected by transfer to Watt AG of 3,953,550 fully paid-in registered shares of the Company with a par value of CHF 100 each.
2	The issue price per share is CHF 392. The sum of CHF 1,154,436,600, being the amount by which the price paid exceeds the par value of the new shares, CHF 395,355,000, remains with the Company as a premium.
3	In accordance with the agreement on non-cash capital contributions dated 1 June 1993, the Company has acquired from Watt AG, Glarus, 1,914,000 registered shares of Swiss Volksbank, Berne, with a par value of CHF 50 each, with a total value and at a total price of CHF 252,935,100. Settlement has been effected by transfer to Watt AG of 574,200 fully paid-in registered shares of the Company with a par value of CHF 100 each.
4	The issue price per share is CHF 440.50. The sum of CHF 195,515,100, being the amount by which the price paid exceeds the par value of the new shares, CHF 57,420,000, remains with the Company as a premium.
5	In accordance with the agreement on non-cash capital contributions dated 10 January 1994, the Company has acquired from Watt AG, Glarus, 200,000 registered shares of Swiss Volksbank, Berne, with a par value of CHF 50 each, with a total value and at a total price of CHF 28,000,000. Settlement has been effected by transfer to Watt AG of 191,781 fully paid-in registered shares of the Company with a par value of CHF 20 each.
6	The issue price per share is CHF 146. The sum of CHF 24,164,380, being the amount by which the price paid exceeds the par value of the new shares, CHF 3,835,620, remains with the Company as a premium.
Art. 28b
1	In accordance with the agreement on non-cash capital contributions dated 14 December 1993, the Company has acquired from Watt AG, Glarus, 1,762,434 bearer shares of Leu Holding Ltd., Zug, with a par value of CHF 100 each, with a total value and at a total price of CHF 992,837,820. Settlement has been effected by transfer to Watt AG of 1,468,695 fully paid-in bearer shares of the Company with a par value of CHF 100 each.

11

2	The issue price per share is CHF 676. The sum of CHF 845,968,320, being the amount by which the price paid exceeds the par value of the new shares, CHF 146,869,500, remains with the Company as a premium.
3	In accordance with the agreement on non-cash capital contributions dated 10 January 1994, the Company has acquired from Watt AG, Glarus, 126,318 bearer shares of Leu Holding Ltd., Zug, with a par value of CHF 100 each, with a total value and at a total price of CHF 71,159,140. Settlement has been effected by transfer to Watt AG of 105,265 fully paid-in bearer shares of the Company with a par value of CHF 100 each.
4	The issue price per share is CHF 676. The sum of CHF 60,632,640, being the amount by which the price paid exceeds the par value of the new shares, CHF 10,526,500, remains with the Company as a premium.
Art. 28c
In accordance with the agreement on non-cash capital contributions dated 8 December 1997, the Company has acquired from Credit Suisse First Boston, Zurich, 9,651,170 registered shares of the "Winterthur" Swiss Insurance Company, Winterthur, with a par value of CHF 20 each, and 35,694 rights to new registered shares resulting from the invalidation of the remaining 35,694 registered shares of the "Winterthur" Swiss Insurance Company (Articles 54 and 33, SESTA), with a total value and at a total price of CHF 1,414,282,140. Settlement has been effected by transfer to Credit Suisse First Boston of 70,714,107 fully paid-in registered shares of the Company with a par value of CHF 20 each. The issue price per share is CHF 20.
Art. 28d
In accordance with the agreement on non-cash capital contributions of 31 July 1998, the Company has acquired from Credit Suisse (Bahamas) Limited, Nassau (Bahamas), 16,916,518 common stock of Garantia Banking Limited, with a par value of USD 1.00 per share, with a total value and at a total price of CHF 706,325,400. Settlement has been effected by transfer to Credit Suisse (Bahamas) Limited as exchange agent of 1,938,708 fully paid-in registered shares of the Company with a par value of CHF 20 per share. The issue price per share is CHF 364.3278. The sum of CHF 667,551,240, being the amount by which the price paid exceeds the par value of the new shares (CHF 38,774,160), is retained by the Company as a share premium.
Art. 28e
In accordance with the agreement on non-cash capital contributions of 15 April 1999, the Company has acquired from Reinsurance Derivatives Holding AG, Zurich, 30,470,235 Perpetual Non-Cumulative Class A Preference Shares, with a par value of USD 1.00 per share, and 83,162,370 Participating Shares, with a par value of USD 1.00 per share, of Credit Suisse Financial Products, London, with a total value and a total price of CHF 486,000,000. Settlement has been effected by transfer to Reinsurance Derivatives Holding AG, Zurich, of 1,800,000 fully paid-in registered shares of the Company with a par value of CHF 20 per share. The issue price per share is CHF 270. The sum of CHF 450,000,000, being the amount by which the price paid exceeds the par value of the new shares (CHF 36,000,000), is retained by the Company as a share premium.

12

	Art. 28f
	In accordance with the agreements on non-cash capital contributions of 3 November 2000, the Company has acquired from AXA, Paris, AXA Financial, Inc., New York, The Equitable Life Assurance Society of the United States, New York, and AXA Participations Belgium, Brussels, 64,029,782 Common Shares, with a par value of USD 0.10 per share, of Donaldson, Lufkin & Jenrette Inc., Delaware, with a total value and a total price of CHF 8,502,828,693.50. Settlement has been effected by transfer to AXA, AXA Financial, Inc., Equitable Life Assurance Society of the United States and AXA Participations Belgium of 25,727,167 fully paid-in registered shares of the Company with a par value of CHF 20 per share. The issue price per share is CHF 330.50. The sum of CHF 7,988,285,353.50, being the amount by which the price paid exceeds the par value of the new shares (CHF 514,543,340), is retained by the Company as share premium.
	Art. 29
Non-Cash Capital Acquisition	Deleted
	The above text is a translation of the original German articles of association (Statuten) which constitute the definitive text and are binding in law.

13

Zurich, January 30, 2003

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Statuten der Credit Suisse Group

EX-4.1

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Exhibit 4.1

EXECUTION COPY

TRANSACTION AGREEMENT

between
CREDIT SUISSE FIRST BOSTON (USA), INC.,
and
THE BANK OF NEW YORK COMPANY, INC.
Dated as of January 7, 2003

Table of Contents

		Page
ARTICLE I
DEFINITIONS
SECTION 1.01.	Certain Defined Terms	2
SECTION 1.02.	Definitions	9
ARTICLE II
PURCHASE AND SALE
SECTION 2.01.	Purchase and Sale of the Equity Interests and the Transferred Assets	11
SECTION 2.02.	Purchase Price; Earnout	11
SECTION 2.03.	Closing	11
SECTION 2.04.	Closing Deliveries by the Seller	12
SECTION 2.05.	Closing Deliveries by the Purchaser	13
SECTION 2.06.	Adjustment of Purchase Price	13
ARTICLE III
REPRESENTATIONS AND WARRANTIES OF THE SELLER
SECTION 3.01.	Organization, Authority and Qualification of the Seller	14
SECTION 3.02.	Organization, Authority and Qualification of the Pershing Companies	14
SECTION 3.03.	Capital Stock of the Company and the Sister Companies; Ownership of the Shares and the LLC Interests	15
SECTION 3.04.	Subsidiaries	16
SECTION 3.05.	No Interests	17
SECTION 3.06.	Corporate Books and Records; Internal Controls	17
SECTION 3.07.	No Conflict	17
SECTION 3.08.	Consents and Approvals	17
SECTION 3.09.	Financial Information	18
SECTION 3.10.	No Undisclosed Liabilities	18
SECTION 3.11.	Conduct in the Ordinary Course; Absence of Certain Changes, Events and Conditions	18
SECTION 3.12.	Litigation	19
SECTION 3.13.	Registrations	19
SECTION 3.14.	Compliance with Laws	19
SECTION 3.15.	Material Contracts	21
SECTION 3.16.	Real Property	22
SECTION 3.17.	Intellectual Property	22
SECTION 3.18.	Assets	23
SECTION 3.19.	Employee Benefit Plans; Labor Matters	23
SECTION 3.20.	Taxes	25
SECTION 3.21.	Brokers	26
SECTION 3.22.	No Other Representations	27
SECTION 3.23.	Customer Clearing Agreements	27
SECTION 3.24.	Insurance	27
SECTION 3.25.	Derivatives; etc.	28

i

ARTICLE IV
REPRESENTATIONS AND WARRANTIES OF THE PURCHASER
SECTION 4.01.	Organization and Authority of the Purchaser	28
SECTION 4.02.	No Conflict	28
SECTION 4.03.	Governmental Consents and Approvals	28
SECTION 4.04.	Investment Purpose	29
SECTION 4.05.	Financing	29
SECTION 4.06.	Litigation	29
SECTION 4.07.	Brokers	29
ARTICLE V
ADDITIONAL AGREEMENTS
SECTION 5.01.	Conduct of Business Prior to the Closing	29
SECTION 5.02.	Access to Information	29
SECTION 5.03.	Confidentiality	30
SECTION 5.04.	Regulatory and Other Authorizations; Notices and Consents	30
SECTION 5.05.	CSFB, Inc. Joint and Several Liability	31
SECTION 5.06.	Investigation	31
SECTION 5.07.	Use of Names	32
SECTION 5.08.	Release of Indemnity Obligations	32
SECTION 5.09.	Other Agreements	32
SECTION 5.10.	Leases	33
SECTION 5.11.	Conversion	33
SECTION 5.12.	Further Action	34
SECTION 5.13.	Intercompany Accounts	34
SECTION 5.14.	Transfer of Assets	34
SECTION 5.15.	Notification of Certain Matters	34
SECTION 5.16.	Non-Compete	34
ARTICLE VI
EMPLOYEE MATTERS
SECTION 6.01.	General	35
SECTION 6.02.	Service Recognition	35
SECTION 6.03.	WARN	35
SECTION 6.04.	Welfare Benefit Plans	35
SECTION 6.05.	Purchaser Savings Plan	36
SECTION 6.06.	Underfunded Liability in the Scheme	36
SECTION 6.07.	Employee Compensation and Benefits	37
ARTICLE VII
TAX MATTERS
SECTION 7.01.	Tax Indemnities	38
SECTION 7.02.	Refunds and Tax Benefits	38
SECTION 7.03.	Contests	39
SECTION 7.04.	Cooperation and Exchange of Information	40
SECTION 7.05.	Conveyance Taxes	40
SECTION 7.06.	Miscellaneous	41

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ARTICLE VIII
CONDITIONS TO CLOSING
SECTION 8.01.	Conditions to Obligations of the Seller	42
SECTION 8.02.	Conditions to Obligations of the Purchaser	42
ARTICLE IX
INDEMNIFICATION
SECTION 9.01.	Survival of Representations and Warranties	44
SECTION 9.02.	Indemnification	44
SECTION 9.03.	Third Party Claims	45
ARTICLE X
TERMINATION AND WAIVER
SECTION 10.01.	Termination	46
SECTION 10.02.	Effect of Termination	47
SECTION 10.03.	Waiver	47
ARTICLE XI
GENERAL PROVISIONS
SECTION 11.01.	Expenses	47
SECTION 11.02.	Notices	47
SECTION 11.03.	Public Announcements	48
SECTION 11.04.	Headings	48
SECTION 11.05.	Severability	48
SECTION 11.06.	Entire Agreement	48
SECTION 11.07.	Assignment	48
SECTION 11.08.	No Third Party Beneficiaries	48
SECTION 11.09.	Amendment	49
SECTION 11.10.	Governing Law	49
SECTION 11.11.	Waiver Of Jury Trial	49
SECTION 11.12.	Counterparts	49
SECTION 11.13.	Specific Performance	49

List of Exhibits
Exhibit 2.02(b)(ii)(A)	List of Purchaser's Customers
Exhibit 2.02(b)(ii)(B)	List of Purchaser's Prospective Customers
Exhibit 2.06(a)	Interim Balance Sheet
Exhibit 2.06(b)	Calculation of Incentive Performance Bonus
Exhibits 5.14(a)	Bill of Sale and Assignment for Owned and Leased Assets
Exhibit 5.14(c)	Bill of Sale and Assignment for Excluded Assets

List of Schedules and Annexes
Annex A	List of Correspondents
Annex B	Employees and Officers with Employment Agreements
Annex C	List of individuals referred to in the "knowledge" definition

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        TRANSACTION AGREEMENT, dated as of January 7, 2003, between CREDIT SUISSE FIRST BOSTON (USA), INC., a corporation organized under the laws of the State of Delaware (the "Seller") and THE BANK OF NEW YORK COMPANY, INC., a corporation organized under the laws of the State of New York (the "Purchaser").

        WHEREAS, the Seller owns, directly or indirectly, all of the issued and outstanding shares of common stock of Donaldson Lufkin & Jenrette Securities Corporation (the "Company"), Pershing Ltd. ("Pershing Ltd.") and iNautix Technologies, Inc. ("Tech" and, together with Pershing Ltd., the "Sister Companies"; all of the issued and outstanding shares of common stock of the Sister Companies being referred to herein as the "Shares");

        WHEREAS, the Seller owns indirectly a one percent general partnership interest (the "Partnership Interest") in Pershing Trading Company L.P. ("Pershing Trading"), a Subsidiary (as defined below) of the Company, with the remaining 99% limited partnership interest being held by the Company;

        WHEREAS, the Company, the Sister Companies and Pershing Trading, together with their Subsidiaries, are engaged in the Business (as defined below);

        WHEREAS, certain assets of the Pershing Companies that are not used in the Business will be transferred by the Pershing Companies to the Seller or one of its Affiliates (as defined below) prior to the Closing (as defined below) as more fully set forth herein, and certain Transferred Assets (as defined below) of the Seller and its Affiliates that are used in the Business will be sold by the Seller and such Affiliates to the Purchaser at the Closing;

        WHEREAS, prior to the Closing, the Seller intends to effect the conversion of the Company into a limited liability company (the "LLC") pursuant to Section 266 of the Delaware General Corporation Law and Section 18-214 of the Delaware Limited Liability Company Act (the "Conversion");

        WHEREAS, after the Conversion, all of the membership interests of the Company, and, if the Seller elects to cause the conversion of Tech into a limited liability company pursuant to Section 266 of the Delaware General Corporation Law and Section 18-214 of the Delaware Limited Liability Company Act, all the membership interests of Tech's successor limited liability company (the "LLC Interests"), shall be owned by the Seller and references to the "Company," and, as applicable, Tech, will be to such successor limited liability company or its predecessor corporation, as the context requires;

        WHEREAS, the Seller wishes to sell, or cause its applicable Subsidiaries to sell, to the Purchaser, and the Purchaser wishes to purchase from the Seller or such applicable Subsidiaries, the Shares, the Partnership Interest and the LLC Interests, as well as the Transferred Assets;

        WHEREAS, in connection with the sale to the Purchaser of the Equity Interests (as defined below) and the Transferred Assets, the Seller and certain of its Affiliates and the Purchaser shall enter into certain Ancillary Agreements (as defined below) providing for an ongoing relationship between the Seller or such Affiliates and the Purchaser;

        WHEREAS, the Employment Agreements (as defined below) have been entered into; and

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        NOW, THEREFORE, in consideration of the premises and the mutual agreements and covenants hereinafter set forth, the Purchaser and the Seller hereby agree as follows:

ARTICLE I

DEFINITIONS

        SECTION 1.01. Certain Defined Terms. As used in this Agreement, the following terms shall have the following meanings:

        "Action" means any claim, action, suit, arbitration, inquiry, proceeding or investigation by or before any Governmental Authority.

        "Affiliate" means, with respect to any specified Person, any other Person that, directly or indirectly through one or more intermediaries, controls, is controlled by, or is under common control with, such specified Person.

        "Agreement" or "this Agreement" means this Transaction Agreement, dated as of January 7, 2003, between the Seller and the Purchaser (including the Exhibits, Annexes and Schedules hereto and the Disclosure Schedule) and all amendments hereto made in accordance with the provisions of Section 11.09.

        "Ancillary Agreements" means the Transition Services Agreement, the Clearing Agreement, the Cross License Agreement, and the Stock Loan Agreement.

        "Business" shall mean the business of providing brokerage, execution, clearing, settlement, data processing and investment products and services to financial organizations as conducted by the Pershing Companies immediately prior to the date hereof.

        "Business Day" means any day that is not a Saturday, a Sunday or other day on which banks are required or authorized by law to be closed in The City of New York.

        "Clearing Agreement" means the agreement to be entered into by the Seller (or one of its Affiliates), and the Company prior to the Closing in accordance with Section 5.09, under which the Company will, for a period of six years following the Closing Date, provide to the Seller or such Affiliate, and the Seller or such Affiliate will take to the same degree and extent, securities clearing, execution and related services that are substantially similar to the services being provided by the Business to the Company in respect of the private client service business of the Company on the date hereof; provided that (i) the fee schedule under such agreement will be adjusted annually so that the fee schedule in respect of such services is no less favorable to the Seller or such Affiliate than the fee schedule for any other introducing customer of the Company at such time for similar services in light of volumes, business mix and revenue, (ii) following the expiration of such agreement, none of the Seller or any of its Affiliates will enter into an agreement with a third party under which substantially similar services to those provided under the Clearing Agreement would be provided to the Seller or such Affiliates by such third party without first offering to the Company the right to provide such services to the Seller or such Affiliates on terms that are at least as favorable to the Seller or such Affiliates as those offered by such third party, and (iii) the standard of services to be provided by the Company under such agreement will be customary for similar agreements and at least commensurate with the level of such services being provided by the Company in respect of the Excluded Assets on the date hereof.

        "Code" means the Internal Revenue Code of 1986, as amended through the date hereof.

        "Company Intellectual Property" means all Intellectual Property in and to which the Pershing Companies hold, or have a right to hold, right, title and interest, and all Intellectual Property licensed or sublicensed to the Pershing Companies from a third party (including the Seller and its Affiliates),

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but excluding any Intellectual Property included in the Excluded Assets and the Retained Names and Marks.

        "Company IP Licenses" means those (a) licenses of Intellectual Property by each of the Pershing Companies to third parties (including the Seller and its Affiliates), (b) licenses of Intellectual Property by third parties (including the Seller and its Affiliates) to the Pershing Companies and (c) agreements between the Pershing Companies, on the one hand, and third parties (including the Seller and its Affiliates), on the other hand, relating to the development or use of Intellectual Property, the development or transmission of data, or the use, modification, framing, linking advertisement, or other practices with respect to Internet websites, in each case, that are used in connection with the Business.

        "Company Shares" means all the issued and outstanding shares of the Company.

        "Confidentiality Agreement" means the letter agreement dated as of October 18, 2002, between the Company and the Purchaser.

        "control" (including the terms "controlled by" and "under common control with"), with respect to the relationship between or among two or more Persons, means the possession, directly or indirectly or as trustee or executor, of the power to direct or cause the direction of the affairs or management of a Person, whether through the ownership of voting securities, as trustee or executor, by contract or otherwise, including the ownership, directly or indirectly, of securities having the power to elect a majority of the board of directors or similar body governing the affairs of such Person.

        "Controlled Group Liability" means any Liability (i) under Title IV of ERISA, (ii) under Section 302 of ERISA, (iii) under Sections 412 and 4971 of the Code or (iv) as a result of failure to comply with the continuation coverage requirements of Section 601 et seq. of ERISA and Section 4980B of the Code, in each case, the occurrence of which does not relate to, or arise from, any action or inaction by any director, officer, employee, agent or representative of the Pershing Companies who is a fiduciary of any Company Benefit Plan or trust related thereto if such action or inaction occurs with respect to a Company Benefit Plan or trust related thereto that is maintained solely for the benefit of current or former employees of any of the Pershing Companies.

        "Correspondent" means any Person to which any Pershing Company provides services in connection with the Business pursuant to any Customer Clearing Agreement.

        "Customer Clearing Agreement" means the contracts to which any Pershing Company is a party with a Correspondent listed on Annex A, together with all amendments, supplements, schedules and exhibits thereto.

        "Disclosure Schedule" means the Disclosure Schedule attached hereto, dated as of the date hereof, and forming a part of this Agreement.

        "Employee" means an employee of any of the Pershing Companies who is employed in the United States.

        "Employment Agreements" means, collectively, the employment agreements entered into on or prior to the date hereof, between the Purchaser or one or more Affiliates of the Purchaser and the several officers and employees identified in Annex B.

        "Encumbrance" means any security interest, pledge, mortgage, lien (including environmental and Tax liens), charge, encumbrance, adverse claim, preferential arrangement or restriction of any kind, including any restriction on the use, voting, transfer, receipt of income or other exercise of any attributes of ownership.

        "Equity Interests" means the Shares, the Partnership Interest and the LLC Interests.

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        "Equity Value" means the total equity of the Business, calculated on a basis substantially consistent with the calculation of the total equity on the Interim Balance Sheet and the other Financial Statements.

        "Excluded Actions" means any Action or any portion of any Action commenced before or after the date hereof against any of the Pershing Companies to the extent relating exclusively to the Legacy Business, including, without limitation, those Actions set forth on Section 1.01 of the Disclosure Schedule.

        "Excluded Assets" means the assets and liabilities set forth in Section 5.14(c) of the Disclosure Schedule to be transferred to the Seller or one of its Affiliates prior to the Closing pursuant to Section 5.14(c).

        "FSA" means the Financial Services Authority located in the United Kingdom, which assumes its full powers and responsibilities under the Financial Services and Market Act 2000.

        "Governmental Authority" means any United States federal, state or local or any non-United States government, governmental, regulatory or administrative authority, agency or commission, including the SEC, any SRO, any National Securities Exchange, the FSA, the LSE, or any court, tribunal, or judicial or arbitral body.

        "Governmental Order" means any order, writ, judgment, injunction, decree, stipulation, determination or award entered by or with any Governmental Authority.

        "HSR Act" means the Hart-Scott-Rodino Antitrust Improvements Act of 1976, as amended, and the rules and regulations promulgated thereunder.

        "Indebtedness" means, with respect to any Person, (a) all indebtedness of such Person, whether or not contingent, for borrowed money, (b) all obligations of such Person evidenced by notes, bonds, debentures or other similar instruments, (c) all indebtedness created or arising under any conditional sale, sale leaseback or other title retention agreement with respect to property acquired by such Person (even though the rights and remedies of the seller or lender under such agreement in the event of default are limited to repossession or sale of such property), (d) all obligations of such Person as lessee under leases that have been or should be, in accordance with U.S. GAAP, recorded as capital leases, (e) all obligations, contingent or otherwise, of such Person under acceptance, letter of credit or similar facilities, (f) all obligations of such Person to purchase, redeem, retire, defease or otherwise acquire for value any capital stock of such Person or any warrants, rights or options to acquire such capital stock, valued, in the case of redeemable preferred stock, at the greater of its voluntary or involuntary liquidation preference plus accrued and unpaid dividends, and (g) all Indebtedness of others referred to in clauses (a) through (f) above guaranteed directly or indirectly in any manner by such Person or in effect guaranteed directly or indirectly by such Person.

        "Intellectual Property" means all foreign and domestic rights in, to and concerning (a) inventions and discoveries, whether patentable or not, and all patents, patent applications and statutory invention registrations, including, without limitation, renewals, extensions, continuations, continuations-in-part, and renewal applications, including renewals, extensions and reissues of patents ("Patents"), (b) trademarks, service marks, trade dress, logos, trade names, corporate names and other source identifiers, registrations and applications for registration thereof, and the goodwill of the business symbolized thereby, including all extensions, modifications and renewals of same (collectively, "Trademarks"), (c) published and unpublished works of authorship and copyrights therein, and copyright registrations and applications for registration thereof and all renewals, extensions, restorations and reversions thereof (collectively, "Copyrights"), (d) software, data, databases and compilations of information, and (e) confidential and proprietary information, trade secrets and know-how, including processes, schematics, business methods, formulae, drawings, prototypes, models, designs, customer lists

5

and supplier lists, in each case, to the extent a jurisdiction provides property rights therein (collectively, "Trade Secrets").

        "IRS" means the Internal Revenue Service of the United States.

        "knowledge" means, with respect to the Seller, the actual knowledge of any of the individuals set forth on Annex C.

        "Law" means any material federal, state, local or foreign statute, law, ordinance, regulation, rule, code or order promulgated by a Governmental Authority.

        "Leased Real Property" means the real property leased by the Pershing Companies or any Affiliate thereof, as tenant, and used in connection with the Business, together with, to the extent leased by the Pershing Companies or any Affiliate thereof, all buildings and other structures, facilities or improvements currently or hereafter located thereon, all fixtures, systems, equipment and items of personal property of the Pershing Companies or any Affiliate thereof attached or appurtenant thereto and all easements, licenses, rights and appurtenances relating to the foregoing.

        "Legacy Business" means any business conducted by any of the Pershing Companies prior to the Closing Date other than the Business.

        "Liabilities" means any and all debts, liabilities and obligations, whether accrued or fixed, absolute or contingent, matured or unmatured or determined or determinable, including those arising under any Law, Action or Governmental Order and those arising under any contract, agreement, arrangement, commitment or undertaking.

        "LSE" means the London Stock Exchange.

        "Material Adverse Effect" means any circumstance, change, event or effect, taken as a whole, that is materially adverse to, or any development that would be reasonably expected to result in a material adverse effect on the Business, results of operations, assets or financial condition of the Pershing Companies taken as a whole, except for any circumstance, change in or effect on, the Pershing Companies, arising out of or attributable to (i) changes or effects that generally affect the industries in which the Pershing Companies operate, to the extent that such effect is not substantially more severe in the case of the Pershing Companies than in the case of similar companies, (ii) changes in general economic, legal, regulatory or political conditions in the U.S., (iii) any actions taken or omitted to be taken pursuant to the terms of this Agreement or (iv) any effects resulting from the announcement of the transactions contemplated by this Agreement.

        "NASD" means The National Association of Securities Dealers, Inc. and its wholly owned subsidiary, NASD Regulation, Inc.

        "National Securities Exchange" means any national securities exchange regulated under the Securities Exchange Act of 1934, as amended.

        "NYSE" means The New York Stock Exchange, Inc.

        "Order" means the entry in any judicial or administrative proceeding brought under any Law by any Governmental Authority or any other Person of any permanent or preliminary injunction or other order.

        "Permitted Encumbrances" means such of the following as to which no enforcement, collection, execution, levy or foreclosure proceeding shall have been commenced: (a) liens for taxes, assessments and governmental charges or levies that are not yet due and payable or that are being contested in good faith in proper proceedings if adequate reserves with respect thereto are maintained in accordance with generally accepted accounting principles; (b) Encumbrances imposed by Law, such as materialmen's, mechanics', carriers', workmen's and repairmen's liens and other similar liens arising in

6

the ordinary course of business securing obligations that are (i) not overdue for a period of more than 30 days and (ii) not in excess of $100,000 in the case of a single property or $500,000 in the aggregate at any time; (c) pledges or deposits to secure obligations under workers' compensation laws or similar legislation or to secure public or statutory obligations; and (d) minor survey exceptions, reciprocal easement agreements and other customary encumbrances on title to real property that (i) were not incurred in connection with any Indebtedness and (ii) do not, individually or in the aggregate, materially adversely affect the value or use of such property for its current and anticipated purposes.

        "Pershing Companies" means the Company, other than with respect to the Excluded Assets, the Sister Companies and their respective Subsidiaries.

        "Pershing Securities" means Pershing Securities Ltd.

        "Pershing Shares" means the Shares and the Company Shares.

        "Person" means any individual, partnership, firm, corporation, association, trust, unincorporated organization or other entity, as well as any syndicate or group that would be deemed to be a person under Section 13(d)(3) of the Securities Exchange Act of 1934, as amended.

        "Pre-Closing Liabilities" means (a) any and all claims (and related Damages) against, and Liabilities (and related Damages) of, any of the Pershing Companies arising prior to the Closing Date, and (b) any claims (and related Damages, which shall include, without limitation, licensing fees payable after the Closing Date relating thereto) by a third party and Liabilities (and related Damages) in respect thereof, including those set forth in Section 3.17(b) of the Disclosure Schedule, that the use of the Company Intellectual Property in existence on the Closing Date and owned by any of the Pershing Companies infringes any U.S. patent of such third party issued prior to the Closing Date, except for Liabilities (and related Damages) (i) accrued or reserved for on the Closing Balance Sheet, (ii) arising from actions taken by the Pershing Companies prior to the Closing Date in the ordinary course of business consistent with past practice (none of which results from, arises out of or relates to any breach of contract, tort or violation of Law), or (iii) set forth on the Disclosure Schedule (other than those matters set forth in items 1, 2, 3, 5, 6, 9, 11, 23, 27, 28, 32, 38, and 40 of Section 3.12 of the Disclosure Schedule), except in the case of clauses (ii) and (iii), arising from any breach of duty by Seller or any of the Pershing Companies constituting gross negligence, recklessness or bad faith.

        "Prime Brokerage Customer" means any Person who meets the description of a Prime Brokerage Customer and satisfies the requirements applicable to Prime Brokerage Customers in the United States Securities and Exchange Commission's no-action letter dated January 25, 1994 to the Prime Broker Committee of the Securities Industry Association.

        "Purchase Price Bank Account" means a bank account in the United States to be designated by the Seller in a written notice to the Purchaser at least five Business Days before the Closing.

        "Purchaser's Accountants" means Ernst & Young LLP, independent accountants of the Purchaser.

        "Regulations" means the Treasury Regulations (including Temporary Regulations) promulgated by the United States Department of Treasury with respect to the Code or other federal tax statutes.

        "SEC" means the United States Securities and Exchange Commission.

        "Seller's Accountants" means KPMG LLP, independent accountants of the Seller.

        "SRO" means a Self-Regulatory Organization registered under the Securities Exchange Act of 1934, as amended, including the NYSE and the NASD.

        "Stock Loan Agreement" means the agreement to be entered into by the Seller (or one of its Affiliates), and the Company prior to the Closing in accordance with Section 5.09, under which (1) the Seller and its Affiliates would, for a period of three years following the Closing Date, have sole and

7

direct access on market terms and conditions, including fees, for lending purposes to the stock held by the Company and all its customers who have given authority for such transactions, including for purposes of covering the internal short positions of customers of the Company and the Company; provided that the Company would receive annual payments of at least $10 million in respect of such services, (2) at the request of the Company, the Seller or one of its Affiliates would lend securities to the Company on customary terms and conditions, including rates and availability, and (3) at the request of the Company, the Seller or one of its Affiliates would make non-purpose cash loans to the Company collateralized by securities acceptable to the Seller or such Affiliate and otherwise on customary terms and conditions, except that the Seller or such Affiliates would not be obligated to make such loans to the Company unless the net assets of the Company in respect of the lending/borrowing transactions under such agreement exceed $150 million; provided however that (i) at the option of the Company, it may terminate such agreement at any time following the first anniversary of the Closing Date, (ii) the Seller shall have reasonable access to the books, records and personnel of the Company during the term of such agreement for purposes of verifying compliance by the Company with such agreement, (iii) the Company would agree to charge customers of the Company rates that are not less than the market rates charged by major bulge bracket firms at such time to customers that are similarly situated to the customers of the Company for services similar to those to be provided to such customers by the Seller or its Affiliates under such agreement, and (iv) such agreement would provide that (u) the Company would have the legal right of offset with respect to the obligations of the Seller or such Affiliate under such agreement, (v) the term of the transactions under such agreement would be the same, (w) the obligations of the Seller or such Affiliate and the Company under such agreement to repay borrowed securities would be collateralized with cash, (x) the Seller or such Affiliate and the Company would agree to enter into a master net settlement agreement that would provide for the net settlement of all contracts through a single payment with a single currency on a daily basis of all transactions under such agreement, (y) the terms of the agreement between the Seller or such Affiliate and its customers would provide that such customers would have recourse only to the Seller or such Affiliate (and not the Company) in the event of the bankruptcy of the Seller or such Affiliate, and (z) until the first anniversary of the Closing Date, none of the Seller or any of its Affiliates could borrow from the Company securities with a value greater than the value of the securities lent to the Company under such agreement plus $250 million.

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        "Subordinated Debenture" means the Subordinated Debenture dated as of January 16, 1995, as amended, between the Company and the Seller.

        "Subsidiaries" means any and all corporations, partnerships, limited liability companies, joint ventures, associations or other entities controlled by the Company and/or the Sister Companies directly or indirectly through one or more intermediaries other than those corporations, partnerships, limited liability companies, joint ventures, associations or other entities which are Excluded Assets.

        "Tax" or "Taxes" means any and all taxes, fees, levies, duties, tariffs, imposts, and other charges of any kind (together with any and all interest, penalties, additions to tax and additional amounts imposed with respect thereto) imposed by any government or taxing authority, including: taxes or other charges on or with respect to income, franchises, windfall or other profits, gross receipts, property, sales, use, capital stock, payroll, employment, social security, workers' compensation, unemployment compensation, or net worth; taxes or other charges in the nature of excise, withholding, ad valorem, stamp, transfer, value added, or gains taxes; license, registration and documentation fees; and customs duties, tariffs, and similar charges.

        "U.S. GAAP" means United States generally accepted accounting principles and practices as in effect from time to time and applied consistently throughout the periods involved.

        SECTION 1.02.    Definitions.    The following terms have the meanings set forth in the Sections set forth below:

Definition	Location
"2003 Statement of Income"	2.02(b)(i)
"Adjusted Underfunded Liability	6.06
"Allocations"	7.06(f)
"Assets"	3.18
"Benefit"	3.19(h)(iii)
"Bill of Sale"	5.14(a)
"Broker-Dealer"	3.13
"Claim"	9.03(a)
"Closing"	2.03
"Closing Balance Sheet"	2.06(a)
"Closing Date"	2.03
"Company"	Recitals
"Company Benefit Plans"	3.19(a)
"Company Trade Secrets"	3.17(c)
"Competing Business"	5.16
"Contest"	7.03(b)
"Conversion"	Recitals
"CP Waiver Date"	2.03
"Cross License Agreement"	5.09(b)
"CSFB Agreement"	5.05
"Damages"	9.02(a)
"Deductible Amount"	9.02(a)
"Deposit"	2.03
"Discretionary Payment Pool"	6.07
"Earnout Payment"	2.02(b)(ii)
"Earnout Revenues"	2.02(b)(ii)
"ERISA"	3.19(a)
"Financial Statements"	3.09
"Financing Event"	2.03

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"Foreign Benefit Plans"	3.19(h)(i)
"Indemnitee"	9.03(a)
"Indemnitor"	9.03(a)
"Index"	6.06
"Independent Accounting Firm"	2.06(b)
"Insurance Policies"	3.24
"Interim Balance Sheet"	2.06(a)
"Interim Balance Sheet Date"	2.06(a)
"Investment Adjustment"	6.06
"Last Valuation"	3.19(h)(vii)
"Leased Assets"	5.14(b)
"Leasing Entity"	3.20(d)
"LLC"	Recitals
"LLC Interests"	Recitals
"Material Contracts"	3.15(a)
"NYSE"	3.14(b)
"Owned Assets"	5.14(a)
"Partnership Interest"	Recitals
"Pershing Ltd."	Recitals
"Pershing Trading"	Recitals
"Plans"	3.19(a)
"Post-Closing Retention Compensation Plan"	6.07
"Pricing Event"	2.03
"Purchase Price"	2.02
"Purchaser"	Preamble
"Purchaser Welfare Plans"	6.04
"Purchaser's Savings Plan"	6.05
"Relevant Liabilities"	7.06(f)
"Retained Names and Marks"	5.07(a)
"Scheme"	3.19(h)(iii)
"Seller"	Preamble
"Seller's Savings Plan"	6.05
"Services"	3.23(a)
"Shares"	Recitals
"Sister Companies"	Recitals
"Specialist"	3.14(b)
"Straddle Period"	7.01(a)
"Subsidiaries Shares"	3.05
"Tax Benefit"	6.06
"Tech"	Recitals
"Transferred Assets"	5.14(b)
"Transition Services Agreement"	5.09(a)
"Trustee's Demand"	6.06
"Underfunded Liability"	6.06
"WARN Act"	6.03

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ARTICLE II

PURCHASE AND SALE

        SECTION 2.01.    Purchase and Sale of the Equity Interests and the Transferred Assets.    Upon the terms and subject to the conditions of this Agreement, at the Closing, the Seller shall sell, or cause its applicable Subsidiaries to sell, to the Purchaser, and the Purchaser shall purchase from the Seller or such Subsidiaries, as applicable, the Equity Interests set forth in Section 2.01 of the Disclosure Schedule and the Transferred Assets.

        SECTION 2.02.    Purchase Price; Earnout.    (a) The purchase price for the Equity Interests and the Transferred Assets shall be $2,000 million (the "Purchase Price"), subject to the adjustments set forth in Section 2.02(b), Section 2.06 and, if applicable, Section 9.02.

        (b)    (i) Not later than March 1, 2004, the Purchaser will provide to the Seller a copy of the statement of income of the Business for the six months ended December 31, 2003, which statement of income will be prepared in accordance with U.S. GAAP and in a manner substantially consistent with the preparation of the Financial Statements (the "2003 Statement of Income").

        (ii)    If the aggregate revenues (net of interest expense) of the Business that have been generated from all customers of the Business, other than customers of the Purchaser's or its subsidiaries' clearing businesses on the date of this Agreement listed on Exhibit 2.02(b)(ii)(A) or prospective customers of the Purchaser's or its subsidiaries' clearing businesses listed on Exhibit 2.02(b)(ii)(B), during the period commencing on July 1, 2003, and ending on December 31, 2003, as reflected in the 2003 Statement of Income (the "Earnout Revenues"), exceed $455 million, the Purchaser will make an additional payment to the Seller, equal to the product of (i) the excess of such revenues over $455 million, and (ii) 2.5 (the "Earnout Payment"); provided that 50% of the revenues generated from the prospective customer of the Purchasers' and the Subsidiaries' clearing businesses marked with an asterisk on Exhibit 2.06(a)(ii)(B) will be included in revenues for purposes of calculating the Earnout Payment. In no event will the Earnout Payment exceed $50 million.

        (iii)    The Seller may dispute the amount of the Earnout Revenues, but only on the basis that the 2003 Statement of Income was not prepared in accordance with U.S. GAAP and in a manner substantially consistent with the preparation of the Financial Statements. In the event of such a dispute, the provisions of Section 2.06(b) will apply mutatis mutandi.

        (iv)    Within three Business Days of the 2003 Statement of Income being declared final in accordance with clause (iii), the Purchaser will pay to the Seller any Earnout Payment payable under this Section 2.02(b) by wire transfer of immediately available funds to a bank account designated by the Seller.

        SECTION 2.03.    Closing.    Upon the terms and subject to the conditions of this Agreement, the sale and purchase of the Equity Interests and the Transferred Assets contemplated by this Agreement shall take place at a closing (the "Closing") to be held at the offices of Shearman & Sterling, 599 Lexington Avenue, New York, New York at 10:00 A.M. New York time on the first Business Day of the month immediately following the month in which all conditions to the obligations of the parties set forth in Article VIII have been satisfied or waived; provided that if such first Business Day occurs fewer than five Business Days following the satisfaction or waiver of such conditions, the Closing will be on the first Business Day of the immediately succeeding month (the day on which the Closing takes place being the "Closing Date"); provided further that the Purchaser may, at its option, by written notice to the Seller, elect to postpone the Closing Date until the date that is the earlier of (a) September 1, 2003, (b) the first Business Day of the month immediately succeeding the month in which the Bloomberg volume weighted average price of the common stock of the Purchaser is equal to at least $27.50 (as adjusted for stock splits, stock dividends or similar events occurring after the date hereof)

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for five consecutive NYSE trading days, each of which occurs after the CP Waiver Date (a "Pricing Event"), and (c) the first Business Day of the month immediately succeeding the month in which the Purchaser has closed one or more offerings of equity securities or asset dispositions the result of which is that the common equity of the Purchaser (excluding retained earnings) is increased by at least $1,100,000,000 (a "Financing Event"); provided that if the first Business Day referred to in clause (b) or (c) above occurs fewer than five Business Days following a Pricing Event or Financing Event, as applicable, the Closing Date will be the first Business Day of the immediately succeeding month; provided however that if the Purchaser so elects to postpone the Closing Date, (i) the Seller will deliver to the Purchaser a certificate dated as of the CP Waiver Date signed by a duly authorized officer of the Seller to the effect that the representations and warranties of the Seller contained in this Agreement shall have been true and correct as of the date of this Agreement and are true and correct as of the date of such certificate with the same force and effect as if made as of such date (other than such representations and warranties as are made as of another date, which shall be true and correct as of such date), except, in either case, where the failure to be so true and correct would not, individually or in the aggregate, have a Material Adverse Effect, (ii) assuming delivery of the certificate referred to in clause (i), the Purchaser shall be deemed to have irrevocably waived all of the conditions to its obligations set forth in Section 8.02, other than those contained in Sections 8.02(a)(ii), 8.02(a)(iii) (as to matters set forth in Section 8.02(a)(ii)), 8.02(c)(i) and 8.02(d), as of the date that would have been the Closing Date pursuant to this Section 2.03 in the absence of such election by the Purchaser (such date, the "CP Waiver Date"); provided, however that the Purchaser will not be deemed to have waived any condition pursuant to this clause (ii) if (x) the subsequent failure of such condition has resulted from, or been caused by, the failure of the Seller to fulfill any of its obligations under this Agreement or (y) the condition contained in Section 8.02(a)(i) shall not have been satisfied as of the CP Waiver Date notwithstanding the delivery by the Seller of the certificate referred to in clause (i) of the immediately preceding proviso, and (iii) within two Business Days of the date on which the Purchaser so elects to postpone the Closing Date, the Purchaser will pay to a mutually satisfactory escrow agent $150 million, as a refundable prepayment of the Purchase Price (and not as liquidated damages) (the "Deposit") by wire transfer of immediately available funds to the Purchase Price Bank Account; provided further however that the Purchaser may not so elect to delay the Closing if prior to the date on which all the conditions to the obligations of the parties set forth in Article VIII have been satisfied or waived, a Financing Event has occurred. Such escrow agent will hold the Deposit pursuant to an escrow agreement that will provide that all interest on the amount of the Deposit will be paid to the Seller, reflect the terms of this Agreement, where applicable, and otherwise be in form and substance reasonably satisfactory to the Seller and the Purchaser. The Purchaser shall promptly advise the Seller in writing of the occurrence of any Financing Event and shall provide reasonable details to the Seller of any computations in respect thereof, including any changes to the common equity (excluding retained earnings) of the Purchaser as a result thereof.

        SECTION 2.04.    Closing Deliveries by the Seller.    At the Closing, the Seller shall deliver or cause to be delivered to the Purchaser:

        (a)  evidence of the registration of the sale of the LLC Interests and the Partnership Interest;

        (b)  the Bill of Sale;

        (c)  stock certificates evidencing the Shares duly endorsed in blank or accompanied by stock powers and transfer forms duly executed in blank;

        (d)  a receipt for the Purchase Price; and

        (e)  the certificates and other documents required to be delivered pursuant to Section 8.02.

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        SECTION 2.05.    Closing Deliveries by the Purchaser.    At the Closing, the Purchaser shall deliver to the Seller:

        (a)  the Purchase Price, less, if applicable, the amount of the Deposit and the amount contemplated by Section 8.02(i), by wire transfer in immediately available funds to the Purchase Price Bank Account;

        (b)  an amount equal to the principal (in the amount of $480 million) plus accrued interest outstanding under the Subordinated Debenture by wire transfer in immediately available funds to the Purchase Price Bank Account; and

        (c)  the certificates and other documents required to be delivered pursuant to Section 8.01.

        SECTION 2.06.    Adjustment of Purchase Price.    The Purchase Price shall be subject to adjustment after the Closing as specified in this Section 2.06:

        (a)  Closing Balance Sheet. As promptly as practicable, but in any event within 75 days following the Closing, the Purchaser shall deliver to the Seller a balance sheet (the "Closing Balance Sheet") with respect to the Business as of 11:59 p.m. on the day immediately preceding the Closing Date, together with a certificate of the Purchaser certifying that the Closing Balance Sheet (i) has been prepared in accordance with U.S. GAAP and on a basis substantially consistent with the preparation of the balance sheet of the Business dated as of October 31, 2002 (a copy of which is attached hereto as Exhibit 2.06(a)) (the "Interim Balance Sheet"; the date as of which the Interim Balance Sheet is prepared being referred to herein as the "Interim Balance Sheet Date") and the other Financial Statements, and (ii) reflects, among other things, an accrual for incentive performance bonuses payable to employees of the Pershing Companies with respect to the period commencing on January 1, 2003, and ending on the Closing Date that is consistent with the past practice of the Business and, in any event (x) with respect to those employees with the title of vice president or more senior, at least equal to that calculated for such employees for such period in accordance with the calculation set forth in Exhibit 2.06(b), and (y) with respect to such employees with the title of assistant vice president or more junior, at a rate equal to at least $1.5 million per month (or portion thereof) during such period.

        (b)  Disputes. The Seller may dispute any amounts reflected on the Closing Balance Sheet, but only on the basis that the Closing Balance Sheet has not been prepared in accordance with U.S. GAAP or on a basis substantially consistent with the preparation of the Interim Balance Sheet and the other Financial Statements; provided, however, that the net effect of such disputed amounts in the aggregate would affect the Equity Value reflected on the Closing Balance Sheet by more than $100,000; provided further, however, that the Seller shall have notified the Purchaser in writing of each disputed item, specifying the amount thereof in dispute and setting forth, in reasonable detail, the basis for such dispute, within 30 Business Days of the Purchaser's delivery of the Closing Balance Sheet to the Seller. With respect to any portions of the Closing Balance Sheet that are not in dispute, a purchase price adjustment shall be made in accordance with Section 2.06(c). In the event of such a dispute, the Seller and the Purchaser shall attempt to reconcile their differences, and any resolution by them as to any disputed amounts shall be final, binding and conclusive on the Seller and the Purchaser. If the Seller and the Purchaser are unable to reach a resolution with such effect within 30 Business Days after receipt by the Purchaser of the Seller's written notice of dispute, the Seller and the Purchaser shall submit the items remaining in dispute for resolution to an independent accounting firm of international reputation mutually acceptable to the Purchaser and the Seller or, if no such firm is agreed upon, PricewaterhouseCoopers(the "Independent Accounting Firm"), which shall, within 30 Business Days after such submission, determine and report to the Purchaser and the Seller upon such remaining disputed items, and such report shall be final, binding and conclusive on the Seller and the Purchaser. The fees and disbursements of the Independent Accounting Firm shall be allocated between the Seller and the Purchaser in the

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same proportion that the aggregate amount of such remaining disputed items so submitted to the Independent Accounting Firm that are unsuccessfully disputed by each such party (as finally determined by the Independent Accounting Firm) bears to the total amount of such remaining disputed items so submitted. In acting under this Agreement, the Independent Accounting Firm shall be entitled to the privileges and immunities of arbitrators.

        (c)  Purchase Price Adjustment. The Closing Balance Sheet shall be deemed final for the purposes of this Section 2.06 upon the earliest of (i) the failure of the Seller to notify the Purchaser of a dispute within 30 Business Days of the Purchaser's delivery of the Closing Balance Sheet to the Seller, (ii) the resolution of all disputes, pursuant to Section 2.06(b), by the Purchaser and the Seller and (iii) the resolution of all disputes, pursuant to Section 2.06(b), by the Independent Accounting Firm. Within three Business Days of the Closing Balance Sheet being deemed final, a Purchase Price adjustment shall be made as follows:

(i)

in the event that the Equity Value as reflected on the Closing Balance Sheet is less than $600 million, then the Purchase Price shall be adjusted downward in an amount equal to such deficiency, and the Seller shall, within three Business Days of such determination, pay the amount of such deficiency to the Purchaser by wire transfer in immediately available funds to an account designated by the Purchaser; or



(ii)

in the event that the Equity Value reflected on the Closing Balance Sheet exceeds $600 million, then the Purchase Price shall be adjusted upward in an amount equal to such excess, and the Purchaser shall, within three Business Days of such determination, pay the amount of such excess to the Seller by wire transfer in immediately available funds to an account designated by the Seller.

        (d)  Prior to the Closing Date, the Seller and the Purchaser shall consult with each other in good faith regarding the appropriate Equity Value on the Closing Date, with a view to minimizing the amount of such Equity Value to the extent that such minimization would not have any adverse effect on either the Seller or the Purchaser.

ARTICLE III

REPRESENTATIONS AND WARRANTIES OF THE SELLER

        As an inducement to the Purchaser to enter into this Agreement, the Seller hereby represents and warrants to the Purchaser as follows:

        SECTION 3.01.    Organization, Authority and Qualification of the Seller.    The Seller is a corporation duly organized, validly existing and in good standing under the laws of the State of Delaware and has all necessary power and authority to enter into this Agreement, to carry out its obligations hereunder and to consummate the transactions contemplated hereby. The execution and delivery of this Agreement and each of the Ancillary Agreements, when executed, by the Seller, the performance by the Seller of its obligations hereunder and the consummation by the Seller of the transactions contemplated hereby have been or will have been, as applicable, duly authorized by all requisite action on the part of the Seller. This Agreement has been duly executed and delivered by the Seller and (assuming due authorization, execution and delivery by the Purchaser) this Agreement and each of the Ancillary Agreements, when executed, constitutes or will constitute, as applicable, a legal, valid and binding obligation of the Seller enforceable against the Seller in accordance with its terms.

        SECTION 3.02.    Organization, Authority and Qualification of the Pershing Companies.    (a) Subject to Section 3.02(b) with respect to the Company, each of the Pershing Companies is a corporation duly organized, validly existing and, to the extent applicable, in good standing under the laws its jurisdiction of incorporation. Each of the Pershing Companies has all necessary power and authority to own, operate or lease the properties and assets now owned, operated or leased by it and to carry on its

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business as it has been and is currently conducted. Each of the Pershing Companies is duly licensed or qualified to do business and, to the extent applicable, is in good standing in each jurisdiction in which the properties owned or leased by it or the operation of its business makes such licensing or qualification necessary other than in such jurisdictions where the failure to be so qualified or licensed would not, individually or in the aggregate, have a Material Adverse Effect. All corporate actions taken by each of the Pershing Companies have been duly authorized, and none of the Pershing Companies has taken any action that in any respect conflicts with, constitutes a default under, or results in a violation of, any provision of its certificate of incorporation or bylaws. True and correct copies of the certificate of incorporation and bylaws of each of the Pershing Companies, each as in effect on the date hereof, have been delivered by the Seller to the Purchaser.

        (b)    As of the Closing Date, (i) the Company shall be a limited liability company duly formed, validly existing and in good standing under the laws of the State of Delaware and shall have all necessary power and authority to own, operate or lease the properties and assets owned, operated or leased by it and to carry on its business as it has been and is then conducted, (ii) all corporate actions taken by the Company shall have been duly authorized, and the Company shall not have taken any action that in any respect conflicts with, constitutes a default under or results in a violation of any provision of its organizational documents, and (iii) true and correct copies of the organizational documents of the Company, as in effect on the Closing Date, shall have been delivered by the Seller to the Purchaser.

        SECTION 3.03.    Capital Stock of the Company and the Sister Companies; Ownership of the Shares and the LLC Interests.    (a) Subject to Section 3.03(b) with respect to the Company, the authorized capital stock, the number of Pershing Shares issued and outstanding and ownership of each of the Company and the Sister Companies is as set forth in Section 3.03 of the Disclosure Schedule, and all the Pershing Shares are validly issued, fully paid and nonassessable. None of the Pershing Shares was issued in violation of any preemptive rights. Except for the transactions contemplated by this Agreement, there are no options, warrants, convertible securities or other rights, agreements, arrangements or commitments of any character relating to the capital stock of the Company and the Sister Companies or obligating the Seller or the Company and the Sister Companies to issue, transfer or sell any Pershing Shares, shares of capital stock of, or any other interest in, the Company and the Sister Companies. Except for the transactions contemplated by this Agreement, there are no outstanding contractual obligations of the Company or the Sister Companies to repurchase, redeem or otherwise acquire any Pershing Shares or, except in connection with the financing of customer positions in the ordinary course of business, to provide funds to, or make any investment (in the form of a loan, capital contribution or otherwise) in, any other Person. Subject to Section 3.03(b) with respect to the Company, the Pershing Shares constitute all the issued and outstanding capital stock of the Company and the Sister Companies and are owned of record and beneficially, directly or indirectly, solely by the Seller, free and clear of all Encumbrances. There are no voting trusts, stockholder agreements, proxies or other agreements or understandings in effect with respect to the voting of any of the Pershing Shares.

        (b)    As of the Closing Date, (i) all of the LLC Interests will be owned beneficially and of record by the Seller, free and clear of all Encumbrances, (ii) except for the transactions contemplated by this Agreement and except as set forth in Section 3.03 of the Disclosure Schedule, there will be no options, warrants, convertible securities or other rights, agreements, arrangements or commitments of any character relating to the LLC Interests or obligating the Seller or the Company to issue or sell any LLC Interests, (iii) there will be no outstanding contractual obligations of the Company to repurchase, redeem or otherwise acquire any LLC Interests or, except in connection with the financing of customer positions in the ordinary course of business, to provide funds to, or make any investment (in the form of a loan, capital contribution or otherwise) in, any other Person, and (iv) there will be no voting trusts, proxies or other agreements or understandings in effect with respect to the voting of any of the LLC

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Interests. Upon consummation of the transactions contemplated by this Agreement and registration of the LLC Interests in the name of the Purchaser in the records of the Company, the Purchaser, assuming it shall have purchased the LLC Interests for value in good faith and without notice of any adverse claim, will own all of the LLC Interests, representing 100% of the interests in the Company, free and clear of all Encumbrances.

        SECTION 3.04.    Subsidiaries.    Section 3.04 of the Disclosure Schedule sets forth a true and complete list of all the Subsidiaries. The authorized capital stock, number of shares of common stock issued and outstanding (the "Subsidiaries Shares") and partnership interests of each of the Subsidiaries and ownership of each of the Subsidiaries is as set forth in Section 3.04 of the Disclosure Schedule, and all of the Subsidiaries Shares are validly issued, fully paid and nonassessable. None of the Subsidiaries Shares or Subsidiary partnership interests was issued in violation of any preemptive rights. Except as set forth in Section 3.04 of the Disclosure Schedule, there are no options, warrants, convertible securities or other rights, agreements, arrangements or commitments of any character relating to the capital stock of the Subsidiaries or obligating the Seller or any of the Pershing Companies to issue or sell any shares of capital stock of, or any other interest in, the Subsidiaries. There are no outstanding contractual obligations of the Subsidiaries to repurchase, redeem or otherwise acquire any Subsidiaries Shares or other interests or, except in connection with the financing of customer positions in the ordinary course of business, to provide funds to, or make any investment (in the form of a loan, capital contribution or otherwise) in, any other Person. The equity interests set forth in Section 3.04 of the Disclosure Schedule constitute all the issued and outstanding equity interests in the Subsidiaries and are owned of record and beneficially, directly or indirectly, solely by the Company and/or the Sister Companies, free and clear of all Encumbrances. There are no voting trusts, stockholder agreements, proxies or other agreements or understandings in effect with respect to the voting of any such interests.

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        SECTION 3.05.    No Interests.    Except as set forth in Section 3.05 of the Disclosure Schedule, there are no corporations, partnerships, joint ventures, associations or other entities in which any of the Pershing Companies own, of record or beneficially, any direct or indirect equity or other interest or any right (contingent or otherwise) to acquire the same. Except as set forth in Section 3.05 of the Disclosure Schedule, none of the Pershing Companies is a member of (nor is any part of any of their businesses conducted through) any partnership. Except as set forth in Section 3.05 of the Disclosure Schedule, none of the Pershing Companies is a participant in any joint venture or similar arrangement.

        SECTION 3.06.    Corporate Books and Records; Internal Controls.

        (a)    The minute books of each of Pershing Companies contain accurate records of all meetings and accurately reflect all other actions taken by the stockholders, the members and the board of directors (or equivalent body) of each of the Pershing Companies and all the committees of the board of directors of each of the Pershing Companies. Except as set forth in Section 3.06 of the Disclosure Schedule, since December 31, 2000, none of the records, systems, controls, data or information of any of the Pershing Companies are recorded, stored, maintained, operated or otherwise wholly or partly dependent on or held by any means (including any electronic, mechanical or photographic process, whether computerized or not) that (including all means of access thereto and therefrom) is not under the exclusive ownership and control of any of the Pershing Companies, accountants retained by any of the Pershing Companies or the Seller.

        (b)    The books and records of each Pershing Company have been fully, properly and accurately maintained in reasonable detail all material respects, and there are no material inaccuracies or discrepancies of any kind contained or reflected therein. Each Pershing Company has devised and maintained a system of internal accounting controls sufficient to provide reasonable assurances that (A) transactions are executed in accordance with management's general or specific authorizations, (B) transactions are recorded as necessary to permit preparation of financial statements in conformity with generally accepted accounting principles and to maintain accountability for assets, (C) access to assets is permitted only in accordance with management's general or specific authorization, and (D) the recorded accountability for assets is compared with the existing assets at reasonable intervals and appropriate action is taken with respect to any differences.

        SECTION 3.07.    No Conflict.    Except as set forth in Section 3.07 of the Disclosure Schedule, the execution, delivery and, assuming that all consents, approvals, authorizations and other actions described in Section 3.08 have been obtained and all filings and notifications listed in Section 3.08 of the Disclosure Schedule have been made, the performance of this Agreement by the Seller do not and will not (a) violate, conflict with or result in the breach of any provision of the certificate of incorporation or bylaws (or similar organizational documents) of the Seller or the Pershing Companies, (b) conflict with or violate any Law or Governmental Order applicable to the Seller or the Pershing Companies or any of their respective assets, properties or businesses, or (c) conflict with, result in any breach of, constitute a default (or event which with the giving of notice or lapse of time, or both, would become a default) under, require any consent under, or give to others any rights of termination, amendment, acceleration, suspension, revocation or cancellation of, or result in the creation of any Encumbrance on any of the Equity Interests or on any of the assets or properties of the Seller or the Pershing Companies pursuant to, any note, bond, mortgage or indenture, contract, agreement, lease, sublease, license, permit, franchise or other instrument or arrangement to which any of the Seller or the Pershing Companies is a party or by which any of the Equity Interests or any of such assets or properties is bound or affected, except, in the case of clauses (b) and (c), as would not, individually or in the aggregate, have a Material Adverse Effect.

        SECTION 3.08.    Consents and Approvals.    The execution, delivery and performance of this Agreement by the Seller do not and will not require any consent, approval, authorization or other order of, action by, filing with or notification to any Governmental Authority, except (a) as described in Section 3.08 of the Disclosure Schedule, (b) the notification requirements of the HSR Act, (c) the

17

notification requirement of Rule 1017 of the NASD, (d) compliance with the notification requirements of NYSE Rule 312 and any further requests or directions received from the NYSE as a result of such notification, (e) compliance with the notification requirements of the FSA, (f) notification to the LSE, (g) where failure to obtain such consent, approval, authorization or action, or to make such filing or notification, would not, individually or in the aggregate, have a Material Adverse Effect or (h) as may be necessary as a result of any facts or circumstances relating solely to the Purchaser.

        SECTION 3.09.    Financial Information.    The Seller has delivered to the Purchaser true, complete and correct copies of (i) the Interim Balance Sheet and the statement of income of the Business for the ten months ended October 31, 2002 and (ii) the balance sheet of the Business as of December 31, 2001 and the statement of income of the Business for the year then ended (collectively, together with the Interim Balance Sheet, referred to herein as the "Financial Statements"). The Financial Statements present fairly in all material respects the financial condition and results of operations of the Business as of such dates or for the periods covered thereby and have been prepared in accordance with U.S. GAAP with such deviations from U.S. GAAP, if any, as are referred to in the notes thereto. All accrued and unpaid liabilities for incentive performance bonuses owed by any Pershing Company as of the respective dates of the Financial Statements have been accrued and reserved for and are reflected in the Financial Statements.

        SECTION 3.10.    No Undisclosed Liabilities.    There are no Liabilities of the Business, other than Liabilities (i) reflected or reserved against on the Interim Balance Sheet, (ii) disclosed in Section 3.10 of the Disclosure Schedule or (iii) incurred since the Interim Balance Sheet Date in the ordinary course of business, consistent with the past practice, that would not, individually or in the aggregate, have a Material Adverse Effect.

        SECTION 3.11.    Conduct in the Ordinary Course; Absence of Certain Changes, Events and Conditions.    Except as set forth in Section 3.11 of the Disclosure Schedule, since the Interim Balance Sheet Date, the Business has been conducted in the ordinary course and consistent with past practice. As an amplification and not limitation of the foregoing, except as contemplated by this Agreement or as set forth in Section 3.11 of the Disclosure Schedule, and except as would not, individually or in the aggregate, have a Material Adverse Effect, since the Interim Balance Sheet Date, none of the Pershing Companies has:

        (i)    except in the ordinary course of business consistent with past practice, permitted or allowed any of the assets or properties (whether tangible or intangible) of the Pershing Companies to be subjected to any Encumbrance, other than Permitted Encumbrances and Encumbrances that will be released at or prior to the Closing;

        (ii)  except in the ordinary course of business consistent with past practice, discharged or otherwise obtained the release of any Encumbrance or paid or otherwise discharged any Liability, other than current liabilities reflected on the Financial Statements and current liabilities incurred in the ordinary course of business consistent with past practice since the Interim Balance Sheet Date;

        (iii)  redeemed any of the capital stock or declared, made or paid any dividends or distributions (whether in cash, securities or other property) to the holders of capital stock of any of the Pershing Companies or otherwise;

        (iv)  merged with, entered into a consolidation with or acquired an interest of 5% or more in any Person or acquired a substantial portion of the assets or business of any Person or any division or line of business thereof, or otherwise acquired any material assets other than in the ordinary course of business consistent with past practice;

        (v)  issued or sold any capital stock, notes, bonds or other securities, or any option, warrant or other right to acquire the same, of, or any other interest in, any of the Pershing Companies other than in the ordinary course of business consistent with past practice;

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        (vi)  other than in the ordinary course of business, consistent with past practice, entered into any agreement, arrangement or transaction with any of its directors, officers, employees or stockholders (or with any relative, beneficiary or spouse living with such Person or Affiliate of such Person);

        (vii) made any material change in any method of accounting or accounting practice or policy used by the Business, other than such changes required by U.S. GAAP;

        (viii)other than in the ordinary course of business consistent with past practice, incurred any Indebtedness in excess of $500,000 individually or $5,000,000 in the aggregate;

        (ix)  made any capital expenditure or commitment for any capital expenditure in excess of $1,000,000 individually or $5,000,000 in the aggregate;

        (x)  (A) granted or announced any increase in the wages, salaries, compensation, bonuses, incentives, pension or other benefits payable by any of the Pershing Companies to any of their employees, or (B) established, increased or promised to increase any benefits under any Company Benefit Plan, in any case, except as required by Law or pursuant to any employment contract or arrangement or involving increases in the ordinary course of business consistent with past practice of the Pershing Companies;

        (xi)  amended, modified or consented to the termination of any Material Contract or any of the Pershing Companies' rights thereunder;

        (xii) suffered any circumstance, change, event, effect or development that would, individually or in the aggregate, constitute a Material Adverse Effect; or

        (xiii)agreed to take any of the actions specified in this Section 3.11.

        SECTION 3.12.    Litigation.    Except as set forth in Section 3.12 of the Disclosure Schedule, except for the Excluded Actions or except as would not, individually or in the aggregate, have a Material Adverse Effect, there are no Actions by or against any of the Pershing Companies or affecting any of the Assets pending before any Governmental Authority or, to the knowledge of the Seller, threatened to be brought by or before any Governmental Authority. None of the matters disclosed in Section 3.12 of the Disclosure Schedule could reasonably be expected to affect the legality, validity or enforceability of this Agreement or the consummation of the transactions contemplated hereby. Except as set forth in Section 3.12 of the Disclosure Schedule, none of the Pershing Companies or any of their Assets is subject to any Governmental Order, nor, to the knowledge of the Seller, are there any such Governmental Orders threatened to be imposed by any Governmental Authority, that has or would, individually or in the aggregate, have a Material Adverse Effect.

        SECTION 3.13.    Registrations.    None of the Pershing Companies is subject to registration under the Investment Company Act of 1940, as amended, or similar Laws of any Governmental Authority. Each of the Pershing Companies and each of its employees which are or who are required to be registered as a broker-dealer (a "Broker-Dealer"), a registered representative, a sales person or in a similar capacity with the SEC, the securities commission of any state or foreign jurisdiction or any SRO are duly registered as such and such registrations are in full force and effect. All federal and state registration requirements have been complied with in all material respects and such registrations as currently filed, and all periodic reports required to be filed with respect thereto, are accurate and complete in all material respects. Section 3.13 of the Disclosure Schedule sets forth a list of all exchange seats and specialist posts owned or leased as part of the Business.

        SECTION 3.14.    Compliance with Laws.    (a) Except as would not, individually or in the aggregate, have a Material Adverse Effect, each of the Pershing Companies has conducted and continues to conduct its business in accordance with all Laws and Governmental Orders applicable to each of the Pershing Companies or any of the Assets, and none of the Pershing Companies is in violation of any such Law or Governmental Order. Each of the Pershing Companies holds all licenses,

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permits, authorizations, orders and approvals from, and has made all filings, applications and registrations with, each Governmental Authority necessary for the operation of its business, except where the failure to make such filings, applications or registrations would not, individually or in the aggregate, have a Material Adverse Effect. All such licenses, permits, authorizations, orders and approvals are in full force and effect and, to the knowledge of the Seller, no suspension or cancellation of any of them is threatened.

        (b)    Except as set forth on Section 3.14(b) of the Disclosure Schedule, none of the Pershing Companies (i) has received, since December 31, 1997, any notification or communication from any Governmental Authority (A) asserting that it or any of its directors, officers, employees, agents, controlled Affiliates or representatives is not in compliance with any of the statutes, regulations, ordinances or rules that a Governmental Authority enforces or (B) threatening to revoke any license, franchise, permit, or governmental authorization (nor, to the knowledge of the Seller, do any grounds for any of the foregoing exist); (ii) is subject to any cease-and-desist or other order issued by, or a party to any written agreement, consent agreement or memorandum of understanding with, or a party to any commitment letter or similar undertaking to, or subject to any order or directive by, a recipient of any supervisory letter from or has adopted any resolutions at the request of any Governmental Authority, or been advised since December 31, 1997 by any Governmental Authority or SRO that it is issuing or requesting any such order, agreement or other action; or (iii) is, or any of its controlled Affiliates is, subject to a "statutory disability" as defined in Section 3(a)(39) of the Exchange Act. At all times when any of the Pershing Companies has controlled or been under common control with, or had a division that functions as, a specialist on the New York Stock Exchange ("NYSE") or another national securities exchange (any such entity or division, a "Specialist"), each such Pershing Company and such Specialist have operated in conformity with information barriers under Rule 98 of the NYSE (or the analogous rule of such other national securities exchange) that have been approved by the NYSE (or such other national securities exchange).

        (c)    Section 3.14(c) of the Disclosure Schedule sets forth all Governmental Authorities with which each of the Company, Pershing Trading, Pershing Ltd. and Pershing Securities is registered as a Broker-Dealer. The Company, Pershing Trading, Pershing Ltd. and Pershing Securities are the only Pershing Companies with Broker-Dealer activities and, by virtue of their Broker-Dealer activities, are not required to be registered in or obtain a license or similar authorization from any other jurisdiction. The Company, Pershing Trading, Pershing Ltd. and Pershing Securities, as Broker-Dealers, have not exceeded the business activities in which they are authorized by Governmental Authorities to engage enumerated in any agreements with any Governmental Authority or any other limitations imposed in connection with their registration forms (including Forms BD). Each of the Pershing Companies has filed all reports, registrations and statements, together with any amendments required to be made with respect thereto, that it has been required to file since 1997 with any Governmental Authority. All other reports and statements required to be filed by a Pershing Company have been filed, including any report or statement required to be filed pursuant to the laws, rules or regulations of the United States with respect to the Company and Pershing Trading and of the United Kingdom with respect to Pershing Ltd. and Pershing Securities, any state or any Governmental Authority, and each of the Pershing Companies has paid all fees and assessments due and payable in connection therewith. The information contained in such registrations, forms and reports was true and complete in all material respects as of the date of the filing thereof, and timely amendments were filed, as necessary, to correct or update any information reflected in such registrations, forms and reports. Each such registration is in full force and effect. Except for normal examinations conducted by an SRO in the regular course of the Company's or Pershing Trading's business, no SRO has initiated any proceeding or investigation into the business or operations of any Pershing Company. Except as set forth in Section 3.14(c) of the Disclosure Schedule, there is no unresolved violation or exception by any SRO with respect to any report or statement relating to any examinations of the Company or Pershing Trading.

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        (d)    Except for the Company, which is registered as an investment advisor under the Investment Advisor Act of 1940, none of the Pershing Companies is required to be registered as an investment advisor, including registration under the Investment Advisor Act of 1940, as amended or subject to regulation under the Investment Advisor Act.

        (e)    Except for the Company, which is (i) registered as a futures commission merchant with the Commodity Futures Trading Commission, (ii) a member of the National Futures Association and (iii) registered as a municipal securities dealer, none of the Pershing Companies' activities require any of them to be registered as an exchange or transfer agent, a clearing agency, a municipal securities dealer, a government securities dealer, a futures commission merchant, a commodity trading advisor or commodity pool operator.

        SECTION 3.15.    Material Contracts.    (a) Section 3.15(a) of the Disclosure Schedule lists each of the following contracts and agreements of the Pershing Companies (such contracts and agreements being "Material Contracts"):

        (i)    all contracts and agreements relating to Indebtedness of the Pershing Companies to a third party that individually are in excess of $2,000,000;

        (ii)  all contracts and agreements with any Governmental Authority to which any of the Pershing Companies is a party;

        (iii)  all contracts and agreements that limit or purport to limit the ability of any of the Pershing Companies to compete in any line of business or with any Person or in any geographic area or during any period of time;

        (iv)  all contracts and agreements between or among any of the Pershing Companies and the Seller or any Affiliate of the Seller;

        (v)  all contracts and agreements, other than option and margin agreements entered into in the ordinary course of business, to which any of the Pershing Companies is a party requiring the payment of money in excess of $1,000,000 during the 12 month period ending on the date hereof or that would, on an annualized basis, have required such payment during such period; provided, however, that with respect to those contracts and agreements the terms of which prohibit the Seller from disclosing their contents, the Seller shall only provide the Purchaser with a list of such contracts and agreements;

        (vi)  all Company IP Licenses, other than shrink-wrap or click-through licenses of computer software, contemplating an exchange of value in excess of $1,000,000 during the 12 month period ending on the date hereof;

        (vii) all contracts and agreements granting an Encumbrance, other than Permitted Encumbrances, upon any property or asset of any Pershing Company;

        (viii)all contracts and agreements obligating any Pershing Company to pay to any Person any money as a result of the execution and delivery of this Agreement or the consummation of the transactions contemplated herein;

        (ix)  all contracts and agreements providing for the acquisition or disposition after the date of this Agreement of any Assets contemplating an exchange of value in excess of $500,000;

        (x)  all contracts and agreements providing for a power of attorney on behalf of any Pershing Company other than qualified service representative agreements, stock powers of attorney and similar agreements; and

        (xi)  all leases and subleases in respect of Leased Real Property.

        (b)    Each Material Contract: (i) is valid and binding on each of the Pershing Companies which is a party thereto, and, to the knowledge of the Seller, the counterparties thereto, and is in full force and

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effect and (ii) upon consummation of the transactions contemplated by this Agreement, except to the extent that any consents set forth in Section 3.08 of the Disclosure Schedule are not obtained, shall continue in full force and effect without penalty or other adverse consequence. None of the Pershing Companies is in breach of, or default under, any Material Contract, except where such breach or default would not, individually or in the aggregate, have a Material Adverse Effect, and to the knowledge of Seller, none of the other parties thereto is in material default or material breach.

        SECTION 3.16.    Real Property.    (a) Section 3.16(a) of the Disclosure Schedule lists all of the Leased Real Property. The Seller has delivered to the Purchaser true and complete copies of all leases and subleases relating to the Leased Real Property and any and all ancillary documents pertaining thereto. Except as set forth in Section 3.16(a) of the Disclosure Schedule, none of the Pershing Companies owns any real property.

        (b)    Each parcel of Leased Real Property is leased free and clear of all Encumbrances other than Permitted Encumbrances and is neither subject to any governmental decree or order to be sold nor being condemned, expropriated or otherwise taken by any public authority with or without payment of compensation therefor, nor, to the knowledge of the Seller, has any such condemnation, expropriation or taking been proposed, except, in either case, as would not, individually or in the aggregate, have a Material Adverse Effect.

        (c)    Except as set forth in Section 3.16(c) of the Disclosure Schedule or except as would not have a Material Adverse Effect: (i) the Pershing Companies and the Assets have complied at all times with all Environmental Laws; (ii) no real property currently or formerly owned or operated by the Pershing Companies has been contaminated with any substance regulated under any Environmental Law; (iii) the Pershing Companies are not subject to any Liability for off-site disposal or contamination; (iv) the Pershing Companies and its Assets are not the subject of any Governmental Orders, claims or notices alleging Liability under any Environmental Law; and (v) to the knowledge of the Seller, there are no other circumstances or conditions involving the Pershing Companies or the Assets that could reasonably be expected to result in any Liabilities, or restrictions on the ownership, use or transfer of any real property included in the Assets under any Environmental Law.

        As used herein, "Environmental Law" means any law, regulation, Governmental Order, decree, common law or requirement of any Governmental Authority relating to the protection of the environment or human health and safety.

        SECTION 3.17.    Intellectual Property.    (a) Section 3.17(a) of the Disclosure Schedule sets forth a true and complete list of all (i) software owned by any of the Pershing Companies, (ii) all patents and patent applications, (iii) trademark registrations and applications, (iv) copyright registrations and applications and (v) unregistered trademarks, in each case, included in the Company Intellectual Property and, in the case of (i), (iii), (iv) and (v), material to the operation of the Business.

        (b)    Except as set forth in Section 3.17(b) of the Disclosure Schedule, (i) to the knowledge of the Seller, the conduct of the Business as currently conducted does not and will not, upon Closing, infringe, misappropriate, violate or conflict with the Intellectual Property of any third party (including the Seller and its Affiliates), and no written claim has been asserted to the Seller or the Pershing Companies that the conduct of the Business as currently conducted infringes or misappropriates the Intellectual Property of any third party; (ii) to the knowledge of Seller, no third party is infringing, misappropriating or violating any Company Intellectual Property in any material respect; (iii) with respect to each item of Company Intellectual Property owned by the Pershing Companies and material to the Business, each of the Pershing Companies, as applicable, is the owner of the entire unencumbered (other than licenses thereof) right, title and interest in and to such Intellectual Property and is entitled to use such Intellectual Property in the continued operation of its business; (iv) with respect to each item of Company Intellectual Property licensed to each of the Pershing Companies as licensee and material to the Business as currently conducted, each of the Pershing Companies has the

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right to use such Intellectual Property in the continued operation of its business as currently conducted and as conducted as of Closing in accordance with the terms of the Company IP License governing such Intellectual Property without the need to pay any additional consideration; (v) to the knowledge of Seller, the Company Intellectual Property is valid and enforceable and has not been adjudged invalid or unenforceable in whole or part; (vi) in connection with any registered or applied for Company Intellectual Property owned by the Company and material to the operation of the Business, the Company has taken commercially reasonable efforts to protect its validity, including, without limitation, the payment of all renewal fees and recordations of all assignments, transfers, name changes, and the like; and (vii) to the knowledge of the Seller, no current or former Pershing Company Employee or contractor is or was party to any valid agreement (directed to non-disclosure, non-compete, exclusive services obligations or the like) that restricts, restricted, forbids or forbade at any time during such Employee or contractor's employment or engagement with the Pershing Companies the activities or performance of duties of such Employee or contractor for or on behalf of the Pershing Companies in connection with the invention or creation of Intellectual Property for or on behalf of the Pershing Companies.

        (c)    Except as set forth on Section 3.17(c) of the Disclosure Schedule, the Pershing Companies have taken commercially reasonable measures to protect the secrecy, confidentiality and value of all Trade Secrets used in and material to the operation of the Business (collectively, "Company Trade Secrets") (including without limitation entering into appropriate confidentiality agreements with officers, directors, employees, and other Persons with access to the Company Trade Secrets).

        SECTION 3.18.    Assets.    Except as would not, individually or in the aggregate, have a Material Adverse Effect, each of the Pershing Companies owns, leases or has the legal right to use all the properties and assets, including Intellectual Property, used or intended to be used by the Pershing Companies or otherwise owned, leased, licensed or used by the Pershing Companies and, with respect to contract rights, is a party to and enjoys the right to the benefits of all contracts, agreements and other arrangements used or intended to be used by the Pershing Companies (all such properties, assets and contract rights being the "Assets"). The Assets, together with the Transferred Assets, the services to be provided pursuant to the Transition Services Agreement, and the licenses to be provided under the Cross License Agreement, constitute all the properties, assets and rights forming a part of, used, held or intended to be used in, and all such properties, assets and rights as are necessary in the conduct of, the Business. At all times since the Interim Balance Sheet Date, the Pershing Companies have caused the Assets to be maintained in accordance with good business practice, and all the Assets are in good operating condition and repair and are suitable for the purposes for which they are used and intended. None of the Excluded Assets is necessary or desirable for the conduct of the Business as currently conducted or intended to be conducted by Seller.

        SECTION 3.19.    Employee Benefit Plans; Labor Matters.    (a) Section 3.19 of the Disclosure Schedule contains a list of each "employee benefit plan" as defined in Section 3(3) of the Employee Retirement Income Security Act of 1974, as amended ("ERISA"), and each stock option, stock purchase, fringe benefit, change in control, severance, retention, bonus and deferred compensation plan, agreement and arrangement (collectively, the "Plans") which are maintained or contributed to by the Seller or the Pershing Companies with respect to any current or former Employee, officer or director of the Pershing Companies or any beneficiary or dependent thereof (collectively, the "Company Benefit Plans"), other than Company Benefit Plans that are not material. With respect to each Company Benefit Plan, the Seller has made available to the Purchaser a true and correct copy of (i) the most recent annual report (Form 5500) filed with the IRS, (ii) such Company Benefit Plan, (iii) each trust agreement relating to each Company Benefit Plan maintained for Employees, (iv) the most recent summary plan description for each Company Benefit Plan for which a summary plan description is required, (v) the most recent actuarial report or valuation, if any, relating to a Company

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Benefit Plan subject to Title IV of ERISA and (vi) the most recent determination letter, if any, issued by the IRS with respect to any Company Benefit Plan qualified under Section 401(a) of the Code.

        (b)    With respect to the Company Benefit Plans, no event has occurred and, to the knowledge of the Seller, there exists no condition or set of circumstances in connection with which any of the Pershing Companies could be subject to any actual or contingent liability under the terms of such Company Benefit Plans, ERISA, the Code or any other applicable Law in an amount that would be material.

        (c)    None of the Pershing Companies is a party to any collective bargaining or other labor union contract applicable to any employee of the Pershing Companies, and no collective bargaining agreement is being negotiated by any of the Pershing Companies. As of the date hereof, there is no labor dispute, strike or work stoppage against any of the Pershing Companies pending or, to the knowledge of the Seller, threatened in writing which may interfere with the respective business activities of any of the Pershing Companies, except where such dispute, strike or work stoppage would not be material. As of the date hereof, to the knowledge of the Seller, none of the Pershing Companies or any of their respective representatives or employees has committed any unfair labor practices in connection with the operation of the Business, and there is no charge or complaint against any of the Pershing Companies by the National Labor Relations Board or any comparable government agency pending, or to the knowledge of the Seller, threatened in writing, except where such unfair labor practice, charge or complaint would not have a Material Adverse Effect. Except as listed in Section 3.19(c) of the Disclosure Schedule, there are no pending charges or complaints alleging sexual or other harassment or other discrimination by any of the Pershing Companies or any of their employees or agents pending or, to the knowledge of the Seller, threatened in writing in each case against Seller or the Pershing Companies. Each of Seller and the Pershing Companies is, with respect to the Business, in substantial compliance with all applicable laws relating to employment and employment practices, terms and conditions of employment, wages and hours and affirmative action.

        (d)    Except with respect to arrangements or agreements the cost of which will be borne by the Seller or its Affiliates (other than the Pershing Companies), the Seller has listed in Section 3.19(d) of the Disclosure Schedule and has made available to the Purchaser (i) copies of all employment agreements with officers of the Pershing Companies (or copies of forms of agreements setting forth representative employment terms and conditions); (ii) copies of all retention and severance agreements, programs and policies of the Pershing Companies with or relating to employees, other than such agreements, programs and policies that are required by applicable Law; and (iii) copies of all plans, programs, agreements and other arrangements of the Pershing Companies with or relating to employees which contain change in control provisions.

        (e)    Neither the execution of this Agreement, nor the consummation of the transactions contemplated hereby will (i) entitle any employee to severance pay becoming due under any Company Benefit Plan or any other arrangement, other than such agreements, programs and policies that are required by applicable Law, (ii) accelerate the time of payment or vesting or trigger any payment or funding (through a grantor trust or otherwise) of compensation or benefits under, increase the amount payable or trigger any other obligation pursuant to, any of the Company Benefit Plans, or any other arrangement, with respect to employees, other than such agreements, programs and policies that are required by applicable Law, or (iii) result in payments under any of the Company Benefit Plans which would not be deductible for federal income Tax purposes by virtue of Section 280G of the Code.

        (f)    Each Company Benefit Plan which is an "employee pension benefit plan" within the meaning of Section 3(2) of ERISA and which is intended to be qualified under Section 401(a) of the Code has received a favorable determination letter from the Internal Revenue Service with respect to all tax law changes prior to the Economic Growth and Tax Relief Reconciliation Act of 2001 or has applied to the IRS for such favorable determination letter within the applicable remedial amendment period and, to

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the knowledge of the Seller, no circumstances exist that are reasonably likely to result in the revocation or denial of any such favorable determination letter.

        (g)    None of the Pershing Companies contribute to a "multiemployer plan", as defined in Section 3(37) of ERISA, nor has it contributed to such a plan within the past five calendar years.

        (h)    (i) All benefit and compensation plans, contracts, policies or arrangements and deferred compensation, stock option, stock purchase, stock appreciation rights, stock based, incentive and bonus plans covering current or former employees based outside of the Untied States or maintained outside of the United States that are subject to or governed by the Law of any jurisdiction other than the United States (collectively, the "Foreign Benefit Plans"), other than Foreign Benefit Plans that are not material, are listed on Schedule 3.19(h)(i) of the Disclosure Schedule. The Foreign Benefit Plans comply in all material respects with applicable Law. All operating documents governing the Foreign Benefit Plans and all employee communications and actuarial reports with respect to the Foreign Benefit Plans made available to the Purchaser are complete and accurate in all material respects.

        (ii)  Except as listed in Schedule 3.19(h)(ii) of the Disclosure Schedule, the fair market value of the assets of each funded Foreign Benefit Plan, the liability of each insurer for any Foreign Benefit Plan funded through insurance or the book reserve established for any Foreign Benefit Plan, together with any accrued contributions, is sufficient to procure or provide for the accrued benefit obligations, calculated to the Closing Date with respect to all current or former participants under such Foreign Benefit Plan according to the actuarial assumptions and valuations most recently used to determine employer contributions to such Foreign Benefit Plan.

        (iii)  For purposes of this subsection 3.19(h), "Benefit" means any pension, lump sum, indemnity, gratuity, deferred compensation, payment of medical expenses or other like benefit given or to be given on or in anticipation of or after leaving employment for any reason, including death, or in connection with any change in the nature of the service of the employee, or on retirement or death. "Scheme" means the Pershing Limited Pension Plan established November 30, 1987.

        (iv)  Except pursuant to the Scheme or as listed on Schedule 3.19(h)(iv) of the Disclosure Schedule, none of the Pershing Companies has paid, provided or contributed towards, nor is under any obligation or commitment (whether or not legally enforceable) to pay, provide or contribute towards, any Benefit for or in respect of any present or past employee (or any spouse, child or dependent of any of them) of any Pershing Company in the UK.

        (v)  The Scheme is approved as an exempt approved scheme (within the meaning of section 592, UK Income and Corporation Taxes Act 1988) and is contracted out of the UK second state pension, and, to the knowledge of the Seller, there is no ground on which approval or contracted out status may be reasonably expected to be withdrawn or cease to apply.

        (vi)  There is no litigation or dispute or, to the knowledge of the Seller, threat of litigation in connection with the Scheme. To the knowledge of the Seller, no investigation by the Pensions Ombudsman, the Occupational Pensions Regulatory Authority or the Inland Revenue has been or is being carried out in relation to the Scheme.

        (vii) The last actuarial valuation of the Scheme was dated as of April 1, 2002 (the "Last Valuation"). To the knowledge of the Seller, the data and other information provided to the actuary for the Last Valuation is complete and accurate in all material respects.

        (viii)  Except pursuant to the Foreign Benefit Plans or as required by applicable Law, no Benefit is provided for any employee or former employee who is employed by the Pershing Companies located in India.

        SECTION 3.20.    Taxes.    (a) Except as would not have a Material Adverse Effect, (i) all Tax returns required to be filed by each Pershing Company or in which any Pershing Company is required

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to be included with respect to Taxes for any period ending on or before the Closing Date, taking into account any extension of time to file granted to or obtained on behalf thereof, have been timely filed or will be timely filed, (ii) all Taxes due and payable (including estimated Taxes) have been paid or will be paid except to the extent the same are being contested in good faith, (iii) all such Tax returns of each of the Pershing Companies are true, correct and complete in all material respects, (iv) no deficiency for any material amount of Tax has been asserted or assessed by a taxing authority against any of the Pershing Companies, (v) none of the Internal Revenue Service or any foreign, state or local taxing authority has proposed any adjustment to any such Tax return that relates to the Business, (vi) no claim has been made by any taxing authority or jurisdiction in which any Pershing Company does not file Tax returns that any Pershing Company is subject to Tax by that jurisdiction and (vii) there are no Tax liens with respect to any assets of the Pershing Companies other than liens for Taxes not yet due and payable.

        (b)    [Intentionally Omitted]

        (c)    [Intentionally Omitted]

        (d)    The LLC will be treated as a disregarded entity for U.S. federal income Tax purposes immediately prior to and at the time of the Closing and none of the Seller, the Company (prior to the LLC Conversion) or the LLC (following the Conversion) or any of their respective Affiliates will take any action or fail to take any action that would cause the LLC to be treated as other than a disregarded entity for any such income Tax purpose. Pershing Ltd., Cadogan Nominees Limited, Pershing Keen Nominees Limited and Pershing Nominees Limited are properly treated as disregarded entities for U.S. federal income Tax purposes, and Pershing Trading is treated as a partnership for such purposes. As of the date of this Agreement, Pershing ICS Nominees Limited is treated as a partnership for U.S. federal income Tax purposes but it is anticipated that on or prior to the Closing Date, Pershing ICS Nominees Limited will be a disregarded entity (and, if not a disregarded entity, Pershing ICS Nominees Limited will remain a partnership). If regulatory approvals are obtained, Tech will be a disregarded entity on the Closing Date, and, if established pursuant to Section 5.01(a) and (b) of the Disclosure Schedule, the Leasing Entity (as defined in such schedule) will be a disregarded entity on the Closing Date.

        (e)    Except as would not have a Material Adverse Effect, (i) the Pershing Companies or their agents have complied with all applicable withholding Tax rules (including, without limitation, withholding on payments from payments to Employees, beneficiaries of Qualified Plans and customers), have deposited all amounts withheld pursuant to such rules in a proper and timely manner, have obtained and maintained all records and documents required by any withholding Tax or information reporting rules, and have timely and properly sent to all recipients of all reportable payments or amounts, and has filed with the Internal Revenue Service and any state and local taxing authorities all reports on Forms 1099 or 1042-S, or similar reports, required to be so sent or filed in respect of any such amount paid to such recipients on or prior to the Closing Date; (ii) all such records are, as of the date hereof, true, complete and correct in all respects; and (iii) the Pershing Companies or their agents have recorded in the processing system any notice pursuant to Section 3406(a)(1)(B) or (C) of the Code received with respect to any Person in connection with the Business.

        (f)    [Intentionally Omitted]

        (g)    Pershing Securities Limited (QI EIN 98-0235607) is the only Pershing Company that is a "Qualified Intermediary" for federal Tax purposes and it has complied with all material requirements applicable to Qualified Intermediaries.

        SECTION 3.21.    Brokers.    Except for any fees and expenses for which the Seller is solely responsible, no broker, finder or investment banker is entitled to any brokerage, finder's or other fee or

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commission in connection with the transactions contemplated by this Agreement based upon arrangements made by or on behalf of the Seller.

        SECTION 3.22.    No Other Representations.    Neither the Seller, the Pershing Companies nor any of their respective directors, officers, employees, agents or representatives has made, or shall be deemed to have made, and neither the Seller nor any of the Pershing Companies is liable for or bound in any manner by, any express or implied representations, warranties, guaranties, promises or statements pertaining to the Pershing Companies or any of their respective assets or businesses, except as specifically set forth in this Article III.

        SECTION 3.23.    Customer Clearing Agreements.    (a) Each Customer Clearing Agreement is valid and binding on each of the Pershing Companies which is a party thereto, and, to the knowledge of the Seller, the counterparties thereto, and is in full force and effect. Except as set forth in Section 3.23 of the Disclosure Schedule, neither the Seller nor any Pershing Company has received any notice that any Correspondent listed on Annex A (i) has ceased, or will cease prior to the Closing, to use the services of the applicable Pershing Company (the "Services") or, after the Closing, the services of the Purchaser as they relate to the Business, (ii) has substantially reduced, or will substantially reduce prior to the Closing, the use of Services or, after the Closing, the services of the Purchaser as they relate to the Business, or (iii) has sought, or is seeking to reduce, the price it will pay for the Services prior to the Closing, or after the Closing, the services of the Purchaser as they relate to the Business.

        (b)    Except as set forth in Section 3.23 of the Disclosure Schedule, none of the Pershing Companies is party to a contract with any Prime Brokerage Customer.

        SECTION 3.24.    Insurance.    Section 3.24 of the Disclosure Schedule sets forth a list of all of the insurance policies, binders, or bonds maintained by the Pershing Companies ("Insurance Policies"). The Pershing Companies are insured with reputable insurers against such risks and in such amounts as the management of the Pershing Companies reasonably has determined to be prudent in accordance with industry practices. All of the Insurance Policies are in full force and effect; the Pershing Companies are not in material default thereunder; and all claims thereunder have been filed in due and timely fashion.

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        SECTION 3.25.    Derivatives; etc.    Except as set forth in Section 3.25 of the Disclosure Schedule, none of the Pershing Companies has entered into any off balance sheet items, swaps, caps, floors, option agreements, futures and forward contracts or other similar arrangements for its own account and any such off balance sheet items, swaps, caps, floors, option agreements, futures and forward contracts and other similar arrangements entered into for the account of any customer of any Pershing Company have been entered into in accordance with all applicable laws, rules, regulations and regulatory policies and, to the extent required by U.S. GAAP, have been disclosed in the Financial Statements.

ARTICLE IV

REPRESENTATIONS AND WARRANTIES OF THE PURCHASER

        As an inducement to the Seller to enter into this Agreement, the Purchaser and hereby represents and warrants to the Seller as follows:

        SECTION 4.01.    Organization and Authority of the Purchaser.    The Purchaser is a bank holding company duly organized, validly existing and in good standing under the laws of the State of New York. The Purchaser has all necessary corporate power and authority to enter into this Agreement, to carry out its obligations hereunder and to consummate the transactions contemplated hereby. The execution and delivery of this Agreement by the Purchaser, the performance by the Purchaser of its obligations hereunder and the consummation by the Purchaser of the transactions contemplated hereby have been duly authorized by all requisite action on the part of the Purchaser. This Agreement has been duly executed and delivered by the Purchaser and (assuming due authorization, execution and delivery by the Seller) this Agreement constitutes a legal, valid and binding obligation of each of the Purchaser enforceable against the Purchaser in accordance with its terms.

        SECTION 4.02.    No Conflict.    The execution and delivery and, assuming compliance with the notification requirements of the HSR Act and the making and obtaining of all filings, notifications, consents, approvals, authorizations and other actions referred to in Section 4.03, except as may result from any facts or circumstances relating solely to the Seller or any Pershing Company, the performance of this Agreement by the Purchaser do not and will not (a) violate, conflict with or result in the breach of any provision of the certificate of incorporation or bylaws or equivalent organizational documents of the Purchaser, (b) conflict with or violate any Law or Governmental Order applicable to the Purchaser or (c) conflict with, result in any breach of, constitute a default (or event which with the giving of notice or lapse or time, or both, would become a default) under, require any consent under, give to others any rights of termination, amendment, acceleration, suspension, revocation or cancellation of, or result in the creation of any Encumbrance on any of the assets or properties of the Purchaser pursuant to, any note, bond, mortgage or indenture, contract, agreement, lease, sublease, license, permit, franchise or other instrument or arrangement to which the Purchaser is a party or by which any of such assets or properties are bound or affected which would have a material adverse effect on the ability of the Purchaser to perform its obligations under this Agreement or consummate the transactions contemplated hereby.

        SECTION 4.03.    Governmental Consents and Approvals.    The execution, delivery and performance of this Agreement by the Purchaser do not and will not require any consent, approval, authorization or other order of, action by, filing with, or notification to, any Governmental Authority, except (a) in cooperation with the Seller and the Pershing Companies in seeking all approvals required by the Seller and the Pershing Companies from Governmental Authorities in performance of this Agreement, (b) (i) the approval of the Board of Governors of the Federal Reserve System, (ii) the approval of the New York State Banking Department, (iii) the approval of the NASD and (iv) the approval of the NYSE, (c) with respect to Pershing Ltd., the approval of the FSA pursuant to the Financial Services and Market Act 2000, Section 178 et seq., (d) the notification requirements of the HSR Act and (e) such

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other filings, notifications, approvals and consents under the merger control laws and regulations of any country or transnational body as are considered by the Purchaser using its reasonable judgment to be necessary or appropriate.

        SECTION 4.04.    Investment Purpose.    The Purchaser is acquiring the Equity Interests solely for the purpose of investment and not with a view to, or for offer or sale in connection with, any distribution thereof.

        SECTION 4.05.    Financing.    At the Closing Date, the Purchaser will have available sufficient funds to pay the Purchase Price.

        SECTION 4.06.    Litigation.    No claim, action, proceeding or investigation is pending or, to the best knowledge of the Purchaser after due inquiry, threatened, that seeks to delay or prevent the consummation of, or that would be reasonably likely to materially adversely affect the Purchaser's ability to consummate, the transactions contemplated by this Agreement.

        SECTION 4.07.    Brokers.    Except for any fees and expenses for which the Purchaser is solely responsible, no broker, finder or investment banker is entitled to any brokerage, finder's or other fee or commission in connection with the transactions contemplated by this Agreement based upon arrangements made by or on behalf of the Purchaser.

ARTICLE V

ADDITIONAL AGREEMENTS

        SECTION 5.01.    Conduct of Business Prior to the Closing.    (a) The Seller covenants and agrees that, except as described in Section 5.01(a) of the Disclosure Schedule, between the date hereof and the time of the Closing, none of the Pershing Companies shall conduct its business other than in the ordinary course and consistent with past practice. Without limiting the generality of the foregoing, except as described in Section 5.01(a) of the Disclosure Schedule, the Seller shall cause each of the Pershing Companies to (i) use its reasonable efforts to (A) preserve intact its business organization and (B) preserve its current relationships with its customers and other persons with which it has significant business relationships; (ii) exercise, but only after notice to the Purchaser and receipt of the Purchaser's prior written approval, any rights of renewal pursuant to the terms of any leases or subleases that by their terms would otherwise expire; (iii) not shorten or lengthen the customary payment cycles for any of its payables or receivables, except as required pursuant to Section 5.13; and (iv) not engage in any practice, take any action, fail to take any action or enter into any transaction which could cause any representation or warranty of the Seller to be untrue or result in a breach of any covenant made by the Seller in this Agreement; provided, however, that prior to the Closing, subject to the provisions of Section 2.06, the Seller may, in its sole discretion and without the consent of the Purchaser, cause to be distributed to Seller any cash from the accounts of the Pershing Companies as it deems desirable.

        (b)  Except as described in Section 5.01(b) of the Disclosure Schedule, the Seller covenants and agrees that, prior to the Closing, without the prior written consent of the Purchaser, not to be unreasonably withheld, the Company will not do any of the things enumerated in the second sentence of Section 3.11.

        SECTION 5.02.    Access to Information.    (a) From the date hereof until the Closing, upon reasonable notice, the Seller shall cause each of the Pershing Companies and each of its officers, directors, employees, agents, representatives, accountants and counsel to: (i) afford the officers, employees and authorized agents, accountants, counsel, financing sources and representatives of the Purchaser reasonable access, during normal business hours, to the offices, properties, plants, other facilities, books and records of the Pershing Companies (other than privileged materials and subject to the applicable privacy laws) and to those officers, directors, employees, agents, accountants and counsel of the Pershing Companies who have any knowledge relating to the Pershing Companies and

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(ii) furnish to the officers, employees and authorized agents, accountants, counsel, financing sources and representatives of the Purchaser such additional financial and operating data and other information regarding the business, assets, properties, personnel and goodwill of the Pershing Companies (or legible copies thereof) as the Purchaser may from time to time reasonably request.

        (b)  In order to facilitate the resolution of any claims made against or incurred by the Seller prior to the Closing, for a period of seven years after the Closing, the Purchaser shall (i) retain the books and records of the Pershing Companies relating to periods prior to the Closing in a manner reasonably consistent with the Purchaser's practice and (ii) upon reasonable notice, subject to applicable privacy laws and obligations, afford the officers, employees and authorized agents and representatives of the Seller reasonable access (including the right to make, at the Seller's expense, photocopies), during normal business hours, to such books and records.

        (c)  In order to facilitate the resolution of any claims made by or against or incurred by the Purchaser or the Pershing Companies after the Closing or for any other reasonable purpose, for a period of seven years following the Closing, the Seller shall (i) retain the books and records of the Seller that relate to the Pershing Companies and its operations for periods prior to the Closing and that shall not otherwise have been delivered to the Purchaser or the Pershing Companies in a manner reasonably consistent with the Seller's practice and (ii) upon reasonable notice, subject to applicable privacy laws and obligations, afford the officers, employees and authorized agents and representatives of the Purchaser or the Pershing Companies reasonable access (including the right to make photocopies at the expense of the Purchaser or the Pershing Companies), during normal business hours, to such books and records.

        SECTION 5.03.    Confidentiality.    (a) The terms of the Confidentiality Agreement are hereby incorporated herein by reference and shall continue in full force and effect until the Closing, at which time such Confidentiality Agreement and the obligations of the Purchaser under this Section 5.03 shall terminate; provided, however, that the Confidentiality Agreement shall terminate only in respect of that portion of the Evaluation Material (as defined in the Confidentiality Agreement) exclusively relating to the Business and the transactions contemplated by this Agreement. If this Agreement is, for any reason, terminated prior to the Closing, the Confidentiality Agreement shall continue in full force and effect.

        (b)  The Seller agrees that it shall enforce any and all confidentiality agreements entered into at any time with any Person (other than the Purchaser) in connection with the potential sale of the Pershing Companies, including by requesting, subject to the limitations set forth in such confidentiality agreements, the return or the destruction of the Evaluation Materials (as defined therein).

        (c)  The Seller agrees to keep confidential all nonpublic information in its possession regarding the Business (including any information made available to the Seller pursuant to Section 5.02(c)); provided, however, that the Seller will not be required to maintain as confidential any information that (i) becomes generally available to the public other than as a result of a disclosure by the Seller or (ii) is required to be disclosed pursuant to the terms of a Governmental Order or other legal requirement.

        SECTION 5.04.    Regulatory and Other Authorizations; Notices and Consents.    (a) Each of the Seller and the Purchaser shall use its reasonable best efforts to promptly obtain all authorizations, consents, orders and approvals of all Governmental Authorities that may be or become necessary for the performance of its and the other party's obligations pursuant to, and the consummation of the transactions contemplated by, this Agreement. The Seller will, and will cause the Pershing Companies to, cooperate with the Purchaser, and the Purchaser will cooperate with the Seller, in promptly seeking to obtain all such authorizations, consents, orders and approvals; provided, however, that neither the Purchaser nor the Seller shall be required to pay any fees or other payments to any such Governmental Authorities in order to obtain any such authorization, consent, order or approval (other than normal filing fees that are imposed by Law on the Purchaser or the Seller, as the case may be). Neither the

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Seller nor the Purchaser shall knowingly take any action that would have the effect of delaying, impairing or impeding the receipt of any required approval. Notwithstanding the foregoing, nothing shall prevent the Purchaser or any of its Affiliates from conducting their business in the ordinary course. The Seller and the Purchaser each agree to make, or to cause to be made, (i) an appropriate filing of a notification and report form pursuant to the HSR Act and (ii) any other filing or notification required by any other applicable Law, in each case, with respect to the transactions contemplated by this Agreement within fifteen Business Days after the date of this Agreement in the case of the HSR Act, and as promptly as reasonably practicable in the case of any other filing or notification, and to supply promptly any additional information and documentary material that may be requested pursuant to the HSR Act or any other applicable Law.

        (b)  Each party to this Agreement, to the extent permitted by applicable Law, shall promptly notify the other party of any communication it or any of its Affiliates receives from any Governmental Authority relating to the matters that are the subject of this Agreement and, to the extent practicable, permit the other party to review in advance any such proposed communication by such party to any Governmental Authority, other than ordinary course filings. No party to this Agreement shall agree to participate in any meeting with any Governmental Authority in respect of any filings, investigation or other inquiry unless it consults with the other party in advance and, to the extent permitted by such Governmental Authority, gives the other party the opportunity to attend and participate at such meeting except to the extent that such meeting, in the reasonable judgment of such party, would involve confidential discussions with a bank regulatory authority. Subject to the Confidentiality Agreement, each party to this Agreement will coordinate and cooperate fully with the other parties in exchanging such information and providing such assistance as such other party may reasonably request in connection with the foregoing and in seeking early termination of any applicable waiting periods under the HSR Act. Subject to the Confidentiality Agreement, each party to this Agreement will provide the other party with copies of all correspondence, filings or communications between it or any of its representatives, on the one hand, and any Governmental Authority or members of its staff, on the other hand, with respect to this Agreement and the transactions contemplated by this Agreement. The preceding provisions of this Section 5.04(b) apply only through the Closing Date or termination of this Agreement; except that the foregoing provisions of this subparagraph (b) shall continue to apply to the extent that a Governmental Authority requires a filing or notification promptly following the Closing Date.

        (c)  Each party agrees to cooperate in obtaining any other consents and approvals that may be required in connection with the transactions contemplated by this Agreement.

        SECTION 5.05.    CSFB, Inc. Joint and Several Liability.    The Seller agrees that, prior to the Closing Date, CSFB, Inc., a Delaware corporation, will agree to be jointly and severally liable with the Seller for the obligations of the Seller hereunder, which form of agreement will be in form and substance reasonably satisfactory to the Purchaser (the "CSFB Agreement").

        SECTION 5.06.    Investigation.    (a) The Purchaser acknowledges and agrees that (i) it has made its own inquiry and investigation into, and, based thereon, has formed an independent judgment concerning, the Business and the Pershing Companies and (ii) neither the Seller, the Pershing Companies nor any of their respective directors, officers, employees, agents or representatives has made, or shall be deemed to have made, and none of such persons or the Seller or the Pershing Companies shall be liable for or bound in any manner by, any express or implied representations, warranties, guaranties or promises pertaining to the Business, the Pershing Companies or any of their assets, except as specifically set forth in Article III of this Agreement.

        (b)  In connection with the Purchaser's investigation of the Business, the Purchaser has received from the Seller certain estimates, projections and other forecasts for the Business, and certain prospective plan and budget information. The Purchaser acknowledges that there are uncertainties

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inherent in attempting to make such projections, forecasts, plans and budgets, that the Purchaser is familiar with such uncertainties, that the Purchaser is taking full responsibility for making its own evaluation of the adequacy and accuracy of all estimates, projections, forecasts, prospective plans and budgets so furnished to it, and that the Purchaser will not assert any claim against the Seller or any of its directors, officers, employees, agents, stockholders, Affiliates, consultants, counsel, accountants, investment bankers or representatives, or hold the Seller or any such persons liable, with respect thereto. Accordingly, the Seller makes no representation or warranty with respect to any estimates, projections, forecasts, prospective plans or budgets referred to in this Section 5.06(b).

        SECTION 5.07.    Use of Names.    (a) Notwithstanding any other provision of this Agreement to the contrary, no interest in or right to use the names "Credit Suisse First Boston," "CSFB," "Donaldson Lufkin & Jenrette" or "DLJ" or any confusingly similar derivation or modification thereof or any trademark, servicemark, trade dress, logo, domain name, URL (universal resource locator), trade name or corporate name of the Seller or any of its Affiliates (collectively, the "Retained Names and Marks") is being transferred to the Purchaser pursuant to the transactions contemplated hereby and, the use of any Retained Names and Marks in connection with the Business by the Purchaser or the Pershing Companies shall cease as of the Closing Date. The Purchaser, promptly following the Closing Date and in any event within three months thereafter, will, and will cause the Pershing Companies and any of their Affiliates to, remove or obliterate all the Retained Names and Marks from its signs, web sites, labels, letterheads and other items and materials of the Business and otherwise, and not put into use after the Closing Date any such items and materials not in existence on the Closing Date that bear any Retained Name or Mark or any name, mark or logo similar thereto. The Purchaser agrees that the Seller shall not have any responsibility for claims by third parties arising out of, or relating to, the use after the Closing Date by the Purchaser, the Pershing Companies or any Affiliate thereof of any Retained Name or Mark.

        (b)  No later than two Business Days after the Closing Date, the Purchaser shall cause the Pershing Companies to change their names so as to eliminate any reference to any of the Retained Names and Marks.

        SECTION 5.08.    Release of Indemnity Obligations.    The Seller and the Purchaser will cooperate with each other with a view to enter into arrangements effective as of the Closing whereby the Purchaser or its Affiliates would be substituted for the Seller or its Affiliate in any guarantees, letters of comfort, indemnities or similar arrangements entered into by the Seller or its Affiliates for the benefit of the Pershing Companies; provided, however, that if the Purchaser or its Affiliates cannot enter into such arrangements, the Seller shall not terminate such guaranty arrangements without the Purchaser's consent; provided, however, that the Purchaser or any of its Affiliate shall enter into a separate guaranty with the Seller or any of its Affiliate to guarantee the performance of the obligations of the relevant Pershing Company pursuant to the contract underlying such guaranty arrangements. Notwithstanding the foregoing, to the extent that the Purchaser or any of its Affiliate is substituted for the Seller or any of its Affiliate in any guaranty, letter of comfort, indemnity or similar arrangement and such guaranty is made to guaranty the performance of the Seller or any of its Affiliate (other than a Pershing Company) under an Affiliate agreement or otherwise, the Seller will indemnify the Purchaser or its Affiliate for any payments actually made by the Purchaser or such Affiliate pursuant to such guaranty agreement solely to the extent that such payment made by the Purchaser or such Affiliate arises from the performance or nonperformance of the Seller or its Affiliate (other than a Pershing Company) pursuant to such Affiliate agreement.

        SECTION 5.09.    Other Agreements    (a) At the Closing, the Seller and certain of its Affiliates shall enter into (i) a transition services agreement with the Company and the Purchaser, if applicable, pursuant to which (A) the Seller or one or more of its Affiliates will provide to the Company or the Purchaser services reasonably required by the Company or the Purchaser to enable it to conduct the Business substantially as conducted prior to the Closing Date and (B) the Company will provide to the

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Seller and its Affiliates services reasonably required by the Seller and its Affiliates to enable them to conduct their business substantially as conducted prior to the Closing Date, which services will, in each case, be provided at prices determined on the basis of fairly allocated costs and will include the continuation at market rates for a period of two years following the Closing Date of services in respect of the options crossing engine of the Seller (the "Transition Services Agreement"), (ii) the Clearing Agreement and (iii) the Stock Loan Agreement, in each case in accordance with the terms of this Agreement and otherwise in form and substance reasonably acceptable to the Seller and the Purchaser. The Seller and the Purchaser will negotiate in good faith the Transition Services Agreement, the Clearing Agreement and the Stock Loan Agreement, in each case with a view to reaching an agreement thereon before the 60th day following the date hereof.

        (b)  At the Closing, the Seller and certain of its Affiliates, on the one hand, and the Purchaser and certain of its Affiliates, on the other hand, shall enter into a cross-license agreement (the "Cross License Agreement"), to be negotiated in good faith, pursuant to which: (i) the Seller and certain of its Affiliates shall grant to the Purchaser and certain of its Affiliates a limited non-exclusive, "as-is" right and license to use certain Intellectual Property, other than Trademarks included in the Excluded Assets, for a limited period of time in connection with the operation of the Business as operated immediately prior to the Closing Date; and (ii) the Purchaser and certain of its Affiliates shall grant to the Seller and certain of its Affiliates a limited non-exclusive, "as-is" right and license to use Intellectual Property owned by or licensed to the Company or transferred to or licensed to the Purchaser and certain of its Affiliates as a result of the transactions contemplated hereby in connection with the operation by the Seller and such Affiliates of their respective businesses in substantially the same manner as such businesses are operated immediately prior to the Closing Date.

        (c)  Promptly following the date hereof, the Seller and the Purchaser will engage in good faith discussions with a view to promptly entering into a mutually satisfactory clearing agreement under which the Company would, prior to the Closing Date, provide securities clearing execution and related services to the correspondents and other introducing customers of BNY Clearing Services LLC.

        (d)  Promptly following the date hereof, the Seller and the Purchaser will engage in good faith discussions with a view to entering into at the Closing one or more mutually satisfactory agreements under which the Company would continue to provide to each of Credit Suisse First Boston (Europe) Limited and Credit Suisse Asset Management Securities, Inc. services substantially similar to the services being provided by the Company to such entities on the date hereof.

        SECTION 5.10.    Leases.    With respect to the Leased Real Property, the Seller will, and will cause its applicable Affiliate to, use its commercially reasonable efforts to obtain such third party consents as are necessary to assign the corresponding lease agreements to the Pershing Companies. The parties hereto agree that, in the event any such consent is not obtained prior to Closing, the Seller will, subsequent to the Closing, cooperate with the Purchaser and the Pershing Companies in attempting to obtain such consent as promptly thereafter as practicable. Until and unless such consent is obtained, the Seller shall use commercially reasonable efforts to provide the Pershing Companies or the Purchaser with the rights and benefits of the affected lease and, if the Seller provides such rights and benefits, the Pershing Companies or the Purchaser shall assume the obligations and burdens thereunder, all on terms substantially similar to those set forth in such affected lease. The Purchaser will use reasonable efforts to cooperate with the Seller in obtaining any of the foregoing consents from third parties and, if applicable, in obtaining any of such rights and benefits. In the event such consents, rights or benefits are not obtained, the Purchaser will, and will cause the Pershing Companies to, take all reasonable actions to mitigate any Losses arising from the failure to obtain the foregoing.

        SECTION 5.11.    Conversion.    Prior to the Closing Date, the Seller shall, and shall cause certain of its Affiliates to, take all actions necessary (including compliance with all applicable notification of

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the NASD and the NYSE) to effect the Conversion. Upon completion of the Conversion, the Company shall be a limited liability company wholly owned by the Seller.

        SECTION 5.12.    Further Action.    Each of the parties hereto shall use all reasonable efforts to take, or cause to be taken, all appropriate action, do or cause to be done all things necessary, proper or advisable under applicable Law, and execute and deliver such documents and other papers, as may be required to carry out the provisions of this Agreement and the Ancillary Agreements and consummate and make effective the transactions contemplated by this Agreement and the Ancillary Agreements.

        SECTION 5.13.    Intercompany Accounts.    All intercompany accounts between the Pershing Companies, on the one hand, and their Affiliates, on the other hand, shall be settled at or prior to the Closing, and at the Closing, the Purchaser shall repay to the Seller the amount of principal (in the amount of $480 million) plus accrued interest outstanding under the Subordinated Debenture.

        SECTION 5.14.    Transfer of Assets.    (a) At or prior to the Closing, the Seller shall cause all right, title and interest to the assets of the Seller and its Affiliates used in the Business and described in Section 5.14(a) of the Disclosure Schedule (the "Owned Assets") to be transferred to the Purchaser or its designee pursuant to a bill of sale and assignment substantially in the form attached as Exhibit 5.14(a) hereto (the "Bill of Sale").

        (b)  At or prior to the Closing, (i) the Seller shall cause all right, title and interest to the assets of the Seller and its Affiliates leased to the Pershing Companies and described in Section 5.14(b) of the Disclosure Schedule (the "Leased Assets" and, together with the Owned Assets, the "Transferred Assets") to be transferred to the Purchaser or its designee pursuant to the Bill of Sale.

        (c)  At or prior to the Closing, the Seller shall cause the Company to transfer all right, title and interest to the Excluded Assets to the Seller or one of its Affiliates pursuant to a bill of sale and assignment substantially in the form attached as Exhibit 5.14(c) hereto.

        SECTION 5.15.    Notification of Certain Matters.    (a) Each of the Seller and the Purchaser shall give prompt notice to the other of any fact, event or circumstance known to it that is reasonably likely, individually or taken together with all other facts, events and circumstances known to it, to result in a breach of any of its representations, warranties, covenants or agreements contained herein such that any of the conditions contained in Article VIII would not be satisfied.

        (b)  The Seller shall promptly notify the Purchaser, and the Purchaser shall promptly notify the Seller of any notice or other communication from any Person alleging that the consent of such Person is or may be required as a condition to the completion of any of the transactions contemplated hereunder except for such consents or notices already indicated as being required as set forth in this Agreement or attached Schedules that are a part of this Agreement.

        SECTION 5.16.    Non-Compete.    Until the third anniversary of the Closing Date, except as otherwise permitted in this Section 5.16, neither the Seller nor any of its controlled Affiliates shall, and the Seller shall use all reasonable efforts to cause its other Affiliates not to, commence any new activities in the United States involving the direct or indirect provision, for its own account or solely or jointly for the benefit of others, of securities clearing and execution outsourcing services on a "correspondent clearing" basis, as such term is understood in the securities brokerage industry (a "Competing Business"). Notwithstanding the foregoing, neither the Seller nor any of its Affiliates shall be precluded from directly or indirectly (a) (i) acquiring some or all of the interests in, being acquired by, merging with, or entering into any other business combination with, an entity that includes a Competing Business and (ii) following any of the foregoing, continuing to operate such Competing Business, (b) providing clearing and execution services to the Seller or any of its Affiliates except as otherwise provided in the Clearing Agreement, or (c) engaging in any business or activity in which the Seller or any of its Affiliates is engaged as of the date hereof (after giving effect to the consummation

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of the transactions contemplated by this Agreement). Due to the irreparable injury and damage to the Purchaser that could result from a violation of this Section 5.16, the Purchaser shall be entitled to injunctive relief against the violation by the Seller or any of its Affiliates of this Section 5.16 in addition to any remedy otherwise available to the Purchaser. If any court of competent jurisdiction shall hold that the restrictions contained in this Section 5.16 are unreasonable, such restrictions shall be deemed to be reduced, but only to the extent necessary, in the opinion of such court, to make them reasonable.

Article VI

EMPLOYEE MATTERS

        SECTION 6.01.    General.    The Purchaser hereby agrees that, for a period of two years immediately following the Closing Date, it shall, or shall cause the Pershing Companies to, provide the Employees with at least the same level of base salary as in effect on the Closing Date and to provide the Employees with benefits under employee benefit plans, programs, contracts and arrangements for the benefit of active and former Employees the value of which is substantially comparable in the aggregate to the value of such benefits provided to such Employees under the employee benefit plans, programs, contracts and arrangements (other than the value of any retiree health benefits or the special termination program in connection with the Fall 2002 workforce reduction) of the Pershing Companies as in effect immediately prior to the Closing Date. From and after the Closing Date, the Purchaser shall honor, or shall cause the Pershing Companies to honor, in accordance with their terms, all employment and severance agreements and all severance, incentive and bonus plans as in effect immediately prior to the Closing Date and listed on Section 3.19 of the Disclosure Schedule that are applicable to any current or former employees or directors of the Company (except for the special termination program in connection with the Fall 2002 workforce reduction). Notwithstanding the foregoing, the Purchaser agrees that, for a period of one year immediately following the Closing Date, it shall, or shall cause the Pershing Companies to, provide the Employees with at least the same level of benefits provided under the special termination program in connection with the Fall 2002 Workforce reduction as in effect immediately prior to the date hereof.

        SECTION 6.02.    Service Recognition.    Employees shall receive for purposes of eligibility to participate and vesting, (but not for the purposes of benefit accrual) under any employee benefit plan, program or arrangement established or maintained by the Purchaser or the Pershing Companies credit for service accrued or deemed accrued on or prior to the Closing Date with the Pershing Companies or any of their Affiliates. Notwithstanding the above, Employees shall receive credit for purposes of eligibility to receive benefits for purposes of vacation pay, early retirement subsidy (if any), and any severance plan, program and arrangement.

        SECTION 6.03.    WARN    The Purchaser shall be responsible for any obligation with respect to employees of the Pershing Companies under the Worker Adjustment Retraining and Notification Act of 1988 and any applicable state or local Law equivalent (collectively, the "WARN Act") arising or accruing on and after the Closing Date. The Seller shall be responsible for any obligation with respect to employees of the Pershing Companies under the WARN Act arising or accruing before the Closing Date. The parties agree to cooperate in good faith to determine whether any notification to employees of the Pershing Companies may be required pursuant to the WARN Act before the Closing Date.

        SECTION 6.04.    Welfare Benefit Plans.    With respect to the welfare plans, programs and arrangements maintained, sponsored or contributed to by the Purchaser (the "Purchaser Welfare Benefit Plans"), the Purchaser shall (i) waive, or cause its insurance carriers to waive, all limitations as to pre-existing and at-work conditions, if any, with respect to participation and coverage requirements applicable to current Employees under any Purchaser Welfare Benefit Plan, except short term and long term disability, and (ii) provide credit to such Employees for any co-payments, deductibles and out-of-pocket expenses paid by such Employees under the employee benefit plans, programs and

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arrangements applicable to employees of the Pershing Companies during the portion of the relevant plan year preceding the Closing Date. Notwithstanding anything else to the contrary in this Agreement, the Purchaser shall not provide retiree health benefits or coverage to any current or former Employee, officer or director of any Pershing Company or any beneficiary or dependent thereof except as required under Section 4980B of the Code and Section 602, et seq. of ERISA. Seller agrees to assume, and indemnify Purchaser for, any Liabilities with respect to current or former employee, officer or director of any Pershing Company or any beneficiary or dependent thereof for retiree health benefits, other than as required under Section 4980B of the Code and Section 602, et seq. of ERISA.

        SECTION 6.05.    Purchaser Savings Plan    The Purchaser shall permit the plan(s) maintained by the Purchaser that is an eligible retirement plan, pursuant to Section 401(a)(31)(D) of the Code (the "Purchaser's Savings Plan") to accept an "eligible rollover contribution" (within the meaning of Section 401(a)(31) of the Code) in cash of all or a portion of the account balance distributed to an Employee under any defined contribution plan that is qualified under Section 401(a) of the Code (the "Seller's Savings Plan"), subject to the Seller's provision of evidence reasonably satisfactory to Purchaser's Savings Plan that such Company Benefit Plan which eligible rollover contribution was transferred is qualified under Section 401(a) of the Code. To the extent not prohibited by applicable Law, effective as of the day immediately following the Closing Date, Purchaser shall make available to each Employee on a non-discriminatory basis and on commercially reasonable terms, a short-term loan in an amount equal to such Employee's aggregate unpaid loan balance with respect to any outstanding loans under Seller's Savings Plan.

        SECTION 6.06.    Underfunded Liability in the Scheme.    In respect of the Scheme, the Seller agrees to pay the Purchaser an amount (the "Underfunded Liability") equal to the excess (if any) of the projected benefit obligations, calculated as of the Closing Date, with respect to all current or former participants of the Scheme over the value of the assets of the Scheme (together with any accrued contributions) as of the Closing Date and on the assumption that no retrospective amendments are made to the trust deed and rules of the Scheme as in effect immediately prior to the Closing Date. The Underfunded Liability will then be adjusted by the Investment Adjustment (as defined below) from and including the Closing Date up to and including the date which is the last UK business day before the date on which the Underfunded Liability is paid to the Purchaser (the "Adjusted Underfunded Liability"). The Underfunded Liability and the Investment Adjustment will be determined using the actuarial methods, assumptions and factors to be agreed between the Seller and the Purchaser. Seller and Purchaser agree to cooperate in determining the amount of the Underfunded Liability and in preparing an estimate of the Adjusted Underfunded Liability as soon as practicable after the Closing Date. If the Seller and Purchaser are unable to determine the amount of the Underfunded Liability or the amount of the Investment Adjustment on or before the three-month anniversary of the Closing Date, the matter will be referred to an independent actuary chosen by agreement between the parties or, failing agreement, appointed by the President of the Institute of Actuaries of England on the application of either the Seller or Purchaser. That independent actuary will act as expert and not as arbitrator and his decision (including any direction in relation to his costs) will be final and binding and the fees and expenses of the independent actuary shall be borne by the Seller and Purchaser equally or in such other proportions as he directs. For the purposes of this Section 6.06, "Investment Adjustment" means the notional investment return of the Scheme (if any) over the relevant period specified in this section calculated by comparing the level of the Index at close of business on the first day of such period with the level of the Index at close of business on the last day of such period or, if either of those days is not a day for which the indices comprising the Index are quoted, the level of the Index at the close of business on the previous day for which they are quoted is used and making reasonable allowance for investment expenses. "Index" means an index agreed by the Seller and the Purchaser as of the Closing Date comprising of the same proportion and composition of investments in which the assets of the Scheme are invested as of the Closing Date. The Adjusted Underfunded Liability shall be calculated and payable in UK pounds sterling.

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        If, in accordance with the trust deed and rules of the Scheme and applicable Law, the trustees of the Scheme may, without the consent of any other party, demand from the Purchaser and/or the Pershing Companies a payment or payments in respect of the underfunding (if any) of the Scheme on the Closing Date (disregarding for the purpose of determining such underfunding any change in the investment policy or values on or after the Closing Date or any retrospective amendments made to the trust deed and rules of the Scheme after the Closing Date which have the effect of increasing the underfunding of the Scheme on the Closing Date) (the "Trustees' Demand") and if the Purchaser and/or any of the Pershing Companies are, in accordance with the trust deed and rules of the Scheme and applicable Law, obligated to pay the Trustees' Demand, the Seller shall pay to the Purchaser the amount by which the Trustees' Demand exceeds the Adjusted Underfunded Liability provided that the Purchaser shall have used its best efforts to minimize the amount of the Trustees' Demand and to procure that the Trustees' Demand is determined on or before the twelve month anniversary of the Closing Date. The Purchaser shall or shall cause the Pershing Companies to pay to the Scheme the full amount received from the Seller pursuant to this Section 6.06.

        If the Purchaser and/or the Pershing Companies obtain any Tax Benefit as a result of contributing any amount which is received from the Seller under this Section 6.06 to the Scheme, the Purchaser will reimburse the Seller in an amount equal to the value of the Tax Benefit (if any). The certificate of the auditors to the company appointed for the purposes of the Companies Acts or other applicable Law which obtains the Tax Benefit as to the fact that a Tax Benefit has or has not been obtained and the amount of the Tax Benefit shall be final and binding on the Seller and the Purchaser. For purposes of this Section 6.06, "Tax Benefit" means the amount of a reduction in the tax liability of the Purchaser and/or the Pershing Companies or a repayment of any tax to the Purchaser and/or the Pershing Companies which is exclusively attributable to the contribution of any amount which is received from the Seller under this Section 6.06 to the Scheme.

        SECTION 6.07.    Employee Compensation and Benefits.    Notwithstanding any other provision of this Agreement, the Seller shall retain and satisfy all Liabilities for unpaid compensation and employee benefits payable to any employee of a Pershing Company in connection with the Post-Closing Retention Compensation Plan, Discretionary Payment Pool, Credit Suisse Group International Share Plan and any retention awards granted in connection with the transaction between Donaldson Lufkin & Jenrette and Seller consummated on November 3, 2000, and for any other unpaid compensation and employee benefits earned by such employees prior to the Closing or as a result of or in connection with the transactions contemplated hereby (including, without limitation, retention agreements), to the extent not reflected on the Closing Balance Sheet. The Purchaser shall indemnify the Seller for all unpaid compensation and employee benefits payable to any employee of a Pershing Company to the extent accrued on the Closing Balance Sheet. For purposes of this Agreement, "Post-Closing Retention Compensation Plan" and "Discretionary Payment Pool" shall have the meanings ascribed to them in Sections 5 and 6, respectively, of the employment agreement among the Company, Credit Suisse First Boston, Inc. and Richard Brueckner, dated as of November 8, 2002.

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Article VII

TAX MATTERS

        SECTION 7.01.    Tax Indemnities    (a) From and after the Closing Date, the Seller shall indemnify and hold the Purchaser and each Pershing Company and their respective officers, directors, employees and agents harmless against any and all Taxes (except Taxes accrued on the Closing Balance Sheet): (i) imposed on or payable by any Pershing Company with respect to any taxable period or portion thereof that ends on or before the Closing Date (including, without limitation, any obligation to contribute to the payment of Taxes determined on a consolidated, combined or unitary basis with respect to a group of corporations that include any Pershing Company, and Taxes resulting from any Pershing Company ceasing to be a member of the Seller's affiliated group for US federal income Tax purposes); (ii) with respect to taxable periods beginning before the Closing Date and ending after the Closing Date (any such period, a "Straddle Period"), Taxes imposed on any Pershing Company which are allocable, pursuant to Section 7.01(b), to the portion of such period ending on the Closing Date; (iii) imposed on or payable by any Pershing Company with respect to any taxable period or portion thereof that ends on or before the Closing Date, including the pre-Closing portion of any Straddle Period because of a breach by the Seller of the representations and warranties set forth in Section 3.20(a) (in each case without giving effect to any qualifier regarding materiality or Material Adverse Effect); (iv) imposed because of a breach by the Seller of the representations and warranties set forth in Section 3.20(d) or 3.20(g) (in each case without giving effect to any qualifier regarding materiality or Material Adverse Effect); and (v) imposed on or payable by any Pershing Company with respect to payments made or information reporting obligations arising with respect to any payments or other reportable transactions that occurred in a period or a portion thereof that ends on or before the Closing Date because of a breach by the Seller of the representations and warranties set forth in Section 3.20(e) (without giving effect to any qualifier regarding materiality or Material Adverse Effect), provided, however, that Purchaser, the LLC and their respective Affiliates and successors shall fully cooperate with and take such reasonable actions as the Seller may reasonably request or as are otherwise reasonably necessary to mitigate the Seller's liability with respect to this clause (v).

        (b)  For purposes of this Agreement, in the case of any Tax imposed on any Pershing Company that is imposed on a periodic basis and is payable for a taxable period that begins before the Closing Date and ends after the Closing Date, the portion of such Taxes which is payable for the portion of such taxable period ending on the Closing Date shall be (i) in the case of any Tax other than a Tax based upon or measured by gross or net income or receipts, the amount of such Tax for the entire taxable period (or, in the case of such Taxes determined on an arrears basis, the amount of such Tax for the immediately preceding period) multiplied by a fraction, the numerator of which is the number of days in the portion of such taxable period ending on the Closing Date and the denominator of which is the number of days in the entire taxable period and (ii) in the case of Taxes that are either based upon or measured by gross or net income or receipts, the amount which would be payable if the relevant taxable period ended on the Closing Date.

        (c)  Purchaser shall indemnify and hold the Seller and its officers, directors, employees and agents harmless from and against any and all Taxes and other costs that result from (i) the LLC being treated as other than a disregarded entity on the Closing Date for any income Tax purpose as a result of any action or failure to act by the LLC, Purchaser or any Affiliate of either thereof (but, with respect to the LLC, only if such action or failure to act occurs after the Closing) or (ii) with respect to any Straddle Period, Taxes imposed on the LLC which are allocable to the portion of such period beginning on the day after the Closing Date.

        SECTION 7.02.    Refunds and Tax Benefits.    (a) Except to the extent such refund was accrued as an asset on the Closing Balance Sheet, the Purchaser shall promptly pay to the Seller the amount of any refund or credit (including any interest paid or credited with respect thereto) received or used, in

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the case of a credit, by the Purchaser or by any Pershing Company of Taxes (i) relating to taxable periods of any Pershing Company or portions thereof ending on or before the Closing Date or (ii) attributable to an amount paid by the Seller under Section 7.01 hereof. The Purchaser shall, if the Seller so requests and at the Seller's expense, cause the relevant entity to file for and use its reasonable best efforts to obtain and expedite the receipt of any refund to which the Seller is entitled under this Section 7.02. The Purchaser shall permit the Seller to participate in (at the Seller's expense) the prosecution of any such refund claim. The Seller shall not be entitled to pursue any refund claim if such claim would increase Taxes payable by any Pershing Company or Purchaser after the Closing unless the Seller shall indemnify Purchaser for such increased Taxes.

        (b)  Any amount otherwise payable by the Seller under Section 7.01 shall be reduced by the estimated present value of any net Tax benefit available to the Purchaser or its Affiliates in connection with the payment of Taxes for which the Seller is responsible under Section 7.01, and increased by the estimated present value of any Tax cost reasonably expected to be incurred by the indemnified party or its Affiliates as the result of the receipt of such indemnity payment. The estimated present value of any net Tax benefit and the estimated present value of any Tax costs referred to in this subsection (and in Section 9.02(e)) shall be computed using the applicable federal rate for the appropriate time period as defined in Section 1274(d)(1) of the Code as the discount rate and a Tax rate for all relevant years of 40%.

        SECTION 7.03.    Contests.    (a) After the Closing Date, the Purchaser shall promptly, but in no event later than 30 days, notify the Seller in writing of the commencement of any Tax audit or administrative or judicial proceeding or of any demand or claim on the Purchaser or any Pershing Company which, if determined adversely to the taxpayer or after the lapse of time, would be grounds for indemnification by the Seller under Section 7.01. Failure to provide such notice will not affect the Seller's obligation of indemnity, except to the extent the Seller's ability to contest the relevant claim is adversely effected to a meaningful extent. Purchaser may at any time, in its sole discretion, upon written notice to the Seller, assume sole responsibility for any such asserted liability and waive all rights to and claims for indemnification from the Seller under this Article VII with respect to any such asserted liability and any other liability the contest of which may be adversely affected by the resolution of such asserted liability, and, in such event, the Seller shall be deemed to have waived its rights to participate in or object to the settlement or compromise of such asserted liability; provided that the resolution of such asserted liability or any such settlement or compromise could not reasonably be expected to adversely affect the Seller.

        (b)  In the case of a Tax audit or administrative or judicial proceeding (a "Contest") that relates to periods ending on or before the Closing Date or otherwise to a matter for which the Seller is primarily responsible under Section 7.01 or 7.02, subject to the immediately following sentence, the Seller shall have the right, at its expense, to control the conduct of such Contest, provided, however, that if such Contest also is in respect of any taxable year or portion thereof beginning after the Closing Date, then (i) the parties shall use all reasonable efforts to separate such post-Closing portion of the contest and (ii) to the extent that is not feasible, then whichever of the Purchaser or the Seller would be liable for the greatest amount of Tax asserted in such Contest (determined on a present value basis) shall be entitled to control such contest. The parties shall use all reasonable efforts to permit such contest, or the issues of such contest as involve Taxes potentially indemnifiable hereunder to be dealt with separately from a contest involving entities controlled by the Purchaser (other than Pershing Companies or successors thereto); provided, further, however, that if it is not possible to cause such contest or such issues to be dealt with in such manner separately, the Purchaser shall be permitted to control such contest but shall be required to consult with Seller in good faith with respect to such contest or such issues and shall use its best efforts to minimize any indemnifiable Tax. The Purchaser and the Seller agree to cooperate, and the Purchaser agrees to cause the relevant Pershing Company to cooperate, in the defense against or compromise of any claim in any audit or proceeding for which the Seller is

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primarily responsible, including, by executing appropriate powers of attorney empowering representatives of the Seller.

        (c)  Neither Purchaser, the LLC nor the Seller shall enter into any compromise or agree to settle any claim pursuant to any Tax audit or proceeding which would be legally binding on the other party and which would adversely affect the other party to a material extent without the written consent of the other party, which consent may not be unreasonably withheld. For the avoidance of doubt, this Section 7.03(c) shall not apply to U.S. federal, state and city income and franchise Tax matters.

        SECTION 7.04.    Cooperation and Exchange of Information.    (a) The Seller and the Purchaser will provide each other with such cooperation and information as either of them reasonably may request of the other in filing any Tax return, amended return or claim for refund, determining a liability for Taxes or a right to a refund of Taxes or participating in or conducting any audit or other proceeding in respect of Taxes. Such cooperation and information shall include providing copies of relevant Tax returns or portions thereof, together with accompanying schedules and related work papers and documents relating to Tax matters of the Pershing Companies. Each party shall make its employees reasonably available on a mutually convenient basis to provide explanations of any documents or information provided hereunder. Each party will retain all returns, schedules and work papers and all material records or other documents relating to Tax matters of all of the Pershing Companies for the taxable period that includes the Closing Date and for all prior taxable periods until the later of (i) the expiration of the statute of limitations of the taxable periods to which such returns and other documents relate, without regard to extensions except to the extent notified by the other party in writing of such extensions for the respective Tax periods or (ii) eight years following the due date (without extension) for such returns; provided, however, that a party shall not dispose of any such materials if at least 90 Business Days before the later of the end of either of the periods described in clause (i) or (ii), the other party has notified the disposing party of its desire to review such material, in which case such other party shall be given an opportunity, at its cost and expense, to remove and retain all or any part of such materials. Any information obtained under this Section 7.04 shall be kept confidential, except as may be otherwise necessary in connection with the filing of returns or claims for refund or in conducting an audit or other proceeding.

        (b)  For Tax periods ending after the Closing Date, the Purchaser shall timely prepare and file with the appropriate authorities all Tax returns required to be filed in respect of the Pershing Companies (including Tax returns required to be filed with respect to a Straddle Period, which shall be prepared on a basis, including methods of accounting, consistent with prior practice), provided that, with respect to a Straddle Period, the Seller shall have the right to review the Tax return and no such Tax return shall be filed without the Seller's consent, which shall not be unreasonably withheld. For Tax periods ending on or before the Closing Date, Seller shall timely prepare and file with the appropriate authorities all Tax returns required to be filed with respect to the Pershing Companies. For Straddle Periods, the Seller shall pay to Purchaser the Seller's share of Taxes imposed with respect to a Straddle Period (as determined in accordance with Section 7.01(a)(ii)) at least two (2) Business Days prior to the date a Tax payment is due.

        SECTION 7.05.    Conveyance Taxes.    All sales, transfer, stamp, stock transfer, value added, use, real property transfer or gains and similar Taxes that may be imposed upon, or payable or collectible or incurred in connection with this Agreement and the transactions contemplated hereby shall be borne 50% by the Seller and 50% by the Purchaser. The Purchaser and Seller agree to cooperate in the execution and delivery of all instruments and certificates necessary to enable the Seller and/or Purchaser to comply with any pre-Closing filing requirements. The parties shall prepare and file all necessary Tax returns and other documentation with respect to all such Taxes and shall take such reasonable steps as appropriate and as permitted by Law to reduce Taxes.

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        SECTION 7.06.    Miscellaneous.    (a) For Tax purposes, the parties agree to treat all payments made under this Article VII, under any other indemnity provisions contained in this Agreement, and for any misrepresentations or breaches of warranties or covenants, as adjustments to the Purchase Price, and shall be treated as such by the parties to the extent permitted by law.

        (b)  This Article VII shall be the sole provision governing indemnities or other reimbursements for Taxes under this Agreement.

        (c)  For purposes of this Article VII and Section 3.20 of this Agreement, all references to the Purchaser and the Seller shall include their successors, if any.

        (d)  Notwithstanding any provision in this Agreement to the contrary, the covenants and agreements of the parties hereto contained in this Article VII (including Section 7.01 and the applicable references to Section 3.20 for purposes of Article VII) shall survive the Closing and shall remain in full force and effect until 30 days after the expiration of the applicable statutes of limitations (taking into account any extensions or waivers thereof).

        (e)  All Tax sharing agreements or similar agreements with respect to or involving any of the Pershing Companies shall be terminated on or prior to the Closing Date and, after the Closing Date, none of the Seller, its Affiliates or any of the Pershing Companies shall be bound thereby or have any liability thereunder, including with respect to any payable or receivable thereunder.

        (f)    The Purchase Price shall be allocated among the Equity Interests and the Transferred Assets as proposed by the Purchaser, subject to review and consent by the Seller, which consent shall not be unreasonably withheld; provided that the Seller and Purchaser hereby agree that not less than $325,000,000 shall be allocated to "Class VI assets" as defined in Treasury Regulation Section 1.338-6(b). In the case of each of Pershing Ltd., Tech, and the Company, the sum of the Purchase Price allocated to the relevant entity and the amount of liabilities (as determined for federal income Tax purposes) (the "Relevant Liabilities") of such entity shall be allocated among the assets of such entity as of the Closing Date in accordance with the "residual method" as provided in the Treasury Regulations promulgated under Sections 338 and 1060 of the Code as proposed by the Purchaser (the "Allocations"), subject to review and consent by the Seller, which consent shall not be unreasonably withheld. Any subsequent adjustments to the sum of the Purchase Price and the Relevant Liabilities shall be reflected in the allocations hereunder in a manner consistent with the Allocations and with the Regulations. The Seller and the Purchaser shall timely file Form 8594 (and any similar forms required under state, local, or foreign Tax law) in accordance with the requirements of Section 1060 of the Code (or state, local, or foreign Tax law, as the case may be) and this Section 7.06(f), and shall timely amend such Forms in the case of any subsequent adjustment to the Purchase Price or Relevant Liabilities.

        (g)  Each party will provide the other with such Tax information as may be required to comply with any applicable federal, state or local Tax law or regulations. The Seller will be responsible for complying with Tax reporting or withholding obligations as to any payments made by the Seller; except that the Purchaser shall be responsible for complying with end-of-year Tax reporting for all wages paid and other Tax reporting matters with respect to the calendar year 2003 (provided that, with respect to wages paid and other payments made prior to the Closing Date Purchaser may rely on the information provided to Purchaser by the Seller) and, to this end, the parties shall enter into the appropriate agreement pursuant to Internal Revenue Service Revenue Procedure 96-60. Purchaser will be responsible for complying with Tax reporting or withholding obligations after the Closing Date.

        (h)  The Seller shall continue to comply with all Tax obligations between the signing and the Closing Date, including all withholding Tax obligations

        (i)    The Seller hereby agrees, subject to obtaining necessary regulatory approvals, to convert Tech into a disregarded entity for all applicable U.S. federal Tax purposes effective on or prior to the

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Closing Date. In the event that the Seller is unable to do so, the Seller shall so notify the Purchaser and the Seller agrees to join with the Purchaser in making an election pursuant to Sections 338(g) and 338(h)(10) of the Code (and in taking all steps necessary to effectuate the same) and any similar election as may be available under applicable state or local laws and specified by the Purchaser (unless the Purchaser notifies the Seller of its intention not to make such election) and to indemnify the Purchaser for any damages resulting from an election under Sections 338(g) and 338(h)(10) not being effective, unless the ineffectiveness of such election is caused by Purchaser's actions, inactions, negligence or change in law.

ARTICLE VIII

CONDITIONS TO CLOSING

        SECTION 8.01.    Conditions to Obligations of the Seller.    The obligations of the Seller to consummate, or cause the consummation of, the transactions contemplated by this Agreement shall be subject to the fulfillment, at or prior to the Closing, of each of the following conditions:

        (a)    Representations, Warranties and Covenants.    (i) Each of the representations and warranties of the Purchaser contained in this Agreement that is qualified by materiality shall have been true and correct as of the date of this Agreement and shall be true and correct as of the Closing and each of the representations and warranties that is not so qualified shall have been true and correct in all material respects as of the date of this Agreement and shall be true and correct in all material respects as of the Closing, with the same force and effect as if made as of the Closing Date (other than such representations and warranties as are made as of another date, which shall be so true and correct as of such date), (ii) the covenants and agreements contained in this Agreement to be complied with by the Purchaser on or before the Closing shall have been complied with in all material respects and (iii) the Seller shall have received a certificate from the Purchaser as to the matters set forth in clauses (i) and (ii) above signed by a duly authorized officer of the Purchaser;

        (b)    HSR Act.    Any waiting period (and any extension thereof) under the HSR Act applicable to the purchase of the Equity Interests contemplated hereby shall have expired or shall have been terminated;

        (c)    No Order.    (i) No court of competent jurisdiction shall have issued or entered any Order that is then in effect and that has the effect of making any of the transactions contemplated by this Agreement or the Ancillary Agreements illegal or otherwise prohibiting their consummation and (ii) no proceeding seeking to prohibit or prevent the Closing or materially diminish the benefits expected to be realized by the Seller from the transactions contemplated hereby shall have been instituted by any Governmental Authority and be pending;

        (d)    Receipt of Governmental Approvals.    The Seller shall have received all authorizations, consents, orders and approvals of all Governmental Authorities which, if not received, would make any of the transactions contemplated by this Agreement or the Ancillary Agreements illegal or otherwise prohibit their consummation;

        (e)    Ancillary Agreements.    The Purchaser shall have duly executed and delivered to the Seller each of the Ancillary Agreements to which it is a party.

        SECTION 8.02.    Conditions to Obligations of the Purchaser.    The obligations of the Purchaser to consummate the transactions contemplated by this Agreement shall be subject to the fulfillment, at or prior to the Closing, of each of the following conditions:

        (a)    Representations, Warranties and Covenants.    (i) Each of the representations and warranties of the Seller contained in this Agreement shall have been true and correct as of the date of this Agreement and shall be true and correct as of the Closing, with the same force and effect as if made

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as of the Closing (other than such representations and warranties as are made as of another date, which shall be true and correct as of such date), except, in either case, where the failure to be so true and correct would not, individually or in the aggregate, have a Material Adverse Effect, (ii) the covenants and agreements contained in this Agreement to be complied with by the Seller or any of its Subsidiaries on or before the Closing shall have been complied with in all material respects and (iii) the Purchaser shall have received a certificate of the Seller as to the matters set forth in clauses (i) and (ii) above signed by a duly authorized officer of the Seller; provided that if the Purchaser elects to postpone the Closing Date in accordance with Section 2.03, the certificate to be provided by the Seller hereunder with respect to the matters set forth in clause (i) shall have been provided to the Purchaser in accordance with Section 2.03;

        (b)    HSR Act.    Any waiting period (and any extension thereof) under the HSR Act applicable to the purchase of the Equity Interests contemplated hereby shall have expired or shall have been terminated;

        (c)    No Order.    (i) No court of competent jurisdiction shall have issued or entered any Order that is then in effect, and, no Governmental Authority shall have taken any action, that has, in either case, the effect of making any of the transactions contemplated by this Agreement or the Ancillary Agreements illegal or otherwise prohibiting their consummation and (ii) no proceeding seeking to prohibit or prevent the Closing or materially diminish the benefits expected to be realized by the Purchaser from the transactions contemplated hereby shall have been instituted by any Governmental Authority and be pending;

        (d)    Resignations of the Directors of the Company and the Sister Companies.    The Purchaser shall have received the resignations, effective as of the Closing, of all the directors and officers of the Company and the Sister Companies, except for such persons as shall have been designated in writing prior to the Closing by the Purchaser to the Seller;

        (e)    Receipt of Governmental Approvals.    The Purchaser shall have received all authorizations, consents, orders and approvals of all Governmental Authorities which, if not received, would make any of the transactions contemplated by this Agreement or the Ancillary Agreements illegal or otherwise prohibit their consummation; provided that no Government Authority shall have imposed any condition or requirement on the Purchaser in connection with any of the foregoing that would, in the reasonable judgment of the Purchaser, have a material adverse effect on (i) the Purchaser's ability to conduct its business and that of its subsidiaries (including the Pershing Companies) taken as a whole following the Closing in substantially the same manner as conducted prior to the Closing, or (ii) the results of operations, assets or financial condition of the business of the Purchaser and its subsidiaries (including the Pershing Companies) taken as a whole following the Closing. Without limiting the effect of the foregoing, the parties agree that the requirements of this Section 8.02(e) shall not be satisfied unless the Purchaser shall have obtained the approval of the NYSE and NASD of the transactions contemplated hereby;

        (f)    Third Party Consents.    All consents or approvals of all Persons, other than Governmental Authorities, required for or in connection with the execution, delivery and performance of this Agreement and the consummation of the transactions contemplated hereby to occur at the Closing shall have been obtained and shall be in full force and effect, unless the failure to obtain any such consent or approval would not, individually or in the aggregate, have a Material Adverse Effect;

        (g)    Conversion.    The Conversion shall have been completed and any documents entered into or filed in connection with the Conversion shall have been in form and substance reasonably satisfactory to the Purchaser;

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        (h)    Ancillary Agreements.    The Seller or any of its Affiliates shall have duly executed and delivered to the Purchaser each of the Ancillary Agreements to which it is a party, and CSFB, Inc. shall have executed and delivered the CSFB Agreement; and

        (i)    Deutsche Bank Securities Inc. Clearing Agreement.    The Company and Deutsche Bank Securities Inc. shall have entered into the Clearing Agreement contemplated by the Asset Acquisition Agreement between the Company and Deutsche Bank Securities Inc. dated June 19, 2002, and substantially all of the conversions contemplated by such clearing agreement shall have occurred; provided, that, at the option of the Seller, this condition shall be deemed to be satisfied if the Purchase Price is reduced by the amount set forth in Section 8.02(i) of the Disclosure Schedule.

Article IX

INDEMNIFICATION

        SECTION 9.01.    Survival of Representations and Warranties.    The representations and warranties set forth in Article III of this Agreement or any certificate delivered pursuant hereto shall survive for a period of eighteen months following the Closing Date and, thereafter, to the extent a Claim is made prior to such date with respect to any breach of any such representation or warranty, until such claim is finally determined or settled; provided, however, that the representations and warranties set forth in Section 3.03 shall survive until the 90^th day following the expiration of the applicable statute of limitations, the representations and warranties contained in Section 3.19 shall survive for a period of three years following the Closing Date and, thereafter, to the extent a Claim is made prior to such date with respect to any breach of any such representation or warranty, until such claim is finally determined or settled, and the representations and warranties contained in Section 3.20 shall survive as set forth in Section 7.06(d). All covenants and agreements contained herein shall survive the Closing and remain in full force and effect for a period of eighteen months following the Closing Date, except for those covenants and agreements that by their terms are to be performed in whole or in part subsequent to the Closing, which shall survive the Closing in accordance with their terms. Notwithstanding the foregoing, the representation set forth in Section 3.17(b)(i) shall survive for three years following the Closing Date. From and after the Closing, the sole and exclusive remedy for any breach of any representation, warranty, covenant or agreement shall be pursuant to Section 9.02, except in the case of fraud. Except for amounts included in a third party Claim indemnified hereunder, under no circumstances shall any party be liable to the other parties for consequential, incidental or punitive damages.

        SECTION 9.02.    Indemnification.    (a) The Seller hereby indemnifies the Purchaser and its respective officers, directors, employees, agents and Affiliates against, and agrees to hold each of them harmless from any loss due to third party claims or otherwise, any liabilities, costs or expenses (including reasonable attorneys' fees), judgments, fines, losses, claims, damages and amounts paid in settlement (collectively, "Damages") relating to or arising from or in connection with (i) any inaccuracy in any representation or the breach of any warranty (in each case, without giving effect to any qualifier regarding materiality or Material Adverse Effect) of the Seller under this Agreement (except as contained in Section 3.03 and Section 3.20, it being understood that all claims in respect of Section 3.20 are exclusively addressed in Article VII) or any certificate delivered pursuant to this Agreement, (ii) any inaccuracy in any representation or the breach of any warranty of the Seller contained in Section 3.03, (iii) the failure of the Seller to duly perform or observe any term, provision, covenant or agreement to be performed or observed by the Seller pursuant to this Agreement, (iv) the Excluded Assets, (v) the Excluded Actions, (vi) the Pre-Closing Liabilities, (vii) the Controlled Group Liability, (viii) the Legacy Business, whether arising prior to or after the Closing, and (ix) the Adjusted Underfunded Liability. Notwithstanding anything herein to the contrary, no claims by the Purchaser shall be asserted pursuant to Section 9.02(a)(i) unless and until the aggregate amount of Damages that

44

would otherwise be payable pursuant to Section 9.02(a)(i) exceeds $35,000,000 (the "Deductible Amount"), in which case the Purchaser shall be entitled to receive only that amount in excess of the Deductible Amount. In calculating the Deductible Amount or Damages hereunder, all Damages which individually (which, for purposes of this limitation, shall mean any related Damages or series of related Damages as a result of a common act or omission) total less than $50,000 shall be excluded in their entirety, and the Purchaser shall have no recourse for such Damages. Notwithstanding anything herein to the contrary, the maximum aggregate liability of the Seller under Section 9.02(a)(i) shall not exceed 15% percent of the Purchase Price.

        (b)  From and after the Closing, the Seller shall be entitled to assert claims against the Purchaser in respect of any Damages arising from or in connection with (i) any inaccuracy in any representation or the breach of any warranty of the Purchaser under this Agreement, (ii) the failure of the Purchaser to duly perform or observe any term, provision, covenant or agreement to be performed or observed by the Purchaser pursuant to this Agreement or (iii) the conduct of the Business following the Closing.

        (c)  Notwithstanding anything herein to the contrary, in the event a party establishes prior to the Closing Date that any of the representations and warranties to survive the Closing in accordance with Section 9.01 are not true and correct as of the Closing Date, its sole and exclusive remedy with respect to any such breach shall be to not close the transaction if any such breach results in the nonsatisfaction of any of the conditions contained in Article VIII.

        (d)  No action, claim or setoff for Damages under this Section 9.02 shall be brought or made (i) with respect to claims for Damages resulting from a breach of any covenant contained in this Agreement after the date on which such covenant shall terminate pursuant Section 9.01 hereof; and (ii) with respect to claims for Damages resulting from a breach of any representation or warranty, after the date on which such representation or warranty shall terminate pursuant to Section 9.01 hereof; provided, however, that any claim made with reasonable specificity by the party seeking to be indemnified within the time periods set forth above shall survive until it is finally and fully resolved.

        (e)  For all purposes of this Article IX, "Damages" shall be net of any insurance or other recoveries payable to the indemnified party or its Affiliates in connection with the facts giving rise to the right of indemnification net of any premium adjustment primarily attributable to such recovery. In addition, any amount otherwise payable by the indemnifying party under this Section 9.02 shall be reduced by the estimated present value of any net Tax benefit available to the indemnified party or its Affiliates in connection with the payments for which the indemnifying party is responsible under this Section 9.02, and increased by the estimated present value of any Tax cost reasonably expected to be incurred by the indemnified party or its Affiliates as the result of the receipt of such indemnity payment so that such indemnified party is put in the same net after-tax position (applying the assumptions in the immediately succeeding sentence) as if it had not incurred any such Damages. The estimated present value of any net Tax benefit and the estimated present value of any Tax costs referred to in this subsection shall be computed using the applicable federal rate for the appropriate time period as defined in Section 1274(d)(1) of the Code as the discount rate and a tax rate for all relevant years of 40%. All indemnification payments made pursuant to this Section 9.02 shall be treated by the parties as an adjustment to the Purchase Price.

        SECTION 9.03.    Third Party Claims.    (a) Upon receipt by the party seeking to be indemnified pursuant to Section 9.02 (the "Indemnitee") of notice of any action, suit, proceedings, audit, claim, demand or assessment (each, a "Claim") against it which might give rise to a claim for Damages, the Indemnitee shall give prompt written notice thereof (which shall be within 20 days of receipt by the Indemnitee of such Claim) to the party from which it seeks to be indemnified (the "Indemnitor") indicating the nature of such Claim and the basis therefor; provided, however, that any delay or failure by the Indemnitee to give notice to the Indemnitor shall relieve the Indemnitor of its obligations hereunder only to the extent, if at all, that it is materially prejudiced by reason of such delay or failure.

45

        (b)  The Indemnitor shall have the right, at its option, to assume the defense of, at its own expense and by its own counsel, any such Claim. Assumption of the defense of any Claim by the Indemnitor shall not prejudice the right of the Indemnitor to claim at a later date that such Claim is not a proper matter for indemnification pursuant to this Article IX. If the Indemnitor shall undertake to compromise or defend any such Claim, it shall promptly notify the Indemnitee of its intention to do so, and the Indemnitee agrees to cooperate fully with the Indemnitor and its counsel in the compromise of, or defense against, any such Claim; provided, however, that the Indemnitor shall not settle any such Claim without the prior written consent of the Indemnitee (which consent will not be unreasonably withheld) unless the relief consists solely of money damages and includes a provision whereby the plaintiff or claimant in the matter releases the Indemnitee from all liability with respect thereto. Notwithstanding an election to assume the defense of such action or proceeding, the Indemnitee shall have, upon giving prior written notice to the Indemnitor, the right to employ separate counsel and to participate in the defense of such action or proceeding, and the Indemnitor shall bear the reasonable fees, costs and expenses of such separate counsel if (i) the Indemnitor shall not have employed counsel reasonably satisfactory to the Indemnitee to represent it within a reasonable time after notice of the institution of such action or proceeding, (ii) the Indemnitee shall have determined in good faith that an actual or potential conflict of interest makes representation by the same counsel or the counsel selected by the Indemnitor inappropriate, (iii) the Indemnitor is not defending a Claim, or (iv) the Indemnitor shall have authorized the Indemnitee to employ separate counsel at the Indemnitor's expense, and in each such case the Indemnitee may defend such Claim on behalf of and for the account and risk of the Indemnitor. In any event, the Indemnitee and its counsel shall cooperate with the Indemnitor and its counsel and keep such counsel informed of all developments relating to any such Claims, provide copies of all relevant correspondence and documentation relating thereto, and shall not assert any position in any proceeding inconsistent with that asserted by the Indemnitor. All costs and expenses incurred in connection with the Indemnitee's cooperation shall be borne by the Indemnitor. In any event, the Indemnitee shall have, upon giving prior written notice to the Indemnitor, the right at its own expense to participate in the defense of such asserted liability. In no event shall the Indemnitee consent to any judgment or entry into any settlement without the written consent of the Indemnitor (which consent will not be unreasonably withheld).

ARTICLE X

TERMINATION AND WAIVER

        SECTION 10.01.    Termination.    This Agreement may be terminated at any time prior to the Closing:

        (a)  by either the Seller or the Purchaser if the Closing shall not have occurred by September 30, 2003; provided, however, that the right to terminate this Agreement under this Section 10.01(a) shall not be available to a party whose failure to fulfill any obligation under this Agreement shall have been the cause of, or shall have resulted in, the failure of the Closing to occur on or prior to such date.

        (b)  by either the Purchaser or the Seller in the event that any Governmental Authority shall have issued an order, decree or ruling or taken any other action restraining, enjoining or otherwise prohibiting the transactions contemplated by this Agreement and such order, decree, ruling or other action shall have become final and nonappealable;

        (c)  by the mutual written consent of the Seller and the Purchaser;

        (d)  by the Purchaser, in the event of the occurrence of any breach of any representation, warranty or covenant of the Seller, in each case that makes any of the conditions set forth in Section 8.02 incapable of being satisfied; or

46

        (e)  by the Seller, in the event of the occurrence of any breach of any representation, warranty or covenant of the Purchaser, in each case that makes any of the conditions set forth in Section 8.01 incapable of being satisfied.

        SECTION 10.02.    Effect of Termination.    In the event of termination of this Agreement as provided in Section 10.01, this Agreement shall forthwith become void and there shall be no liability on the part of any party hereto, except (a) as set forth in Section 5.03 and Article XI and (b) that nothing herein shall relieve any party from liability for any breach of this Agreement. No later than two Business Days following the termination of this Agreement in accordance with Section 10.01, the Seller will, if previously paid, repay the amount of the Deposit to the Purchaser by wire transfer in immediately available funds to a bank account designated by the Purchaser.

        SECTION 10.03.    Waiver    Any party to this Agreement may (a) extend the time for the performance of any of the obligations or other acts of the other party, (b) waive any inaccuracies in the representations and warranties of the other party contained herein or in any document delivered by the other party pursuant hereto or (c) waive compliance with any of the agreements or conditions of the other party contained herein. Any such extension or waiver shall be valid only if set forth in an instrument in writing signed by the party to be bound thereby. Any waiver of any term or condition shall not be construed as a waiver of any subsequent breach or a subsequent waiver of the same term or condition, or a waiver of any other term or condition, of this Agreement. The failure of any party to assert any of its rights hereunder shall not constitute a waiver of any of such rights.

ARTICLE XI

GENERAL PROVISIONS

        SECTION 11.01.    Expenses.    Except as otherwise specified in this Agreement, all costs and expenses, including fees and disbursements of counsel, financial advisors and accountants, incurred in connection with this Agreement and the transactions contemplated hereby shall be paid by the party incurring such costs and expenses, whether or not the Closing shall have occurred.

        SECTION 11.02.    Notices.    All notices, requests, claims, demands and other communications hereunder shall be in writing and shall be given or made (and shall be deemed to have been duly given or made upon receipt) by delivery in person, by courier service, by cable, by telecopy, by telegram, by telex or by registered or certified mail (postage prepaid, return receipt requested) to the respective parties at the following addresses (or at such other address for a party as shall be specified in a notice given in accordance with this Section 11.02):

(a)

if to the Seller:


Credit Suisse First Boston (USA), Inc..
11 Madison Avenue
New York, New York 10010
Telecopy: (212) 538-3395
Attention: Neil Radey
                Managing Director


with

a copy to:


Shearman & Sterling
599 Lexington Avenue
New York, New York 10022
Telecopy: (212) 848-7179
Attention: Clare O'Brien, Esq.

47

(b)

if to the Purchaser:



The Bank of New York Company, Inc.
One Wall Street
New York, New York 10286
Telecopy: (212) 635-1070
Attention: Michael Shepherd, Esq.
                          General Counsel

with

a copy to:


Sullivan & Cromwell
125 Broad Street
New York, New York 10004
Telecopy: (212) 558-3588
Attention: Donald C. Walkovik, Esq.

        SECTION 11.03.    Public Announcements.    Neither party to this Agreement shall make, or cause to be made, any press release, public announcement or communication to employees or customers in respect of this Agreement or the transactions contemplated hereby or otherwise communicate with any third party in respect of this Agreement or the transactions contemplated hereby without the prior consent of the other party unless otherwise required by Law or stock exchange regulation, and the parties shall cooperate as to the timing and contents of any such press release, public announcement or communication.

        SECTION 11.04.    Headings    The descriptive headings contained in this Agreement are for convenience of reference only and shall not affect in any way the meaning or interpretation of this Agreement.

        SECTION 11.05.    Severability    If any term or other provision of this Agreement is invalid, illegal or incapable of being enforced by any Law or public policy, all other terms and provisions of this Agreement shall nevertheless remain in full force and effect so long as the economic or legal substance of the transactions contemplated hereby is not affected in any manner materially adverse to any party. Upon such determination that any term or other provision is invalid, illegal or incapable of being enforced, the parties hereto shall negotiate in good faith to modify this Agreement so as to effect the original intent of the parties as closely as possible in an acceptable manner in order that the transactions contemplated hereby are consummated as originally contemplated to the greatest extent possible.

        SECTION 11.06.    Entire Agreement    This Agreement, the Ancillary Agreements and the Confidentiality Agreement constitute the entire agreement of the parties hereto with respect to the subject matter hereof and supersede all prior agreements and undertakings, both written and oral, between the Seller and the Purchaser with respect to the subject matter hereof and thereof.

        SECTION 11.07.    Assignment    This Agreement may not be assigned by operation of law or otherwise without the express written consent of the Seller and the Purchaser (which consent may be granted or withheld in the sole discretion of the Seller or the Purchaser, as the case may be); provided, however, that the Seller or the Purchaser may assign this Agreement in whole or in part to one or more of its Affiliates, without such consent; provided, however, that no such assignment shall relieve the Seller or the Purchaser, as the case may be, of its obligations if the assignee does not perform such obligations.

        SECTION 11.08.    No Third Party Beneficiaries.    This Agreement shall be binding upon and inure solely to the benefit of the parties hereto and their permitted assigns and nothing herein, express or

48

implied, is intended to or shall confer upon any other Person any legal or equitable right, benefit or remedy of any nature whatsoever under or by reason of this Agreement.

        SECTION 11.09.    Amendment.    This Agreement may not be amended or modified except (a) by an instrument in writing signed by, or on behalf of, the Seller and the Purchaser or (b) by a waiver in accordance with Section 10.03.

        SECTION 11.10.    Governing Law.    This Agreement shall be governed by, and construed in accordance with, the laws of the State of New York, applicable to contracts executed in and to be performed entirely within that state. All actions and proceedings arising out of or relating to this Agreement shall be heard and determined in any New York state or federal court sitting in The City of New York. The parties hereto unconditionally and irrevocably agree and consent to the exclusive jurisdiction of, and service of process and venue in, the United States District Court for Southern District of New York and the courts of the State of New York located in the County of New York, State of New York and waive any objection with respect thereto, for the purpose of any action, suit or proceeding arising out of or relating to this Agreement or the transactions contemplated hereby and further agree not to commence any such action, suit or proceeding except in any such court.

        SECTION 11.11.    Waiver Of Jury Trial.    The parties each hereby waive trial by jury in any judicial proceeding involving, directly or indirectly, any matters (whether sounding in tort, contract or otherwise) in any way arising out of, related to, or connected with this Agreement, the transactions contemplated hereby or the relationships established hereunder.

        SECTION 11.12.    Counterparts.    This Agreement may be executed in one or more counterparts, and by the different parties hereto in separate counterparts, each of which when executed shall be deemed to be an original but all of which taken together shall constitute one and the same agreement.

        SECTION 11.13.    Specific Performance.    The parties hereto agree that irreparable damage would occur in the event that any provision of this Agreement was not performed in accordance with the terms hereof and that the parties shall be entitled to specific performance of the terms hereof, in addition to any other remedy at law or equity.

        IN WITNESS WHEREOF, the Seller and the Purchaser have caused this Agreement to be executed as of the date first written above by their respective officers thereunto duly authorized.

CREDIT SUISSE FIRST BOSTON (USA), INC.
By:	/s/  JEFFREY M. PEEK Name: Jeffrey M. Peek Title: Managing Director and Head of Financial Services Division

THE BANK OF NEW YORK COMPANY, INC.
By:	/s/  CHARLES RAPPOLD Name: Charles Rappold Title: Executive Vice President

49

QuickLinks

Table of Contents
ARTICLE I DEFINITIONS
ARTICLE II PURCHASE AND SALE
ARTICLE III REPRESENTATIONS AND WARRANTIES OF THE SELLER
ARTICLE IV REPRESENTATIONS AND WARRANTIES OF THE PURCHASER
ARTICLE V ADDITIONAL AGREEMENTS
Article VI EMPLOYEE MATTERS
Article VII TAX MATTERS
ARTICLE VIII CONDITIONS TO CLOSING
Article IX INDEMNIFICATION
ARTICLE X TERMINATION AND WAIVER
ARTICLE XI GENERAL PROVISIONS

EX-10

ANNUAL REPORT  2002


Credit Suisse Group is a leading global financial services company headquartered in Zurich. Credit Suisse Financial Services provides private clients and small and medium-sized companies with private banking and financial advisory services, banking products, and pension and insurance solutions from Winterthur. Credit Suisse First Boston, the investment bank, serves global institutional, corporate, government and individual clients in its role as a financial intermediary. Credit Suisse Group’s registered shares (CSGN) are listed in Switzerland and Frankfurt, and in the form of American Depositary Shares (CSR) in New York. The Group employs around 78,000 staff worldwide.

Financial calendar
Annual General Meeting	Friday, April 25, 2003
Dividend payment	Friday, May 2, 2003
First quarter results 2003	Tuesday, May 6, 2003
Second quarter results 2003	Tuesday, August 5, 2003
Third quarter results 2003	Tuesday, November 4, 2003

LIST OF CONTENTS

ANNUAL REPORT 
LIST OF CONTENTS
MESSAGE FROM THE CHAIRMAN
MESSAGE FROM THE CO-CHIEF EXECUTIVE OFFICERS
CREDIT SUISSE GROUP KEY FIGURES 2002
INFORMATION ON THE COMPANY

INFORMATION ON THE COMPANY | CREDIT SUISSE GROUP
Overview
Strategy
Expanding asset gathering and asset management businesses
Strengthening our financial intermediation business
Leveraging our financial services resources
Business unit strategies
History  

INFORMATION ON THE COMPANY | CREDIT SUISSE FINANCIAL SERVICES
Overview
Strategy
Private Banking
Overview
Products and services
Investment advice and discretionary asset management
Financing
Advisory services
Customized products and services
Marketing and distribution
Corporate & Retail Banking
Overview
Products and services
Marketing and distribution
Life & Pensions
Overview
Products and services
Traditional products
Non-traditional products
Disability insurance
Group pensions
Marketing and distribution
Insurance
Overview
Products and services
Motor insurance
Non-motor (excluding accident and health)
Accident and health
Marketing and distribution
CSFS – Operating environment and competition
Operating environment
Competition

INFORMATION ON THE COMPANY | CREDIT SUISSE FIRST BOSTON
Overview
Strategy
Institutional Securities
Overview
Products and services
Fixed Income division  
Equity division  
Investment Banking division  
CSFB Financial Services
Overview
Asset management business
Private Client Services  
Pershing
Products and services
Asset management and advisory services
Funds
CSFB – Operating environment and competition
Operating environment
Competition

INFORMATION ON THE COMPANY | CREDIT SUISSE GROUP AND SOCIETY
Seizing opportunities, inspiring trust
Sustainability – meeting responsibilities
Employees
Employee satisfaction in a difficult market environment
Promoting the best possible dialog
A working environment free from discrimination
and harassment
Combining family life and work
Developing individual talent
Strengthening corporate culture
Clients and shareholders
Safeguarding client and shareholder confidence
Occupational benefit plans
Assessing client satisfaction
Swiss banking confidentiality
“Know your customer”
Society
Economic activity and human rights
Taking responsibility for the next generation
Credit Suisse First Boston Foundation
Art and culture at Credit Suisse Group
Supporting the sports stars of today and tomorrow
Cyberhelvetia – supporting Expo.02
Building bridges between politics, business and academia
Commitment of individual staff
Environment
The environmental management system
Sustainability in purchasing
Sustainability investments
Environmental risk management
Energy contracting
Operational ecology

OPERATING AND FINANCIAL REVIEW
OPERATING AND FINANCIAL REVIEW
Overview
Factors affecting results of operations
General economic and market conditions
Exchange rate fluctuations
Competition
Government policy, legislation and regulation
Reporting principles
Inter segment revenue sharing and cost allocation
Own-use real estate
Valuation adjustments, provisions and losses
Reserve for general banking risks
Taxes
Key performance indicators

OPERATING AND FINANCIAL REVIEW | CREDIT SUISSE GROUP
Year ended December 31, 2002 compared to year ended December 31, 2001
Year ended December 31, 2001 compared to year ended December 31, 2000

Reconciliation of operating to consolidated results
Reconciliation of operating to consolidated results

OPERATING AND FINANCIAL REVIEW | CREDIT SUISSE FINANCIAL SERVICES
Year ended December 31, 2002 compared to year ended December 31, 2001
Year ended December 31, 2001 compared to year ended December 31, 2000
Private Banking
Year ended December 31, 2002 compared to year ended December 31, 2001
Year ended December 31, 2001 compared to year ended December 31, 2000
Corporate & Retail Banking
Year ended December 31, 2002 compared to year ended December 31, 2001
Year ended December 31, 2001 compared to year ended December 31, 2000
Life & Pensions
Year ended December 31, 2002 compared to year ended December 31, 2001
Year ended December 31, 2001 compared to year ended December 31, 2000
Insurance
Year ended December 31, 2002 compared to year ended December 31, 2001
Year ended December 31, 2001 compared to year ended December 31, 2000
Investments for Life & Pensions and Insurance

OPERATING AND FINANCIAL REVIEW | CREDIT SUISSE FIRST BOSTON
Year ended December 31, 2002 compared to year ended December 31, 2001
Year ended December 31, 2001 compared to year ended December 31, 2000
Institutional Securities
Year ended December 31, 2002 compared to year ended December 31, 2001
Year ended December 31, 2001 compared to year ended December 31, 2000
CSFB Financial Services
Year ended December 31, 2002 compared to year ended December 31, 2001
Year ended December 31, 2001 compared to year ended December 31, 2000

OPERATING AND FINANCIAL REVIEW | CORPORATE CENTER
Year ended December 31, 2002 compared to year ended December 31, 2001
Year ended December 31, 2001 compared to year ended December 31, 2000

OPERATING AND FINANCIAL REVIEW | SUPPLEMENTAL INFORMATION

RISK MANAGEMENT
CREDIT SUISSE GROUP RISK MANAGEMENT
Introduction
Risk management governance
Economic Risk Capital
Introduction
Concept
Applications
Key risk trends 2002
Market risk
Introduction
Overview of market risk exposures
Trading portfolios
Non-trading portfolios
Business specific market risk disclosures
Corporate Center
Credit Suisse Financial Services
Trading portfolio
Non-trading portfolio
Credit Suisse First Boston
Trading portfolio
Non-trading portfolio
Credit risk for the banking businesses
Definition of credit risk
Credit risk management approach
Loans
Due from banks, due from customers and mortgages
Risk element lendings
Non-performing loans
Restructured loans
Potential problem loans
Loan valuation allowances and provisions
Loan valuation allowances and provisions for inherent credit losses
Summary of loan valuation allowance experience
Year ended December 31, 2002 compared to year ended December 31, 2001
Year ended December 31, 2001 compared to year ended December 31, 2000
Year ended December 31, 2000 compared to year ended December 31, 1999
Country risk
Cross-border outstandings
Insurance Risk
Introduction
Risk structure in the insurance business
Non-life
Life
Reinsurance
Business risk
Liquidity and funding risk
Operational risk
How we measure market risk
Introduction
Value-at-Risk
Limitations
Scenario analysis
Assumptions
Limitations

FINANCIAL INFORMATION
FINANCIAL INFORMATION
CONSOLIDATED FINANCIAL STATEMENTS
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
REPORT OF THE GROUP AUDITORS
PARENT COMPANY FINANCIAL STATEMENTS
NOTES TO THE PARENT COMPANY FINANCIAL STATEMENTS
PROPOSAL TO THE ANNUAL GENERAL MEETING
REPORT OF THE STATUTORY AUDITORS
FIVE-YEAR SUMMARY OF SELECTED FINANCIAL DATA

CORPORATE GOVERNANCE
CORPORATE GOVERNANCE
Introduction
Company
Major shareholders
Capital structure
Board of Directors of Credit Suisse Group
Membership and qualifications
Independence
Meetings
Board responsibilities
Board Committees
Chairman’s and Governance Committee
Audit Committee
Compensation Committee
Risk Committee
Members of the Board of Directors and the Committees
Changes in the Board of Directors since the last Annual General Meeting
Honorary Chairman of Credit Suisse Group
Secretaries of the Board of Directors
Management
Group Executive Board
Members of the Group Executive Board
Changes in the Group Executive Board
Senior Management of Credit Suisse Group
Senior Management of the business units
Executive Board Credit Suisse Financial Services
Operating Committee Credit Suisse First Boston
Advisory Board of Credit Suisse Group
Compensation
Core compensation principles
Performance based
Market driven
Values oriented
Shareholder alignment
Compensation components
Fixed compensation
Variable compensation
Other incentive programs
Measurement and plan documentation
Loans to Members of the Board of Directors and Group Executive Board
Shareholders
Voting rights, transfer of shares
Annual General Meeting
Changes of control and defense measures
Duty to make an offer
Clauses on changes of control
Auditors
Information policy

MAIN OFFICES
INFORMATION FOR INVESTORS
Cautionary statement regarding forward-looking information












Continuing the “craftsmanship” theme of our corporate reporting, in this Report we feature the work of textile designer Claire O’Hea. Claire’s unique contemporary pieces express human skill, innovation and professionalism – qualities at the heart of Credit Suisse Group’s 360° approach to finance.

This symbol is used to indicate topics on which further information is available on our website. Go to www.credit-suisse.com/annualreporting/bookmarks.html to find links to the relevant information. This additional information indicated is openly accessible and does not form part of the Annual Report. Some areas of Credit Suisse Group’s websites are only available in English.



MESSAGE FROM THE CHAIRMAN



Walter B. Kielholz
Chairman of the Board of Directors
Dear shareholders, clients and colleagues

2002 was a year of transition for Credit Suisse Group. As with the rest of the industry, the Group’s performance for the year was affected negatively by the continuation of global economic and political uncertainty and the related weakness of the financial markets.

Credit Suisse Group recorded a net loss of CHF 3.3 billion for the year, compared to a net profit of CHF 1.6 billion for 2001. At year’s end, the Group's total assets under management stood at CHF 1,195.3 billion, down 16.4% from a year earlier. Against the background of this unsatisfactory performance, the Board of Directors has decided to propose a dividend of CHF 0.10 per share to the Annual General Meeting on April 25, 2003.

Despite the challenges of the past year, the Group succeeded in maintaining or improving the market position of most of its key businesses in 2002. We also moved aggressively with various initiatives that are designed to build on that solid foundation and allow us to be profitable even in flat market conditions while realizing our full potential as the markets recover.

The key steps we took in 2002 included the appointment of a new management team with Oswald J. Grübel and John J. Mack as co-Chief Executive Officers. They are experienced, highly respected industry leaders who share a common focus on delivering bottom-line results.

Under its new leadership, the Group has focused on improving financial performance by reducing costs, building on our core business strength, and maintaining or improving market share. We have further realigned our European initiative to concentrate on private banking clients. At Winterthur, we addressed the problems resulting from exposure to falling equity markets and an intensely competitive environment. At Credit Suisse First Boston, we made progress in reducing costs and reducing exposure to legacy asset portfolios. In addition, in the fourth quarter, Credit Suisse First Boston reached an agreement in principle with certain US regulators to settle US investigations relating to research analyst independence and IPO allocations.

Credit Suisse Group still faces significant challenges, and there is no certainty about the timing or extent of a recovery in the global markets. However, we did take significant strides forward in 2002 to address the key issues affecting our financial performance. As a result, we entered 2003 with a stronger balance sheet and an improved capital base, and we believe the Group is now positioned to achieve our goal of a return to profitability in 2003. I look forward to working with Oswald J. Grübel and John J. Mack as we leverage Credit Suisse Group’s strengths to serve the interests of our shareholders, clients and employees.

Walter B. Kielholz
March 2003


MESSAGE FROM THE CO-CHIEF EXECUTIVE OFFICERS



Oswald J. Grübel
Co-CEO Credit Suisse Group
Chief Executive Officer
Credit Suisse Financial Services


John J. Mack
Co-CEO Credit Suisse Group
Chief Executive Officer
Credit Suisse First Boston
Dear shareholders, clients and colleagues

Credit Suisse Group’s performance in the year 2002 was highly unsatisfactory, and we have made it our priority to return the Group to profitability. To accomplish that, we have been reducing costs and refocusing the Group on our core, profitable businesses, while maintaining our leadership positions in key markets.

Besides strategic realignments, the specific challenges we faced over the past year included addressing investment losses in our insurance business; setting-aside provisions for regulatory and litigation matters; reducing our exposure to legacy assets in our investment banking business; and reducing costs across the Group. While this had a negative short-term effect on our financial performance in 2002, we believe that these steps have positioned us to return to profitability in 2003 and to grow our business from a much stronger foundation going forward.

At the business unit Credit Suisse Financial Services, we have further realigned our European initiative to focus on private banking clients. Private Banking improved its results in the fourth quarter, while profit was up for the year at Corporate & Retail Banking. Both Life & Pensions and Insurance returned to profitability in the fourth quarter. However, Credit Suisse Financial Services has to operate in a very challenging environment. To ensure that the business unit remains competitive, we must seek new efficiencies and further reduce costs.

At the business unit Credit Suisse First Boston, we have achieved substantial cost savings over the past year without impacting our revenue-generating ability. Costs in 2002 were USD 2.7 billion below the level in 2001. Our rankings for global M&A, equity and debt were all higher in 2002, and we ranked number 1 again in both high-yield and asset-backed new issuances. Credit Suisse First Boston substantially reduced its exposure to legacy asset portfolios that were hindering our financial performance and flexibility, and made progress in resolving major regulatory issues. Finally, the Firm announced the sale of Pershing, which will have a further positive impact on our capital base when the transaction becomes final.

Given the ongoing challenges of the market environment and global uncertainty, we remain cautious in our outlook for 2003. We believe, however, that the measures taken during 2002, as well as those to be implemented in 2003, position us to return to profitability in 2003. We intend to stay focused on executing our business strategy, as we continue to deliver the highest quality of services to our clients globally.

Oswald J. Grübel John J. Mack
March 2003


CREDIT SUISSE GROUP KEY FIGURES 2002

Consolidated income statement
				Change	Change
				in % from	in % from
in CHF m	2002	2001	2000	2002/2001	2001/2000
Operating income	28'038	39'154	37'231	(28)	5
Gross operating profit	4'509	8'870	12'083	(49)	(27)
Net profit/(loss)	(3'309)	1'587	5'785	–	(73)

Return on equity
				Change	Change
				in % from	in % from
in %	2002	2001	2000	2002/2001	2001/2000
Return on equity	(10.0)	4.1	17.7	–	(77)

Consolidated balance sheet
			Change
			in % from
in CHF m	31.12.02	31.12.01	31.12.01
Total assets	955'656	1'022'513	(7)
Shareholders' equity	31'394	38'921	(19)
Minority interests in shareholders' equity	2'878	3'121	(8)

Capital data
			Change
			in % from
in CHF m	31.12.02	31.12.01	31.12.01
BIS risk-weighted assets	201'466	222'874	(10)
BIS tier 1 capital	19'544	21'155	(8)
of which non-cumulative perpetual preferred securities	2'162	2'076	4
BIS total capital	33'290	34'888	(5)
Solvency capital Winterthur	10'528	8'555	23

Capital ratios
in %			31.12.02	31.12.01
BIS tier 1 ratio	Credit Suisse		7.4	6.9
	Credit Suisse First Boston	1)	10.3	12.9
	Credit Suisse Group	2)	9.7	9.5
	Credit Suisse Group (banking)	3)	10.0	8.8
BIS total capital ratio	Credit Suisse Group		16.5	15.7
EU solvency margin	Winterthur		167.5	128.6

Assets under management/client assets  4)
			Change
			in % from
in CHF bn	31.12.02	31.12.01	31.12.01
Advisory assets under management	605.1	723.5	(16)
Discretionary assets under management	590.2	707.1	(17)
Total assets under management	1'195.3	1'430.6	(16)
Client assets	1'793.2	2'138.2	(16)

Net new assets  4)
			Change
			in % from
in CHF bn	2002	2001	2001
Net new assets	(2.6)	67.5	–
1) Ratio is based on a tier 1 capital of CHF 10.6 bn (31.12.01: CHF 15.2 bn), of which non-cumulative perpetual preferred securities is CHF 1.0 bn (31.12.01: CHF 1.1 bn).
2) Ratio is based on a tier 1 capital of CHF 19.5 bn (31.12.01: CHF 21.2 bn), of which non-cumulative perpetual preferred securities is CHF 2.2 bn (31.12.01: CHF 2.1 bn).
3) Ratio is based on a tier 1 capital of CHF 19.7 bn (31.12.01: CHF 19.4 bn), of which non-cumulative perpetual preferred securities is CHF 2.2 bn (31.12.01: CHF 2.1 bn).
4) Certain reclassifications have been made to conform to the current presentation.

Number of employees (full time equivalents)
				Change
				in % from
		31.12.02	31.12.01	31.12.01
Switzerland	banking	21'270	21'794	(2)
	insurance	7'063	6'849	3
Outside Switzerland	banking	25'057	28'415	(12)
	insurance	25'067	23'103	9
Total employees Credit Suisse Group		78'457	80'161	(2)

Share data
				Change
				in % from
		31.12.02	31.12.01	31.12.01
Shares issued		1'189'891'720	1'196'609'811	(1)
To be issued upon conversion of MCS	1)	40'413'838	0	–
Shares repurchased	2)	0	7'730'000	–
Shares outstanding		1'230'305'558	1'188'879'811	3
Share price in CHF		30.00	70.80	(58)
Market capitalization in CHF m		36'909	84'173	(56)
Book value per share in CHF		23.18	29.92	(23)
1) Maximum number of shares related to Mandatory Convertible Securities (MCS) issued by Credit Suisse Group Finance (Guernsey) Ltd.
2) Shares cancelled on 09.08.02, as previously approved by the Annual General Meeting.

Share price
			Change
			in % from
in CHF	2002	2001	2001
High (closing price)	73.60	87.00	(15)
Low (closing price)	20.60	44.80	(54)

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Earnings per share
					Change	Change
					in % from	in % from
		2002	2001	2000	2002/2001	2001/2000
Net profit/(loss) in CHF m		(3'309)	1'587	5'785	–	(73)
Diluted net profit/(loss) in CHF m		(3'309)	1'588	5'789	&n dash;	(73)
Weighted average shares outstanding	1)	1'190'206'207	1'194'090'788	1'111'100'088	0	7
Dilutive impact	2)	–	9'356'766	4'591'588	–	104
Weighted average shares, diluted		1'190'206'207	1'203'447'554	1'115'691'676	(1)	8
Basic earnings per share in CHF		(2.78)	1.33	5.21	–
Diluted earnings per share in CHF		(2.78)	1.32	5.19	&ndash ;	(75)
1) Adjusted for weighted average shares repurchased.
2) The calculation of the diluted loss per share in the financial year 2002 excludes the effect of the potential exchange of convertible bonds and the potential exercise of options to purchase shares, as the effect would be anti-dilutive.

INFORMATION ON THE COMPANY





INFORMATION ON THE COMPANY | CREDIT SUISSE GROUP


Overview
We are a global financial services company domiciled in Switzerland. In the area of financial services, we offer investment products, wealth management and financial advisory services, including insurance and pension solutions, for private and small and medium-sized corporate clients. In the area of global investment banking, we provide financial advisory and capital raising services, sales and trading for users and suppliers of capital, as well as asset management products and services.

Our operations are structured into the following two business units:

The business unit Credit Suisse Financial Services, or CSFS, is a leading provider of comprehensive financial services in Europe and other select markets. Under the main brands Credit Suisse, Credit Suisse Private Banking and Winterthur, it offers investment products, private banking and financial advisory services, including insurance and pension solutions, for private and corporate clients. CSFS includes:

• Private Banking, which provides personal investment counseling and professional asset management services for high-net-worth clientele;

• Corporate & Retail Banking, our operation for retail banking and corporate clients in Switzerland;

• Life & Pensions, our life insurance and pensions business; and

• Insurance, our non-life insurance business.

The business unit Credit Suisse First Boston, or CSFB, serves global institutional, corporate, government and high-net-worth clients in its role as a financial intermediary. Its businesses include securities underwriting, sales and trading, financial advisory services, lending, private equity investments, brokerage services and investment research. It also provides asset management products and services. CSFB includes:

• Institutional Securities (formerly Investment Banking), our global business providing financial advisory, lending and capital raising services and sales and trading for users and suppliers of capital; and

• CSFB Financial Services, our business providing asset management products and financial and advisory services.

In addition, our Corporate Center includes our parent company operations, centrally managed functions for the benefit of the Group as a whole and consolidation adjustments.


Strategy
Our group strategy is aimed at maintaining and strengthening our position among the global leaders in two key segments of the world's financial services market:

• Asset gathering and asset management; and

• Financial intermediation.

Through each of our businesses, we aim to build expertise and presence in these areas while at the same time leveraging our financial services resources across all our businesses. Our overall objectives are to achieve high customer satisfaction, maximize shareholder value and be an employer of choice for talented individuals.


Expanding asset gathering and asset management businesses
We offer our private clients, which are the predominant consumers of our asset gathering and asset management businesses, a comprehensive range of savings, life insurance, pension and investment products and services. These products range from standardized to highly individual financial solutions and are designed to meet our clients' needs over their whole life cycle. For our institutional clients, we also offer a full range of asset gathering and asset management services on a global basis.

Since embarking on this strategy, our total assets under management have grown from CHF 737.0 billion at January 1, 1997 to CHF 1,195.3 billion at December 31, 2002. Key strategic acquisitions that have contributed to our growth in assets under management include the merger with "Winterthur" Swiss Insurance Company, or Winterthur, in 1997 and the acquisitions of Warburg Pincus Asset Management in 1999 and Donaldson, Lufkin & Jenrette, Inc., or DLJ, in 2000.

Our asset gathering and asset management businesses (Private Banking, Corporate & Retail Banking, the insurance businesses and CSFB Financial Services) reported operating income of CHF 15,065 million in 2002 compared to CHF 19,427 million and CHF 17,830 million in 2001 and 2000, respectively.

We believe that changing demographics, anticipated pension reforms in key markets, inter-generational- wealth transfer and globalization of financial markets, among other trends, will continue to be sources of demand for our asset gathering products and services in the near future.


Strengthening our financial intermediation business
Through our global investment banking activities, we act as a financial intermediary offering innovative and competitive products and services to corporate clients, financial institutions, governments and individuals throughout the world. A significant step in our efforts toward strengthening financial intermediation was our acquisition of DLJ in 2000. This transaction bolstered and extended our global franchise and allowed us to further our goal of being a top tier global investment bank.

Our financial intermediation business (Institutional Securities) reported operating income of CHF 15,125 million in 2002 compared to CHF 21,217 million and CHF 20,092 million in 2001 and 2000, respectively.


Leveraging our financial services resources
We are committed to leveraging our considerable product, content, distribution and financial resources to achieve better execution of our new and existing strategies across all businesses. We believe our key points of leverage are our brands, proprietary products, customer access and distribution networks, access to and presence in the capital markets, asset management expertise and technology and processing infrastructure. Our goal, which we are furthering through CSFS and other business initiatives, is to achieve a more integrated delivery of many insurance and banking products and services across multiple distribution channels. We also provide e-commerce services as an extension of our traditional products and services.


Business unit strategies
Within the framework of our overall Group strategy, each of our two business units also pursues its own more specific strategy designed to meet the needs of its customers, as well as its particular operating and competitive environment. These strategies are discussed in more detail below.


History  
Our history dates back to the formation of Schweizerische Kreditanstalt, which was founded in 1856 to help finance railway construction and industrialization in Switzerland. We opened our first branch in Basle in 1905 and our first branch outside of Switzerland in New York in 1940. In 1978, we commenced co-operation with First Boston, Inc. and in 1990, we acquired a controlling stake. We purchased Bank Leu in 1990 and Schweizerische Volksbank in 1993. In 1995, we also began strategic cooperation with Winterthur. Following a restructuring of our Group, effective January 1, 1997, into four distinct specialized business units within two Swiss banks, the Credit Suisse legal entity (formerly Schweizerische Volksbank) and the Credit Suisse First Boston legal entity (formerly Schweizerische Kreditanstalt), we merged in 1997 with Winterthur. We currently operate within two business units: Credit Suisse Financial Services and Credit Suisse First B oston. These business units contain separate operating segments grouped within three principal legal entities:

• Credit Suisse (comprising the segments of Private Banking and Corporate & Retail Banking);

• Winterthur (comprising the segments of Life & Pensions and Insurance); and

• Credit Suisse First Boston (comprising the segments of Institutional Securities and CSFB Financial Services).

We are registered as a corporation in the commercial register of, and have registered offices in, Zurich, Switzerland. The address of our principal executive offices is Paradeplatz 8, P.O. Box 1, CH-8070, Zurich, Switzerland; our telephone number is +41 1 212 1616.

Credit Suisse Group structure





INFORMATION ON THE COMPANY | CREDIT SUISSE FINANCIAL SERVICES


Overview
Credit Suisse Financial Services is the business unit that includes the Private Banking, Corporate & Retail Banking, Life & Pensions and Insurance segments. These operations provide comprehensive financial services to retail, affluent and high-net-worth clients in Europe and other markets around the world. CSFS has been designed with the goal of more effectively integrating private banking, retail banking and insurance activities so as to better position CSFS to provide a more effective multi-product, multi-distribution offering, predominantly under the Credit Suisse and Winterthur brands. The objective is to distribute comprehensive financial services products through the channels of each of the four segments comprising CSFS. At December 31, 2002, the distribution network consisted of 223 branches serving Corporate & Retail and Private Banking clients in Switzerland, various Private Banking locations abroad, approximately 526 insurance locations in Switzerland and representation in more than 23 countries worldwide. Approximately 76 of the banking branches and insurance locations in Switzerland are joint locations.

In the future CSFS will execute securities and treasury transactions for its private banking, retail and corporate clients in Switzerland under its own name. We expect that CSFB's Zurich-based securities and treasury execution platform – including the respective mid- and back-offices and IT-functions – will be integrated into CSFS during the second half of 2003. In the future, CSFB will deliver securities and teasury products to its Swiss institutional, corporate and government clients through its London offices. Client relationships are not affected in any relevant way by this reorganization. CSFB's investment banking and Swiss institutional coverage businesses in Switzerland will be retained by CSFB and are not affected by this integration.  

On February 25, 2003, we announced a realignment of Winterthur’s organizational structure to bring the Insurance and Life & Pensions segments under a joint management, with a single executive board. As a result of the new organizational structure, the management of the two Winterthur segments will be combined, except for Switzerland and the United Kingdom. In Switzerland, life and non-life insurance will continue to be managed separately due to the substantial size of both of these operations. They will continue to work together closely to exploit their synergies. In the United Kingdom, these two operations will also remain separate because their business models are very different. This management structure change does not affect the financial reporting of the Insurance and Life & Pensions segments.


Strategy
CSFS pursues the key strategy of asset gathering and wealth management for its predominantly private clients and small and medium corporate clients. Its various operating segments aim to grow their asset gathering businesses by seeking to be among the leaders in developing innovative solutions for clients' financial needs and by providing clients with superior access through an integrated set of distribution and customer service channels designed to make optimal use of new technologies. CSFS seeks to identify and develop new business opportunities, particularly with affluent and high-net-worth customers, focusing on both developing new and preserving existing client relationships. Attractive solutions, encompassing comprehensive financial services products as well as high service quality and accessibility through a variety of physical and electronic distribution channels, are important factors. The quality of CSFS’ staff is also a d ecisive element in asset gathering. Accordingly, CSFS seeks to be an employer of choice.

CSFS aims continually to improve its products and distribution platforms, taking advantage of changes through innovative business models and enhancing the offering within its various geographic markets, and aims to further leverage its strong franchises and operating platforms.

Approximately 90% of CSFS’ business is within the European market. In addition, CSFS is targeting the Asian market for future growth. CSFS expects to grow through both acquisition and internal growth.


Private Banking

Overview
Private Banking is one of the world's largest private banking organizations with branches in Switzerland and numerous international markets. It specializes in providing personal investment counseling and professional asset management to an affluent and high-net-worth clientele.

At December 31, 2002, Private Banking had CHF 488 billion of assets under management. Approximately 17% of total assets under management were in equities, 26% in fixed income securities, 33% in investment funds and 24% in liquidity accounts, money market and other products.

On January 1, 2002, Private Banking became a part of CSFS. As of October 4, 2002, Private Banking reorganized its operations, focusing on three market areas:

• Market Area 1 consists of the Swiss domestic market, international private clients in Italy and France, and the centralized processing locations, or booking centers, in Luxembourg, Guernsey, Monaco and Gibraltar.

• Market Area 2 consists of international private clients in Asia Pacific, the Middle East, the Americas, Northern Europe, Eastern Europe, Iberia, Germany and Austria. It includes the new international private banking center in Singapore, Credit Suisse Private Advisors and booking centers in Hong Kong and the Bahamas.

• Market Area 3 consists of the onshore banking operations in the five key European markets, Germany, Italy, the United Kingdom, France and Spain.

In addition to these organizational changes, European private banking (formerly the European Financial Services Initiative), which encompasses Market Area 3, will focus only on high-net-worth clients in the future. As a result, the distribution networks have been refocused to adapt to the current organizational structure.

In January 2002, the affluent client business of Corporate & Retail Banking, for wealthy clients receiving individual advice, was transferred to Private Banking in Switzerland.

In August 2002, Private Banking launched Credit Suisse Private Advisors with locations in Zurich, San Francisco and New York. This organization aims to serve and offer wealth management solutions to US high-net-worth clients.

In October 2002, the Credit Suisse Trust group was reorganized to ensure the availability of independent advice and the delivery of integrated wealth management solutions to ultra high-net-worth clients.

As of January 1, 2003, a new “Service Model Private Clients Switzerland”, or SMPC, was introduced in Private Banking in Switzerland. This client-centric organization realigns client segments according to their needs, product usage and location. Private clients with investable assets below CHF 250,000 or mortgages of less than CHF 1 million are served through Corporate & Retail Banking. This allows Private Banking to strengthen its focus on high-net-worth clients.

Private Banking also operates a number of separately branded banking and portfolio management companies, including Bank Leu, Clariden Bank, Bank Hofmann and Credit Suisse Fides, all headquartered in Zurich, BGP Banca di Gestione Patrimoniale in Lugano, JO Hambro Investment Management Limited in London and Frye-Louis Capital Management, Inc. in Chicago. These companies cater principally to clients who demand personalized services within a smaller environment. In addition to these activities, Private Banking maintains product centers in various locations that provide brokerage services, wealth management solutions, including trusts and estate planning, and management of international client deposits.


Products and services
Private Banking offers a wide range of products and services, including investment advice and discretionary asset management, financing, advisory services, customized products and services and e-commerce solutions. Private Banking also offers mutual fund products – around 1,000 own and third-party funds – and a variety of structured investment products. Structured investment products aim to provide market-neutral investments and access to our own and third-party international asset managers through a fund of funds approach. Market-neutral means that the asset managers pursue investment strategies which offer returns in economic scenarios in which traditional assets perform poorly. The whole range of products and services aims to cover the needs of Private Banking's global clientele at every stage in their life.


Investment advice and discretionary asset management
Investment advice and discretionary asset management are the core services of Private Banking. Investment advice covers a wide range of topics from portfolio consulting to advice on single securities. For clients who are interested in more active management of their portfolios, Private Banking offers dedicated investment consultants who inform clients of investment opportunities. For clients with more complex requirements, Private Banking offers investment portfolio structuring and implementation of special strategies, including a wide range of investments in structured products, structured investments, private equity and real estate.

Private Banking's discretionary asset management is designed for clients who wish to delegate the responsibility for investment decisions to their private banker. Private Banking offers a number of standardized portfolio management mandates linked to the client's risk preferences and base currency. These mandates are available in two forms: direct investments and investments in funds only. In addition, the mandates can follow either predefined investment strategies, such as capital preservation and growth or current return, or customized solutions to meet clients' identified investment goals.

Within the investment committee's guidelines, Private Banking's analysts and investment professionals develop their forecasts and specific recommendations for asset allocations and individual investments. This output is subject to regular monitoring and refinement as market conditions change.

Private Banking's investment information is a key component of its overall business and is used by the internal relationship managers to advise clients. In addition, certain summarized investment information is provided directly to clients through various distribution channels.


Financing
Private Banking offers two principal financing services:

• Securities-backed financing and margin lending, allowing clients to borrow against their investment portfolios; and

• Real estate financing of clients' residential properties.

In both types of lending, the funding limits are risk-based and Private Banking discounts the collateral pledged to support the loans based on the type of collateral.


Advisory services
Private Banking's advisory services comprise tax planning, pension planning, wealth and inheritance advice, including the establishment of Private Banking trusts and foundations, and life insurance needs. Private Banking provides comprehensive financial advice taking into account a broad range of factors influencing the client's present and future financial situation.


Customized products and services
Customized products and services are those offerings designed for and marketed to specific customer segments. Private Banking's corporate advisory services are aimed at entrepreneurs seeking to sell their businesses or to raise additional capital. In either case, Private Banking provides valuation services and seeks to find potential investors in the public and private markets. Private Banking also offers "Family Office" services, a variety of tailor-made products and advice for individuals and families generally with minimum assets of USD 50 million.


Marketing and distribution
All Private Banking clients have a designated relationship manager as a primary point of contact. At December 31, 2002, Private Banking had approximately 2,500 relationship managers and financial advisors worldwide.

Private Banking serves its clients through the banking branches of CSFS in Switzerland and various locations abroad. It provides advice, information, products and transactions through a network of internal and external specialists, portfolio managers, investment consultants and financial planners. It also offers its services directly over the Internet through its portal located at www.credit-suisse.com/privatebanking.

In 2002, the Global Private Banking Center Singapore was established. It provides:

• Access to a comprehensive range of online and traditional financial services and lifestyle products 24 hours a day, seven days a week;

• Access to bankers who speak 20 different languages and are familiar with the clients' cultural backgrounds;

• An Internet platform that permits access to 19 stock exchanges worldwide and trading in over 1,000 mutual funds; and

• Customized market data, news updates, easy-to-use financial simulation tools and a range of non-financial lifestyle products and services.

Corporate & Retail Banking

Overview
Corporate & Retail Banking serves both corporate and retail clients through a multi-channel approach, with a focus on Switzerland.

At December 31, 2002, Corporate & Retail Banking had CHF 48.0 billion of assets under management. Approximately CHF 25.3 billion, or 52.7%, of these assets under management related to retail clients and approximately CHF 22.7 billion, or 47.3%, related to corporate clients. At December 31, 2002, Corporate & Retail Banking had approximately 1.7 million retail clients and approximately 100,000 corporate clients.

In January 2001, Corporate & Retail Banking began serving corporate and retail clients through separate businesses dedicated to the needs of each type of client. Within each of these businesses, it also operates along geographic lines in Switzerland. It competes in the retail client market on the basis of service levels and advice, rather than by offering the lowest price for its products and services. Corporate & Retail Banking's goal for the corporate client business is to improve results through effective cost control and a shift from the pure lending business to a more commission-based business. In addition to its customer and geographic units, it maintains separate product and trading businesses. The results of operations of Corporate & Retail Banking include the activities of Neue Aargauer Bank, or NAB, a separately branded retail bank operating in the canton of Aargau.

As part of the realignment effective January 1, 2002, the affluent client business for clients receiving more individual advice was transferred to Private Banking.

Effective January 1, 2003, as a consequence of the SMPC, clients are allocated to different segments, according to their needs, product usage and location. As a general rule, clients with investable assets of CHF 250,000 or mortgages of CHF 1 million mark the boundary between the Corporate & Retail Banking and Private Banking segments. Corporate & Retail Banking is responsible for all individual and retail clients with assets and mortgages below these amounts and acts as an infrastructure and service provider. In addition, as of January 31, 2003, the online brokerage “youtrade” has been discontinued due to significant decline in trading volumes and revenues. However, we continue to provide online banking facilities for retail and private banking customers in Switzerland through Direct Net.


Products and services
Corporate & Retail Banking offers retail and corporate clients a wide range of financing and loan products and services, such as mortgages, unsecured corporate loans, trade finance, consumer loans, leasing and credit cards, as well as products, services and solutions in asset management, payment transactions, foreign exchange, pensions and life insurance. Corporate & Retail Banking also offers clients e-commerce solutions. In some cases, such as with asset management and insurance products, Corporate & Retail Banking sells its products jointly with other businesses, including Life & Pensions, Insurance and CSFB Financial Services. In other cases, such as with payment systems, it provides services for other businesses of the Group.

In the credit card business, Corporate & Retail Banking operates a joint venture, Swisscard AECS, with American Express Travel Related Services Company for the purpose of issuing cards, processing transactions and acquiring merchants. It is also one of the main providers of credit cards in Switzerland in terms of number of accounts. Eurocard, Visa and American Express credit cards are sold through the distribution channels of Corporate & Retail Banking. In May 2002, the American Express Centurion Card was launched. The Centurion Card is an all-inclusive service package covering lifestyle, travel, customer assistance, and financial management fields and is higher positioned than American Express’s Platinum Card.

Corporate & Retail Banking offers sophisticated payment solutions tailored to the needs of all customer segments. The variety of payment products ranges from IT-based, fully automated transaction solutions for large corporate clients to cost efficient and convenient schemes for private clients. Over 60% of customer interaction currently takes place on electronic channels such as Internet banking interfaces.

For its lending products, Corporate & Retail Banking often requires a pledge of collateral. The amount of collateral required is determined based on the type and amount of the loan, as well as the risk profile of the specific customer. Currently, over 80% of its loan portfolio is secured by collateral, which includes marketable securities and commercial and residential properties.

In 2002, we expanded the mortgage business to foreign countries and, on October 1, 2002, Corporate & Retail Banking launched a "Start-up bonus mortgage" for first time buyers of self-occupied residential property with a 0.5% interest rate discount on half the mortgage amount for half the agreed term.

For the second consecutive year, Credit Suisse Trade Finance was awarded the “Best Trade Finance Bank in Switzerland” by Global Finance Magazine, New York. Direct Trade Finance, launched in November 2002, is a new application for internationally active corporate clients. It enables trade finance transactions via the Internet. Credit Suisse is the first bank offering this service in Switzerland.


Marketing and distribution
At December 31, 2002, Corporate & Retail Banking served its clients through 223 banking branches of CSFS, including 36 branches of NAB in Switzerland. In approximately 76 of these locations, Corporate & Retail Banking, Insurance and Life & Pensions share joint facilities to enable better cross-selling of banking and insurance products. Corporate & Retail Banking markets its products to clients primarily through its branch network, as well as through direct channels, including the Internet and telephone banking.

Advisors for small and medium-sized corporate clients are based in 34 of its locations and 9 branches of NAB. Corporate & Retail Banking serves its large domestic clients through two regional offices, which are located in Zurich and Lausanne.


Life & Pensions

Overview
The Life & Pensions segment is a global provider of life insurance and pension products for private and corporate clients through multiple distribution channels.

The principal market units of Life & Pensions are in Western Europe, where the focus is on Switzerland, Germany, the United Kingdom and, to a lesser extent, other European countries. In addition, it has operations in Central and Eastern Europe and in selective Asian markets. Life & Pensions continues to pursue its strategy to diversify its portfolio of private clients in Europe and thereby increase synergies with Private Banking. In addition, measures are being taken to increase the offering of non-traditional capital-light products, which are insurance products where the investment risk is borne by the policyholder and which have lower solvency capital requirements, as well as to provide a greater focus on key markets.

Within its home market of Switzerland, on the basis of direct gross premium income in 2001, Life & Pensions was the second largest provider of life insurance. The banking sales forces of Corporate & Retail Banking and Private Banking and the agents of Life & Pensions strive to increase the cross-selling of insurance and banking products.

The European growth markets, based on premium income, for Life & Pensions are Germany, Belgium, Italy, Spain and the United Kingdom. The Life & Pensions operations in Germany, which are part of DBV-Winterthur, sell principally traditional insurance products to individual customers. In the United Kingdom, Life & Pensions offers a wide range of unit-linked products and tailor-made personal pension schemes. Life & Pensions acquired a closed block of business from Colonial UK in 2000. In addition to administering this business in run-off, Life & Pensions markets its products and services to former customers of Colonial in the United Kingdom.

In its Central and Eastern European markets, where there have been significant developments in pension reform over the past several years, Life & Pensions administers pension funds and seeks to offer supplementary personal pension schemes. In 2001, Life & Pensions acquired Vojensky Otevreny Penzijni Fond, or VOPF, one of the largest pension funds in the Czech Republic, with approximately CHF 300 million of assets under management, which was merged into Winterthur Penzijni Fond A.S. and the combined entity renamed Credit Suisse Life & Pensions Penzijni Fond A.S. in 2002. In addition, Life & Pensions offers unit-linked life insurance policies in these markets. The business in Asia increased due to the acquisition of Credit Suisse Life Insurance Co., Ltd. (formerly Nicos Life), in April 2000.

In June 2002, Life & Pensions acquired Premier Life Ltd., Luxembourg and the portfolio of Premier Life Ltd., Bermuda for a purchase price of CHF 44 million (EUR 30 million). The acquired business contributed gross premiums of CHF 724 million, of which CHF 685 million is from the Bermuda portfolio transfer. Life & Pensions has been present in Luxembourg through its subsidiary Winterthur-Europe Vie since 1993. In 2002, Winterthur Europe Vie wrote gross premiums of CHF 84 million (EUR 57 million). Premier Life Ltd., Luxembourg and Premier Life Ltd., Bermuda specialize in unit-linked life insurance products for affluent private clients in Europe and are among the market leaders in their field.

In 2002, Winterthur finalized the divestiture of the Paris-based and Austrian operations and, in December 2002, Winterthur announced the sale of its subsidiaries, Companhia Europeia de Seguros S.A., and Winterthur Pensiones S.A., in Portugal.

As a result of the new organizational structure mentioned above, the management of the two Winterthur segments will be combined in all countries except for Switzerland and the United Kingdom. In Switzerland, life and non-life insurance will continue to be managed separately due to the substantial size of both of these operations. They will continue to work together closely to exploit their synergies. In the United Kingdom, these two operations will also remain separate because their business models are very different. This management structure change does not affect the financial reporting of the Life & Pensions segment.


Products and services
Life & Pensions’ products consist of traditional and non-traditional life insurance, both of which are offered on an individual and group basis. The majority of Life & Pensions’ products are participatory products, including with-profit funds in the United Kingdom, which provide for policyholder dividends based on legal or contractual obligations or at management's discretion. The extent to which each category is offered and the types of products available vary considerably from jurisdiction to jurisdiction. In Switzerland, for example, Life & Pensions sells primarily endowment and annuity products. In the United Kingdom, the life insurance products offered are predominantly with-profit and unit-linked. Life & Pensions also provides disability insurance, as well as a number of additional products, to group pension funds on a defined benefit or defined contribution basis. Life & Pensions is continually devel oping innovative solutions for its key markets.


Traditional products
Traditional products consist of endowments and annuities for which the investment risk is borne by the insurer and not by the policyholder. The insurer also bears mortality risk for the life of the product. These products include pure protection, or term insurance, designed to provide a lump sum at the end of a fixed term and death coverage during the term. They may or may not contain a cash surrender value. Endowments and annuities can be regular or single premium products, depending upon whether they require periodic or lump-sum payments by the policyholder. For traditional with-profit products, policyholder premiums are invested by the insurer in a range of assets including equities, real estate and fixed income securities. With-profit policyholders receive a share of the profits resulting from the insurance company's investments. In 2002, Life & Pensions had gross premiums from traditional products representing approximately 80% o f its total gross premiums.


Non-traditional products
Non-traditional products are medium to long-term savings products with life insurance coverage for which the investment risk is borne in whole or in part by the policyholder, depending upon whether there is a guaranteed minimum payment. Guaranteed payments are required in a number of jurisdictions in which Life & Pensions sells its products. In these jurisdictions the insurer bears the mortality risk and the investment risk to the extent of the guarantees. Non-traditional products include variable annuities and guaranteed investment contracts. Non-traditional products may be regular or single premium and either with-profit or unit-linked. With-profit policyholders receive a share of the profits resulting from the insurance company's investments. Unit-linked policyholders are entitled to a return based upon the performance of segregated accounts. In some cases, Life & Pensions’ unit-linked products offer the policyholder a ch oice of investment vehicles, including funds managed by other CSG entities and by third-party providers. In 2002, Life & Pensions had gross premiums from non-traditional products representing approximately 20% of its total gross premiums.


Disability insurance
The most important disability products that Life & Pensions offers are waiver of premium and disability pensions, on a stand-alone basis or as policy riders. The policyholder typically may choose the period following disability after which the payments begin.


Group pensions
Life & Pensions offers a variety of group pension solutions, either with-profit or unit-linked, on a defined benefit or defined contribution basis for small, medium and large companies. Defined benefit pension products provide the insured with a pre-determined benefits package regardless of the contribution and its investment return over the life of the policy. Defined contribution products specify the contribution to be made, with the benefits paid based on the investment returns earned by that contribution. These products include asset accumulation or investment vehicles, protection for death and disability and income or annuity components. Swiss group pension plans which are part of the "second pillar" of the Swiss retirement savings program are subject to a minimum return which is set by the Swiss federal law on occupational benefit plans (second pillar). This rate was reduced from 4% to 3.25% as of January 1, 2003. The employee b enefit business represents 20.6% of the technical reserves. This reduction will partially alleviate the impact of the adverse business environment for group life insurers.


Marketing and distribution
Using many of the same distribution channels as the Insurance segment, Life & Pensions distributes its products principally through tied or exclusive agents, brokers and banks. In 2002, approximately 58% of Life & Pensions’ premium production, which includes gross premiums written and off-balance sheet sales, were derived from tied agents including agents of the Insurance segment, approximately 19% from brokers and approximately 15% from banks, including branches of Corporate & Retail Banking and Private Banking. In the United Kingdom, independent financial advisors market highly specialized, investment-only individual pension products and group defined contribution pension plans.

Life & Pensions sells group life products principally through tied agents for small and medium companies, and through brokers and an organization of employee benefit consultants with insurance and banking skills for multinational corporate customers.


Insurance

Overview
The Insurance segment is a global provider of non-life insurance, offering private and small corporate clients solutions through a range of distribution channels.

Based on 2002 gross premium income, Insurance is the leading Swiss all-line carrier of non-life insurance with an extensive service network. Insurance ranked the seventh largest non-life insurer in Europe in terms of 2002 gross premium income.

The Insurance segment is focusing its resources on markets where it has a leading position or good opportunities for growth, while withdrawing from those markets in which it cannot achieve adequate returns on invested capital. This is emphasized by the sale of Winterthur International in June 2001 and the sale of the non-life insurance subsidiaries in Austria, its Paris-based non-life insurance operations and its non-life insurance subsidiary in Hong Kong. In December 2002, Winterthur announced the sale of its subsidiary, Companhia Europeia de Seguros S.A., in Portugal.

In Germany, the Insurance segment has a particular focus on health and general liability insurance. In 1994, Winterthur acquired a controlling interest in a German company, DBV Insurance, and in 1996 consolidated its operations with DBV under the holding company DBV-Winterthur Holding AG. Since then, it has increased its controlling stake in DBV-Winterthur, primarily through the acquisition of Commerzbank AG's 22% interest. As of December 31, 2002, the Insurance segment held approximately 70%.

Churchill Insurance, Insurance’s UK operations, is, in terms of premium income, within the top-ten UK insurance companies. In 2000, it acquired National Insurance and Guarantee Corporation Plc, or NIG, a non-life insurance company operating independently as a distributor through brokers. Churchill has forged alliances with UK banks and building societies such as Lloyds TSB and Nationwide Building Society in the joint offering of insurance and banking products within an integrated distribution channel. Churchill entered into a strategic alliance in June 2001 with AMP Pearl and in November 2001 with Prudential plc to underwrite and administer their branded general insurance businesses in the United Kingdom. In 2001 and 2002, Churchill strengthened its presence in selected niche markets, for instance travel and motorcycle insurance, through the acquisition of small, specialist insurers such as Inter and Devitts.

In September 2001, Insurance acquired the non-life activities of Commercial General Union, or CGU, in Belgium. The acquisition strengthened its position in the Belgian non-life insurance market and enabled it to offer a wider range of insurance products to a broader customer base. Based on premium income for 2002, Insurance ranks sixth in the Belgian non-life insurance market.

In North America, Insurance operates through four regional insurance companies in the United States and a nationwide insurance company in Canada. Its largest US insurer, General Casualty, headquartered in Wisconsin, serves the Northeast and Midwest United States.

In June 2001, Winterthur International was sold to XL Capital Ltd Bermuda. Winterthur International conducted mainly large account commercial property and casualty business. The sale price of this all-cash transaction of approximately CHF 678 million (USD 405 million), based on the unaudited financial statements of Winterthur International for the period ending June 30, 2001, is subject to adjustment based on the audited financial statements for that year.

As a result of the new organizational structure mentioned above, the management of the two Winterthur segments will be combined, except for Switzerland and the United Kingdom. In Switzerland, life and non-life insurance will continue to be managed separately due to the substantial size of both of these operations. They will continue to work together closely to exploit their synergies. In the United Kingdom, these two units will also remain separate because their business models are very different. This management structure change does not affect the financial reporting of the Insurance segment.


Products and services
Insurance offers motor insurance, non-motor insurance (including fire and property and general liability insurance) and accident and health for individual and small corporate customers. It focuses on personal and commercial lines of insurance designed to provide a high level of customer service. For small and medium corporate clients, it offers packaged products combining different lines of insurance.


Motor insurance
Motor insurance is the largest single product line of the Insurance segment and contributed approximately 42% to total premium income in 2002. In Switzerland and most other European countries, every automobile owner is required to maintain third-party liability coverage. The motor insurance product line provides this coverage to both individuals and commercial fleets. General motor liability includes coverage for bodily injury and property damage liability claims brought against insured persons connected with the insured vehicle. Motor products also insure against physical damage resulting from vehicle collision, theft, fire, glass breakage and weather-related losses. In addition, Insurance offers personal injury coverage for drivers and passengers in the case of an accident.


Non-motor (excluding accident and health)
Insurance's fire, property and general liability products include building insurance covering damage from fire, flood and weather-related incidents and liability of individuals and businesses. It sells household contents insurance to individual customers, commercial property insurance and business interruption insurance. The Insurance segment’s general liability business provides a wide range of personal and commercial liability insurance products, covering the liability of private persons and small and medium businesses arising from their activities and premises. Commercial lines insurance includes insurance for operations, products, professional activities and environmental liability. In 2002, non-motor business contributed approximately 40% to total premium income.


Accident and health
Insurance offers individual health insurance covering medical expenses, per diem hospital expenses and lost pay in the event of illness. It also provides individual accident insurance covering these expenses, as well as death and disability claims. In addition to personal lines, it sells commercial group accident insurance, which covers medical and per diem hospital expenses and provides annuities in the event of death or disability caused by accidents at work or at home. It also offers collective accident insurance, as well as collective health insurance covering per diem hospital expenses for illness or birth of a child. In 2002, accident and health business contributed approximately 18% to total premium income.


Marketing and distribution
Insurance distributes its products through a range of different channels including brokers, tied agents, banks and direct channels, such as call centers and the Internet. Tied agents are exclusive agents who represent only one insurer and are obliged to offer the customer a product from the range of products offered by that insurer. Insurance's distribution channels are to a large extent shared with Life & Pensions, although the extent of the overlap varies by country and by distribution channel. In 2002, approximately 43% of Insurance’s total gross premiums written came from brokers and approximately 39% from tied agents. The remainder was generated through call centers (11%), banks (5%) and other distribution channels (2%), including the Internet.

WebinsurancePartners provides insurance via the Internet and has a pan-European focus. The customer can purchase online insurance at the partner's point of sale. Partners include banks, car dealers, real estate agents and Internet portals. The insurance may be offered under the partner’s name, under the Winterthur brand or as a co-brand.


CSFS – Operating environment and competition

Operating environment
Although the European financial services market is competitive, we believe that there are opportunities for growth in certain segments. These segments include the wealth accumulation market, which we expect to grow primarily as a result of demographic shifts, pension reforms in various markets and an increased focus on investment products. These trends are being further amplified by EU convergence, which is creating a more homogenous, larger European market. EU convergence is affecting customer behavior, product innovation and branding within the European financial services market.

In parallel with this growth, there has been a fundamental change in customer requirements in the financial services industry. Customer segmentation is giving way to customer choice, and undifferentiated product offerings are being replaced by products and services targeted to specific customer groups. In addition, customers are demanding not just products, but comprehensive advice and solutions to their overall financial needs. These solutions will need to include both a provider's proprietary products and services and integrated third-party offerings. Branding and marketing are now increasingly important aspects of the financial services business.

As a consequence of these changes, financial services providers are offering clients multiple access points to their products, including physical delivery, telephone and Internet channels. They are moving their processes to web-based applications to ensure maximum availability of products and services and convenience to the client. In addition, providers are increasingly relying on “open architecture”, which includes both their own and third-party products. Financial services providers are also responding to these trends by leveraging their brand across a range of customer offerings and managing distribution and production as separate businesses.

We expect the market for private banking to continue to grow in the foreseeable future. Growth is expected to be relatively higher in onshore markets as a result of greater political stability in many industrialized and newly industrialized countries and deregulation of local markets coupled with tighter restrictions in traditional offshore locations. The principal positive trends affecting the private banking industry over the next several years include the expected growth of the world's economies and growing demand for pension provisions, which can no longer be met through state funding. As a result, governments are increasingly encouraging the accumulation of private wealth. In addition, a new class of entrepreneurs is seeking the service of private banks, while at the same time the next generation is inheriting an increasing volume of "baby boomer" wealth. Advances in technology are making a further impact on, and are reshaping the bu siness models in, private banking as specialized providers unbundle services, products and advice.

In the face of wealth accumulation and wealth transfer, the private banking market is being transformed from a passive wealth management industry into an active, performance-driven business. The result of this trend in recent years has been an increase in net new assets in the private banking industry and, due to the worldwide negative development of the equity markets, a downturn in the valuation of the asset base, which has had an impact on industry revenues. The exposure to equity securities in the private banking business has however, led to greater sensitivity toward stock market trends.

Legislative initiatives in the United States and the European Union are also affecting the private banking industry. These initiatives include efforts by governments and regulators to control money laundering and tax fraud and to repatriate private wealth through tax amnesty programs.

Future terrorist attacks, military conflicts and economic or political sanctions could negatively impact the results of operations and financial condition of these businesses.


Competition
We face intense competition in all financial services and private banking products and services markets. Consolidation, both in the form of mergers and acquisitions and by way of alliances and co-operation, is increasing competition. New competitors, including Internet-based financial services providers and non-financial companies, are entering the market. The European financial services market is relatively mature, and the demand for financial services products is, to some extent, related to overall economic development. Competition in this environment is based on many factors, including the products and services offered, pricing, distribution systems, customer service, brand recognition and perceived financial strength. In addition, the global wealth management industry is highly fragmented and becoming attractive to an increasing number of financial services competitors as a result of its historically small regulatory capital requireme nts and historically high returns. These competitors include retail banks, insurance companies, accounting firms, independent asset managers and online brokers.

Competitors in the Private Banking business are globally active banks and Swiss independent private banks. In the ultra high-net-worth individuals business, we compete with US investment banks, which are building upon their investment banking expertise and relationships. For the Swiss affluent and private banking client business our closest competitor is UBS AG. In addition, local competitors can be significant in particular markets.

In the Corporate & Retail Banking business, the closest competitor is UBS AG with its Swiss-based retail and corporate banking business. We also compete to some extent with the Swiss cantonal banks, many of which are state-owned and have state guarantees, and with the regional savings and loan organizations and the Raiffeisen, or cooperative, banks.

Competition in the insurance market is intense and increasing as a result of continuing performance pressure. This pressure stems from declining financial returns from reinvestment at lower yields, the need to maintain adequate levels of capital, slowing growth in many markets and customer demand for greater transparency of products and pricing. The biggest competitors in Switzerland are Swiss Life for life insurance and Zurich Financial Services for non-life insurance business.



INFORMATION ON THE COMPANY | CREDIT SUISSE FIRST BOSTON


Overview
Credit Suisse First Boston includes the operations of the Institutional Securities (formerly Investment Banking) and CSFB Financial Services segments. CSFB serves global institutional, corporate, government and high-net-worth individual clients in its role as financial intermediary. It provides clients with a broad range of products and services. These include:

• Securities underwriting, sales and trading;

• Investment banking;

• Financial advisory services;

• Private equity investments;

• Full service brokerage;

• Financial services outsourcing solutions;

• Derivatives and risk management products;

• Investment research; and

• Asset management business.

The Institutional Securities segment provides financial advisory and capital raising services and sales and trading for users and suppliers of capital around the world. The Institutional Securities segment is operated and managed through three principal operating divisions:

• The Fixed Income division, which is active in underwriting, trading and distributing fixed-income financial instruments, offers derivatives and risk management products and provides research across its product range;

• The Equity division, which engages in sales, trading and research in equity and equity-related products, including listed and over-the-counter derivatives and risk management products, and securities lending and borrowing; and

• The Investment Banking division, which serves a broad range of users and suppliers of capital, provides financial advisory and securities underwriting and placement services and, through the private equity group, makes privately negotiated equity investments, and acts as an investment advisor for private equity funds.

The CSFB Financial Services segment provides international asset management services to institutional, mutual fund and private investors, financial services to broker-dealers, investment managers and private investors and financial advisory services to high-net-worth individuals and corporate investors. The CSFB Financial Services segment includes:

• The asset management business, which operates under the main brand name Credit Suisse Asset Management;

• Private Client Services, a financial advisory business serving high-net-worth individuals and corporate investors; and

• Pershing, a leading provider of financial services outsourcing solutions for introducing broker-dealers and independent investment managers. CSFB has entered into a definitive agreement to sell Pershing to The Bank of New York Company, Inc.  

On November 3, 2000, we acquired DLJ. On the same day, Credit Suisse First Boston Corporation (now known as Credit Suisse First Boston LLC), CSFB’s principal US registered broker-dealer subsidiary, became a subsidiary of DLJ, and DLJ changed its name to Credit Suisse First Boston (USA), Inc., or CSFB (USA).

In December 2001, CSFB Financial Services acquired SLC Asset Management Limited, SLC Pooled Pensions Limited and Sun Life of Canada Unit Managers Limited, the principal UK asset management subsidiaries of Sun Life Financial Services of Canada Inc. SLC Asset Management Limited has contracts for the management of the insurance assets (including property) of former affiliate Sun Life Assurance Company of Canada (UK) Limited and third-party institutional and retail funds.

In January 2002, CSFB acquired Holt Value Associates, L.P., a leading provider of independent research and valuation services to asset managers, which was integrated with CSFB edge , CSFB's online research and valuation database service.

CSFB has taken a number of steps as part of its strategy to focus on core businesses while reducing costs. In the fourth quarter of 2001, CSFB exited certain non-core businesses, including the precious metals trading business and the Australian and New Zealand retail brokerage businesses. In the first quarter of 2002, it sold the US and UK CSFB direct online trading operations and Autranet, Inc., a broker-dealer subsidiary active in the distribution to institutional investors of investment research products purchased from independent research specialists. In February 2003, CSFB sold its local brokerage business in Poland and agreed to sell its 90% participation in its South African local equity brokerage operations. The South Africa transaction is expected to close by the end of the first half of 2003, subject to regulatory approvals and other conditions. CSFB also has continued to reduce the portfolio of real estate and related loans and distressed assets that are part of non-continuing businesses.

In connection with efforts to strengthen CSFB’s resources available for core businesses, in January 2003, CSFB entered into a definitive agreement to sell Pershing to The Bank of New York Company, Inc. for USD 2 billion in cash, the repayment of a USD 480 million subordinated loan and a contingent payment of up to USD 50 million based on future performance. The transaction is expected to close in the first half of 2003, subject to regulatory approvals and other conditions.

We expect that CSFB's Zurich-based securities and treasury execution platform – including the respective mid- and back-offices and IT-functions – will be integrated into CSFS during the second half of 2003. In the future, CSFB will deliver securities and treasury products to its Swiss institutional, corporate and government clients trough its London offices. Client relationships are not affected in any relevant way by this reorganization. CSFB's investment banking and Swiss institutional coverage businesses in Switzerland will be retained by CSFB and are not affected by this integration.  


Strategy
CSFB continues to build upon its position as a top-tier global investment bank, while seeking to improve results and placing high priority on controls and risk management. CSFB will continue to focus on providing its clients with the highest quality of service across all business areas. Strategic priorities include being a market leader in its core businesses, focusing on key customers across geographic regions, applying its capital efficiently to maximize returns and minimize risks, and focusing on markets that are profitable or that contribute to the profitability of CSFB’s franchise.

In Institutional Securities, CSFB will seek to consolidate its leading franchise and market share while increasing productivity and improving results. Priorities include enhanced client focus and disciplined management of CSFB’s lending business. CSFB also intends to capture synergies through its integration of the Equities division and the Fixed Income division. Focus in the Fixed Income division will be to continue building the client franchise and customer businesses. In the Equities division, priorities will be to maintain the cash business platform and to build the customer derivatives and prime banking businesses. CSFB will continue to focus on its equity research model and fully comply with regulations for research.

In CSFB Financial Services, CSFB will seek to continue to build its asset management business, including its institutional asset management business and Private Client Services, in key markets through the expansion of existing operations and through select acquisitions. The asset gathering business, as a whole, will seek to leverage the resources of Credit Suisse Financial Services and Institutional Securities in an effort to realize the synergies that exist within the Group. In addition, the asset management business will seek to strengthen its global platform through organizational changes and targeted investment and financial goals and objectives. CSFB will continue to focus on increasing the proportion of high margin asset classes, including equity and alternative investments, and increasing the yields on assets, while protecting and building its top quality fixed-income franchise. In Private Client Services, CSFB will seek to acceler ate the shift to asset gathering, with increased emphasis on fee-based business and enhanced productivity overall.

CSFB remains committed to adhering to the highest professional standards and providing top quality execution and investment performance, while developing and retaining outstanding investment professionals.


Institutional Securities

Overview
Institutional Securities provides financial advisory and capital raising services and sales and trading for users and suppliers of capital around the world.

For the year ended December 31, 2002, Institutional Securities ranked:

• Third in global mergers and acquisitions advisory services in US dollar volume of announced transactions;

• First in global mergers and acquisitions advisory services in number of transactions;

• Second in US dollar value of global debt underwriting;

• First in US dollar value of global high-yield debt underwriting;

• Fifth in US dollar value of global equity and equity-linked underwriting;

• Third in US dollar value of US debt and equity underwriting;

• First in global equity research, with 21 ranked analysts, fourth in North American equity research, with 44 ranked analysts, second in European equity research, with 38 ranked analysts, and second in North American fixed-income research with 31 ranked analysts; and

• First in US dollar value of global asset-backed financing.

Products and services
Institutional Securities’ clients demand high quality products and services for their funding, investing, risk management and financial advisory needs. In response to these needs, Institutional Securities has developed a global product-based structure delivered through regional teams. The following is a discussion of Institutional Securities’ key global products and services and the divisions through which they are delivered.


Fixed Income division  
The Fixed Income division engages in underwriting, securitizing, trading and distributing a broad range of financial instruments in developed and emerging markets, including US Treasury and government agency securities, foreign sovereign government securities, US and foreign investment-grade and high-yield corporate bonds, money market instruments, foreign exchange and real estate-related assets. The Fixed Income division also provides a full range of derivatives products for the financing, risk management and investment needs of its customers. The Fixed Income division covers sovereign government, corporate and institutional customers and provides research across its entire product range.

Key fixed-income products and services include:

• Interest-rate products, including instruments issued by US government agencies and other sovereign government issuers and transactions in interest-rate derivatives. As part of this business, the Fixed Income division is a primary dealer in US Treasury and government agency securities and participates in US Treasury auctions and government agency new issues. It also offers a wide range of interest-rate derivatives products in all major currencies;

• Credit products, involving research, sales, trading and capital markets activities in all credit markets, including investment-grade, high-yield and distressed debt securities, mortgage-backed and asset-backed instruments and credit derivatives;

• Senior bank debt in the form of syndicated loans and commitments to extend credit to investment-grade and non-investment-grade borrowers. The Fixed Income division is also engaged in secondary market trading of syndicated loans and other loans, and trading in defaulted and distressed loans;

• Real estate activities, such as financing real estate and real estate-related products and originating loans secured by commercial and multifamily properties. The Fixed Income division also securitizes and trades in a wide range of commercial and residential real estate and real estate-related whole loans;

• Emerging markets, where the Fixed Income division underwrites, invests and trades in the fixed-income securities and loans of a number of sovereign government and corporate issuers and obligors located in emerging market countries;

• Prime brokerage and futures execution services on all major futures and options exchanges worldwide;

• CSFB's own money market funding through the issuance of a wide variety of products, including time deposits, certificates of deposit, bankers' acceptances, commercial paper, medium-term notes and long-term debt;

• Foreign exchange transactions serving a broad range of clients worldwide, including multinational corporations, money managers, hedge funds, banks and high-net-worth individuals; and

• Research on more than 500 issuers across the credit spectrum and on a variety of structured products and global economic analysis.

Equity division  
The Equity division engages in a broad range of equity activities for investors around the world, including sales, trading, brokerage and market-making in US and international equity and equity-related securities, options and futures. Equity-related activities include:

• New issue distribution of all types of equity securities, including common stock, convertible securities and other equity and equity-related securities;

• Secondary trading as principal and agent on all major exchanges and over-the-counter;

• Primary and secondary market transactions, as principal and agent, in convertible bonds and listed and over-the-counter derivatives, and convertible, international and index arbitrage and other program-trading activities;

• Risk arbitrage, which involves investing for CSFB's own account in the equity securities of companies involved in publicly announced corporate transactions;

• Prime banking, which includes dealer-to-dealer financing and the coverage of proprietary and client short positions through securities borrowing and lending arrangements; and

• Research on a broad range of industries and companies and on market and economic trends.

In 2002, as part of changing practices in the investment banking industry and CSFB’s commitment to ensuring the independence of its research, CSFB made a number of changes in securities research activities, including realigning its research department, including equity research, to report to the Vice Chairman of CSFB for Research and for Legal & Compliance, adopting new rules on securities ownership by analysts and implementing new procedures for communication between analysts and investment bankers.


Investment Banking division  
The Investment Banking division's activities include financial advisory services regarding mergers and acquisitions and other matters, origination and distribution of equity and fixed-income securities and leveraged finance and private equity investments. Investment Banking provides comprehensive financial advisory services and, in conjunction with the Equity and Fixed Income divisions, capital raising services, and develops and offers innovative financing for a broad range of clients. Through the Private Equity Group the Investment Banking division also conducts worldwide private equity investment activities.

CSFB maintains offices in select major cities through which investment banking activities are conducted. Investment Banking has established industry groups with a broad range of dedicated industry specialists. The industry group structure facilitates the delivery of specialist information and services to clients on a global basis. Investment Banking clients include US and international public and private corporations, sovereign governments, supranational and national agencies and public sector entities.

Investment Banking's principal services consist of:

• Mergers and acquisitions and other financial advisory services, including corporate sales and restructuring, and divestitures and take-over defense strategy; and

• Capital raising, through equity and equity-linked offerings, leveraged finance, investment-grade debt underwritings, high-yield debt underwritings, bank debt and bridge financing, structured products, raising of private capital and project finance. Investment Banking's offerings include both domestic and cross-border transactions.

The private equity group invests primarily in unlisted or illiquid equity or equity-related securities in privately negotiated transactions. The private equity group makes private equity investments across the entire capital structure, from venture capital equity to investments in the largest leveraged buyouts. In addition to debt and equity investments in companies, the private equity group manages private equity funds and invests in real estate and third-party managed private equity funds. Investments are made directly or through a variety of investment vehicles. At December 31, 2002, Institutional Securities managed or advised funds and proprietary private equity portfolios on behalf of clients of USD 15.0 billion. At December 31, 2002, Institutional Securities had global investments in private equity for its own account of approximately USD 2.0 billion and had unfunded commitments of approximately USD 2.0 billion.

Each private equity fund is managed over the medium to long term to maximize the value over time of its investments. In addition to an annual management fee, realized gains may be generated from the carried interest after a threshold return for investors has been achieved. Operating income may also be derived from realized and unrealized appreciation or depreciation upon the disposition of the investment. These latter sources of revenue typically emerge, if at all, over a number of years, and CSFB's private equity business is therefore a long-term business.

If a private equity investment in a company or an investment fund substantially declines in value, CSFB may potentially lose some or all of any management or similar fees, may not receive any increased share of the income and gains from such investment (to which CSFB is entitled when the return on such investment exceeds certain threshold returns) and may lose its pro rata share of the capital invested in that company and other companies in the same fund. Further, it may become more difficult to dispose of the investment. Even investments that are performing well have proven difficult to exit because of the weak initial public offering market and the decline in secondary public offerings. In certain circumstances, depending on the size of the investment, the nature of the company's problems or other factors, CSFB may become involved in disputes or legal proceedings relating to the investment, and CSFB's reputation or its ability to sponso r private equity investment funds in the future could be adversely affected.


CSFB Financial Services

Overview
CSFB Financial Services provides international asset management services, including mutual funds, to institutional and private investors, financial services to broker-dealers and investment managers and financial advisory services to high-net-worth individuals and corporate investors.

In December 2002, CSFB's asset management business implemented organizational changes designed to strengthen its global platform, including reducing the number of operating regions from five to three and realigning management responsibilities.

In connection with efforts to strengthen CSFB’s resources available for core businesses, in January 2003, CSFB entered into a definitive agreement to sell Pershing to The Bank of New York Company, Inc. The transaction is expected to close in the first half of 2003, subject to regulatory approvals and other conditions.


Asset management business
The following is a description of the primary markets of our asset management business:

• In the Americas, the asset management business has investment management operations in the United States and Brazil. The US operations of the asset management business include investment management of a full range of US and international equity products, US core, high-yield and structured fixed-income products and private equity, hedge fund of funds and high-net-worth products. The asset management business distributes its US products directly through domestic institutional channels and to high-net-worth private clients and internationally through affiliates. In Brazil, the asset management business conducts fund management operations through Banco de Investimentos Credit Suisse First Boston S.A., Garantia Limited, an investment banking and asset management company acquired in 1998, and certain of its affiliates.

• In Europe, the asset management business has investment management operations in the United Kingdom, Switzerland, Germany, France, Italy, Spain, Luxembourg, Poland, Hungary and the Czech Republic, all of which, except in Luxembourg and Spain, offer local investment management capabilities. London is also the base for the global fixed-income and equity products businesses. The asset management business has a strong presence in the Swiss investment management market. In Switzerland, the asset management business also offers real estate and indexed products. The Swiss products of the asset management business are distributed through a range of channels, including through CSFS, directly to institutional clients and through third-party intermediaries. At December 31, 2002, based on total assets under management, the asset management business in Switzerland had a 30.9% market share in the Swiss pooled pension market and a 21 .3% market share in Swiss registered retail mutual funds.

• In Asia Pacific, the asset management business has investment management operations in Japan and Australia. The asset management business has institutional and retail activities in Japan and is further developing its business through the Credit Suisse brand. The Japanese operations, which include the operations of Warburg Pincus Asset Management (Japan), Inc., offer clients an integrated investment philosophy and research, marketing and distribution platforms. The Australian operations of the asset management business offer a range of Australian, Asian and international equity products, Australian fixed-income, balanced and real-estate products to both Australian institutional and retail customers.

Private Client Services  
The Private Client Services business serves high-net-worth and corporate investors with significant financial resources and specialized investment needs. Private Client Services operates principally out of offices in ten US cities and in London. Private Client Services had 381 investment advisors and managed or advised clients on approximately CHF 71.7 billion (USD 51.6 billion) in assets as of December 31, 2002.


Pershing
Pershing is a leading provider of financial services outsourcing solutions, including correspondent brokerage services, to many of the world's major financial institutions and investment managers. Founded in 1939 and acquired by DLJ in 1977, Pershing provides execution, settlement and clearance on a multi-currency basis in approximately 40 international markets. Pershing's extended service model for major financial institutions enables customers to provide an array of asset-gathering products and services. On January 7, 2003, CSFB entered into a definitive agreement to sell Pershing.


Products and services
The following is a discussion of the key global products and services of CSFB Financial Services and the divisions through which they are delivered.


Asset management and advisory services
The asset management business offers its clients discretionary asset management services through segregated or pooled accounts. Clients may choose from a wide array of products, including:

• Fixed-income and equity products in local and global markets;

• Balanced products, comprising a mixed portfolio of fixed-income and equity investments according to a pre-defined risk parameter set by the customer or the investment guidelines of the fund and asset allocation products;

• Money market currency products;

• Quantitative indexed products;

• Derivatives and commodities;

• Real estate portfolio management; and

• Alternative investment products, which include fund of funds products.

The investment policies of portfolio managers are generally focused on providing maximum return within the investor's criteria, while maintaining a controlled risk profile and adherence to high quality compliance and investment practices. The advisory services of the asset management business include advice on customized investment opportunities, new product and risk management strategies and global investment reporting. Global investment reporting involves the use of a global custodian, acting as a central depository for all of a client's securities. Once the custody has been centralized, clients are offered a series of value-added services, including cash management, securities lending, performance measurement and compliance monitoring.

The Private Client Services business offers a range of services, including single stock brokerage, hedging and sales of restricted securities. Private Client Services also offers its clients a wide range of investment management products, including third-party-managed accounts and alternative investments.

Through Pershing, CSFB Financial Services has provided a broad range of financial services outsourcing solutions, including custody, cash management, product development, information management, portfolio evaluation, financing, proprietary research, securities lending and related services.


Funds
The asset management business offers a wide range of open-end funds. These funds are marketed under the main brand name Credit Suisse in Europe, Japan, Australia, Latin America and the United States. In Japan, certain Warburg Pincus Asset Management funds are still marketed under the Warburg Pincus name. The largest complex of funds, which is domiciled in Luxembourg and marketed mainly in Europe, includes a full range of equity, balanced, fixed-income and money market funds. In addition to these pan-European mutual funds, the asset management business offers domestic registered funds in the United States, Switzerland, the United Kingdom, Germany, Italy, France, Poland, Japan and Australia.

The asset management business acts primarily as a wholesale distributor of mutual funds, and the majority of the Credit Suisse brand funds are marketed through our other businesses and third-party distributors, including third-party banks and insurance companies and other financial intermediaries.


CSFB – Operating environment and competition

Operating environment
CSFB believes that the long-term outlook for leaders in the investment banking industry is generally positive, although the industry is volatile and subject to periodic market downturns worldwide or in particular geographic regions. In addition, competition has resulted in significant pressure on margins. The global “bulge bracket”, or top tier, investment banks are likely to be more successful than other firms, and there is continuing consolidation in the financial services industry. One of the principal macroeconomic trends affecting the investment banking industry is greater capital formation, which is produced by aging demographics, pension reforms and wealth creation. Consolidation and convergence, driven by a blurring of traditional product and geographic boundaries, deregulation and the importance of scale and efficiency, have also created benefits for global full-service providers such as CSFB. Technology has led to pr oductivity improvements and new distribution and business models, more demanding and better informed customers and the need to balance productivity gains with investment requirements.

The slowdown in global economic growth in 2001 continued in 2002. Weak corporate earnings and high-profile bankruptcies weighed heavily on market sentiment, exacerbated by scandals relating to accounting and corporate governance and the threat of terrorism and war. In addition, certain regulatory issues, including research analyst independence and the allocation of shares in initial public offerings, affected the industry. An industry-wide agreement in principle with certain US regulators was announced in December 2002 to resolve certain of the regulatory issues.

All major stock indices were down significantly in 2002. Equity trading and underwriting volumes and mergers and acquisitions activity fell sharply from 2001 levels while debt underwriting volumes remained flat. The credit environment in 2002 was among the most difficult in recent history, with default rates substantially higher and recoveries substantially lower than historic levels. The difficult market and credit environment had a negative impact in 2002 on CSFB’s business, particularly in lending, capital markets, financial advisory and equity sales and trading. As a result, in 2002 CSFB made further personnel reductions to help reduce expenses and to remain appropriately staffed for the prevailing industry and market environment.

The financial services business, including asset management, is viewed as a growth sector. Despite a weaker and more volatile market environment, the underlying fundamentals and demographics continue to support the sector. CSFB believes that there will be positive net new asset or organic growth opportunities within this sector over the next several years. Despite this positive outlook for the business, increased competition, higher research costs, required advancements in technology, growth in client needs and globalization are trends that place greater pressure on margins and increase the need for scale within full-service asset management organizations. This growth, together with major external changes such as technological innovation and increased volatility and complexity in world markets, is changing the way the industry delivers services, manages investments and measures risk. While the pace has slowed in the last year, investment management firms are also experiencing historically high levels of mergers and acquisitions activity. New entrants are purchasing investment management companies, while existing firms are merging to create global organizations and achieve economies of scale.


Competition
CSFB faces intense competition from various types of firms in all aspects of its business and throughout the world. The principal competitive factors influencing CSFB’s business are its reputation in the market place, its client relationships, its mix of market and product capabilities, and the ability to attract and retain highly skilled employees.

In investment banking, CSFB competes with brokers and dealers in securities and commodities, investment banking firms, commercial banks and other firms offering financial services. CSFB is subject to competitive pressure to make loans to certain clients, and such lending is a low-margin business that ties up capital. CSFB has also experienced significant price competition in certain of its businesses, which has reduced profit margins on certain products or in certain markets. Competition from alternative trading systems is reducing fees and commissions. In addition, as private equity funds grow and proliferate, competition to raise private capital and to find and secure attractive investments is accelerating.

In asset management, CSFB’s major competitors are the asset management subsidiaries of financial services firms, US mutual and institutional fund managers and European fund managers. Despite the trend towards globalization in the asset management industry, competition is most significant in individual geographic locations.



INFORMATION ON THE COMPANY | CREDIT SUISSE GROUP AND SOCIETY

All businesses relate to their social environment on many different levels. Various stakeholder groups – such as shareholders, clients, employees, the media and a range of civil-society organizations – are increasingly interested in the social and environmental aspects of corporate activity. Like the businesses themselves they have realized that companies can only create sustainable value if they also recognize and accept their social, environmental and economic responsibilities.


Seizing opportunities, inspiring trust
If a company is to fulfill its social responsibilities, it needs to constantly adapt to new circumstances and strive for improvement, and take corrective actions, when appropriate. When the economic climate is difficult, confidence in a company may suffer. In 2002, Credit Suisse Group's cost saving measures, industry investigations by regulatory authorities and discussions about corporate governance, hit the headlines. Nonetheless, the Group continued its efforts to promote equal opportunities and offer training for staff, to develop innovative products for its clients, to diligently enforce regulation on money laundering and terrorist assets, and to support the community.


Sustainability – meeting responsibilities
Credit Suisse Group’s Code of Conduct forms the basis for the company’s commitment to specific aspects of sustainability. The Code also refers to the broader obligations that the Group has endorsed or supported. These include the UN's Global Compact – which sets out basic principles relating to human rights, employment standards, environmental protection and other matters– and the United Nations Environmental Program (UNEP).

Credit Suisse Group has issued an Environmental Report since 1995. In 2002, this was supplemented by additional information relating to employees, clients and general societal issues in the bank’s first Sustainability Report. Several independent rating agencies and index providers have rated Credit Suisse Group as one of the leading companies in the field of sustainability; it has also been included in various sustainability indices such as the FTSE4Good Index, the Dow Jones Sustainability Group Index and the Dow Jones STOXX Sustainability Index. The following examples illustrate the commitment demonstrated by Credit Suisse Group and its business units to sustainability.


Employees
In view of current social, economic and cultural trends, it is essential for a company such as Credit Suisse Group to fulfill its responsibilities towards its employees and to foster an environment that is conducive to open communication.


Employee satisfaction in a difficult market environment
Interesting and meaningful work and a good relationship with colleagues are essential for promoting and maintaining high levels of employee satisfaction. This however, may be impacted by external factors such as the political climate, the current economic situation and the company’s financial performance. At Credit Suisse Group, these factors have had an impact on employee morale. In response to the current market environment, in Switzerland, there was no general salary increase as of April 1, 2003. However, the minimum holiday entitlement for all employees in Switzerland was increased to 25 working days as of January 1, 2003. The planned reduction of positions by Credit Suisse and Winterthur during 2003 will be implemented in a responsible manner that treats everyone fairly – taking individual circumstances into consideration. Supporting measures will include personal advice and counseling, comprehensive job and vacancy manag ement, retraining initiatives, increased use of flexible and reduced time working models and, if necessary, flexible retirement options.


Promoting the best possible dialog
Credit Suisse Group supports a culture of open dialog between employees and their line managers and senior management. Communication with employees – whether via e-mail, Intranet, staff magazines, workers councils or personal contact – is, however, subject to regulatory restrictions. Swiss and US stock exchange regulations and practices require companies whose shares are traded on these exchanges to disclose material and price sensitive information simultaneously to all shareholders.


A working environment free from discrimination

and harassment
Credit Suisse Group’s Code of Conduct supports a bias-free working environment providing equal opportunities and addresses issues relating to training and development, a healthy work-life balance and protection from discrimination or sexual harassment. Each year, Credit Suisse Group's Diversity team in Switzerland publishes an internal report documenting the progress of efforts to provide equal employment opportunities for women and men within both business units in Switzerland. Women now account for more than 20% of all members of middle management in Switzerland and almost 10% of senior management which represents an increase of 6% and 4% respectively compared to the previous year.

The five year global Diversity Plan at Credit Suisse First Boston was established with the goal of increasing the number of women and members of social minorities occupying management positions. Senior management has demonstrated its commitment to advancing women and ethnic minorities in key leadership positions through the appointment of three managers to the Executive Board in 2002. Another objective is to promote community awareness and positive networking. These initiatives are aimed at recruiting employees from sections of the population that are underrepresented in the financial services sector. In New York City, for example, the Credit Suisse First Boston Explorer Program offers such students the opportunity to spend three days gaining an insight into the company and its activities. The London office participates in “Capital Chances – Women in Investment Banking” program, which uses workshops and educational activ ities to help identify potential career paths in the industry.


Combining family life and work
In an effort to provide and encourage equal opportunities, Credit Suisse Group supports its employees through a variety of initiatives such as a progressive approach to professional training and development, flexible working arrangements, part-time professional employment, job sharing, and parental leaves, wherever operational circumstances allow. In January 2003, Credit Suisse First Boston announced new, globally applicable guidelines on maternity and paternity leave that in many countries exceed the local legal requirements.


Developing individual talent
Credit Suisse Group has positive momentum in executing its business strategy and will rely heavily on the next generation of leadership in order to carry its vision into the future. The Group is able to provide a wide array of developmental opportunities for staff members, ranging from individual e-learning initiatives to specialized internal leadership programs.

A tool for identifying individual development potential is the “360-degree feedback” appraisal system, which is in use in many divisions of the company. This appraisal of employees by their line managers and colleagues, as well as by internal and external clients, identifies strengths and weaknesses from different perspectives.


Strengthening corporate culture
Although market conditions will likely continue to be challenging, Credit Suisse Group’s core businesses retain leading positions in key markets and provide the Group with a powerful platform on which to continue building for the future. Sustainable growth will not be possible without the dedication, hard work and demonstrated leadership of staff that has allowed Credit Suisse Group to make some difficult transitions while preserving the employer brand.

At Credit Suisse First Boston, various measures have been implemented to create a uniform corporate culture and a positive team spirit under the motto “One CSFB”. Credit Suisse First Boston has implemented the “One CSFB Awards”, a program that recognizes individuals and teams that have made an extraordinary contribution to reinforcing the company’s core values.


Clients and shareholders
Besides expertise, performance, reliability, advice and products, the other factors crucial to creating and fostering a successful client relationship are trust and individual responsibility. Client and shareholder confidence can be strengthened by protecting financial privacy and exercising discretion towards third parties, as well as by providing products that are tailored to clients' requirements and by offering high-quality services.


Safeguarding client and shareholder confidence
Falling stock prices and economic problems have undermined the confidence of many companies’ clients and shareholders. As a result they have become more interested in transparency and in the manner in which financial results and other important developments are presented. The Internet in particular has thus grown more important as a source of information. “Webranking 2002” – the most reputable European corporate website survey – rated Credit Suisse Group’s website as the best of all European financial services companies’ websites.


Occupational benefit plans
One of last year’s talking points in Switzerland was the guaranteed rate of return on occupational pensions. Central to this discussion was the issue of how life insurance companies have used their investment income in the past. Winterthur Life created transparency by publishing figures dating back to 1985 for its Swiss group life business. These revealed that a high proportion of its investment income – i.e. just under 90% – was passed on to policyholders in the form of both direct and indirect benefits. Client deposits are securely invested despite the negative stock market performance, meaning that Winterthur Life fulfils all the relevant supervisory requirements.


Assessing client satisfaction
Credit Suisse Group regularly assesses client satisfaction in key areas. Complaints should be answered in a fast, efficient and courteous manner by Complaints Management, by dedicated central units, and locally by the relevant branches. Credit Suisse Group analyses client surveys and the causes of complaints, and uses the results as a basis for targeted improvements. It views client complaints as an opportunity for improvement.


Swiss banking confidentiality
Questions raised in the course of bilateral negotiations between Switzerland and the EU about the future of Swiss banking confidentiality have created uncertainty in the minds of many people – including the clients of Credit Suisse Group. Protection of privacy is a pillar of the Swiss legal system and is firmly embedded in Swiss culture as an expression of individual freedom. At the end of January 2003, EU finance ministers reached a basic political agreement regarding the taxation of savings income of EU residents. As of 2004, at the earliest, 12 countries will apply the directive on exchanging information between tax offices, while Belgium, Luxembourg and Austria will levy a withholding tax. Likewise, Switzerland will levy such a tax, according to the prospective result of the negotiations with the EU.


“Know your customer”
Client identification is essential in the fight against money laundering, the search for terrorist funds and the avoidance of dormant assets. Switzerland leads the way in the fight against money laundering. Its know-your-customer rules are among the strictest in the world. They also demand that banks meet special due diligence requirements with regard to politically exposed persons. Credit Suisse Group’s policies help identify signs of criminal activity and systematically implement the appropriate measures.

The terrorist attacks of September 11, 2001, in the US highlighted a whole new aspect of criminal financial activity, i.e. so-called “terrorist funds.” As a member of the Wolfsberg Group, which published the Wolfsberg Statement on the Suppression of the Financing of Terrorism in January 2002, Credit Suisse Group has been at the forefront of the search for funds of this kind.

Credit Suisse Group bases its policy for the avoidance of dormant accounts on the new Swiss Bankers Association guidelines (in force since July 2000) and supports efforts to create statutory regulations that provide for dormant accounts to be handed over to the authorities after a certain waiting period.


Society
Credit Suisse Group fulfills its responsibility towards the society in which it operates by making an active contribution to a varied cultural and civic life.


Economic activity and human rights
With the advance of internationalization and globalization since the end of the Cold War, the issue of business and human rights has become an increasingly important topic of public debate.

Credit Suisse Group is committed to meeting its responsibilities with regard to human rights as asserted in the UN Global Compact. The Group firmly believes that business activity helps improve the living standards of all people, provided any negative effects are recognized, corrected or mitigated.




Taking responsibility for the next generation
Both Winterthur and Credit Suisse have a long-standing relationship with the UN, and with UNICEF in particular, which is why Credit Suisse Group took an active part in the UN General Assembly on Children. Credit Suisse Group promotes several social welfare projects with an interdisciplinary focus – such as Plusport Schweiz, the Swiss umbrella association for disabled people partaking in sports. One of the projects run by Credit Suisse Group’s Jubilee Foundation and Plusport Schweiz is the Swiss sports day for the disabled. This event provides around 1,500 mentally and physically disabled people from all corners of Switzerland with an opportunity to compete in over 25 different disciplines and to come together in a festival of sport.

Winterthur Insurance’s Loss Minimization Foundation, which has been active in Switzerland since almost 30 years, is mainly concerned with the prevention of traffic accidents. In Spain, the Fundación Winterthur also supports accident prevention activities. In addition it helps to maintain and conserve the country’s cultural heritage and makes a significant contribution to a wide-ranging debate on social trends by organizing conferences, etc. In Germany, DBV-Winterthur’s child safety committee has already been in existence for 35 years.


Credit Suisse First Boston Foundation
The Credit Suisse First Boston Foundation primarily supports educational initiatives aimed at improving opportunities available to children and young people from difficult socio-economic backgrounds. In the US, for example, Credit Suisse First Boston joined forces with the Robin Hood Foundation to help build ten libraries in economically disadvantaged neighborhoods in New York City in the world’s most extensive library initiative, providing 8,000 young people with easier access to a key educational resource.

2002 saw Credit Suisse First Boston, via its foundation, work with local authorities to help build, renovate and refurbish schools in Asian countries including China, Vietnam, Thailand and Cambodia. In the UK, Credit Suisse First Boston staff collected funds as part of the Charity of the Year initiative on behalf of National Children’s Home.


Art and culture at Credit Suisse Group
In addition to its social commitments, Credit Suisse Group also supports cultural causes. Following established guidelines, it regularly buys works by artists, mainly of the younger generation, in order to reflect the Group’s corporate culture and promote its corporate identity.

Every two years, Credit Suisse Group’s Jubilee Foundation rewards young musicians for their outstanding achievements. In 2002, the CHF 75,000 prize went to the 25-year old Moldavian violinist Patricia Kopatchinskaja.

The 2002 Comedy Festivals that were held in many Swiss towns were sponsored by Winterthur.


Supporting the sports stars of today and tomorrow
Especially in its Swiss home market, Credit Suisse Group and its business units support the sporting world through their sponsorship of soccer, skiing, equestrian sport and motor racing, as well as events such as the Credit Suisse Sport Awards. The company also backed the successful joint Austrian-Swiss bid for the Euro 2008 soccer championships.


Cyberhelvetia – supporting Expo.02
Credit Suisse Group committed itself to Switzerland’s Expo.02 national exhibition with the Cyberhelvetia Internet and exhibition project. In the course of 159 days, more than 700,000 visitors to the Cyberhelvetia pavilion in Bienne experienced an interactive encounter with the virtual world.


Building bridges between politics, business and academia
Within Credit Suisse Group, the Economic Research and Consulting competence center at Credit Suisse Financial Services continually monitors and analyzes economic and socio-political trends, primarily in Switzerland. With its reports on such subjects as EU expansion or Swiss educational and health policy, the competence center contributed actively to public debate on topical political subjects – just as Credit Suisse First Boston did with its study on the new formula for financial redistributions between Switzerland’s cantons. By working with Swiss business associations and participating in the Avenir Suisse think tank, and by fostering direct contact with people active in politics, Credit Suisse Group seeks to identify social trends at an early stage and help shape the relationship between the worlds of politics and business.


Commitment of individual staff
Besides the wide-ranging involvement of Credit Suisse Group itself, it is worth mentioning the active role played by a great number of the Group’s staff – mostly in an honorary capacity – in political, educational, research and art bodies at all levels, as well as in all forms of social, charitable and cultural work.


Environment

The environmental management system
The environmental policy signed by members of the Executive Boards sets out the Group’s pledge to contribute to sustainable development by acting in an environmentally responsible manner; it also defines the key areas of action. To fulfill the conditions of its environmental policy, Credit Suisse Group has been operating an environmental management system for several years. In 1997, the Group became the first bank in the world to receive ISO 14001 certification for its locations in Switzerland; following re-certification in 2000, all of its banking locations worldwide are now certified under ISO 14001.


Sustainability in purchasing
By applying a responsible purchasing policy, the principles of sustainability are taken into account in a company’s choice of products, materials and services. A pilot project was launched in Switzerland in 2002 to apply both ecological and social criteria to the selection of suppliers.

Internationally, too, Credit Suisse First Boston’s business units have adopted sourcing practices that take account of environmental concerns and that ask suppliers to provide information about certifications such as ISO 14001. Furthermore, the company donates used computer equipment to charitable organizations.


Sustainability investments
Credit Suisse Group offers its customers various investment opportunities in the area of sustainability. Its range of sustainability investments includes the ethical and ecological investment funds CS Fellowship and CS Global Sustainability, as well as Prime New Energy, an investment company focusing on the fuel cell, solar energy and wind energy sectors. In early 2002, Bank Leu, a Credit Suisse Group subsidiary, launched the Leu Prima Cat Bond Fund, the world’s first public fund for catastrophe bonds.

In addition to offering these products, Credit Suisse Group has also expanded its range of sustainable investment services: Stock Screener, an online equity analysis tool, enables Credit Suisse Private Banking clients to select sustainability stocks from the wider investment universe. More detailed information on Stock Screener and sustainability investments in general can be found at www.credit-suisse.com/sustainable-investments.


Environmental risk management
In 1994 Credit Suisse Financial Services set up a dedicated unit to examine the environmental risks associated with corporate credit applications. At Credit Suisse First Boston, directives and tools were also created to ensure targeted environmental risk management. A study published in fall 2002 by UK asset manager Friends Ivory & Sime attested Credit Suisse Group a leading role in the area of environmental risk monitoring among financial institutions. As a further refinement of its environmental risk policy in 2002, Credit Suisse Group developed a forestry policy in dialog with the WWF.




Energy contracting
Energy contracting helps to unlock synergies and economies of scale in the supply of energy, enabling energy-efficient solutions to be put into practice. Credit Suisse Leasing, in conjunction with the energy services forum Swiss Contracting, provides financing in this area so that projects for district heating, wood-fuelled power stations etc. can be carried out. As a result, energy services worth CHF 55 million have already been financed since 2000.


Operational ecology
Efficient resource management contributes to cost efficiency and improves environmental performance. Through systematic environmental management, Credit Suisse Group monitors its main material and energy flows and identifies measures for optimizing them.

In receiving the UK Energy Efficiency Accreditation Award for its London offices in fall 2002, Credit Suisse First Boston demonstrated its high standards of energy management and laid the foundation for further optimization measures. Credit Suisse First Boston also received UK energy supplier Powergen’s Energy Management Award in 2002.

Following the debate about CO ₂ emissions in Switzerland, Credit Suisse Group is currently revising its existing Guiding Principles on Energy Use for its Swiss locations in order to anticipate future developments in good time. Credit Suisse First Boston’s biggest international locations have also been set energy targets to reduce CO ₂ emissions.



OPERATING AND FINANCIAL REVIEW





OPERATING AND FINANCIAL REVIEW

The following discussion and analysis should be read in conjunction with our consolidated financial statements and the related notes. Our consolidated financial statements are prepared in accordance with the accounting rules of the Swiss Federal Law on Banks and Savings Banks and the respective Implementing Ordinance, the Swiss Federal Banking Commission guidelines, and Swiss GAAP FER Financial Reporting Standards for the insurance businesses of the Group, which collectively are the generally accepted accounting principles for banks and insurance companies, respectively, in Switzerland and which we refer to in this Annual Report as Swiss GAAP.


Overview
We are a global financial services company engaging in private banking, corporate and retail banking, insurance, investment banking and asset management.

Effective January 1, 2002, we managed our operations in two business units, Credit Suisse Financial Services, or CSFS, and Credit Suisse First Boston, or CSFB. CSFS consists of four segments, Private Banking, Corporate & Retail Banking, Life & Pensions and Insurance. CSFB includes two segments, Institutional Securities (formerly Investment Banking) and CSFB Financial Services.


Factors affecting results of operations
Our results of operations are affected, to varying degrees, by a variety of factors, including general economic and market conditions, exchange rate fluctuations, competition within the financial services industry, government policy, legislation and regulation, and financial supervision. In addition, acquisitions, dispositions and changes in the structure of our business have affected our results from year to year.


General economic and market conditions
Global economic growth slowed in the second half of 2000, and the slowdown worsened in 2001 and continued in 2002. The slowing economies in the United States, Europe and Japan and the weak global equity markets created an adverse operating environment for financial services companies. Terrorism, military action, the threat of further military action and a global stagnation caused stock markets around the world to drop to their lowest levels in years. The poor market conditions were also adversely affected by investor concerns about accounting irregularities, corporate bankruptcies, weak corporate earnings and a deteriorating credit environment. Investor fears and uncertainty from these events continue to have a negative effect on financial markets.

While successive interest rate cuts in 2001 followed by a more stable interest rate environment in 2002 generally had a positive effect on revenue from fixed income securities, lower valuations and volatility continued to adversely affect the equity markets. There was a large decline in merger and acquisition activity and capital markets transactions in virtually all sectors and the new issue market continued to be adversely affected by market conditions. The poor market conditions have persisted to date notwithstanding some indications that the economy may be recovering.

Adverse changes in economic conditions have, among other things, led to movements in debt and equity markets, changes in interest rates and declines in the credit quality of both borrowers and counterparties. These changes have reduced demand for our products and services, reduced securities transaction volumes and increased the level of our bad debt charge. A continued fall in the equity markets would have a further negative impact on the results of our insurance and investment banking businesses, and the level of and return on our assets under management. Changes in interest rates have had a material impact on our net interest income. Interest rate movements have also affected our fixed income trading portfolio and the investment performance of our asset management business. A mismatch of interest earning assets and interest bearing liabilities in any given period could in the event of changes in interest rates have a materially adverse effect on our results of operations and financial condition. Our investment banking revenues have also suffered from the decline in global mergers and acquisitions activity, the weakening credit environment and increasing competition among “the bulge bracket” investment banks for a smaller pool of transactions, which have led to lower margins.

In the past two years, we implemented cost cutting initiatives in an effort to align more closely the size of our investment banking business with changing market conditions and to bring its cost structure in line with its major competitors. Our investment banking business also began a strategy to exit non-core businesses and concentrate on increasing its market share and improving its results in those areas where it already has a significant leadership position.

Future terrorist attacks, military conflicts and economic or political sanctions would result in further volatility in global financial markets and would likely reduce financial activity and negatively affect our results of operations.


Exchange rate fluctuations
We prepare our consolidated accounts in Swiss francs. Changes in currency exchange rates between the Swiss franc and the US dollar and other major currencies may have an effect on our results. In addition, changes in exchange rates between the Swiss franc and other currencies may affect our results for investments denominated in those currencies. In addition, because CSFB is managed in US dollars, changes in the US dollar/Swiss franc foreign exchange rate may have a material impact on our results. In 2002, our results of operations were negatively impacted by the fluctuation in US dollar/Swiss franc exchange rate.


Competition
We face intense competition in all financial services and private and investment banking products and services markets. Consolidation, both in the form of mergers and acquisitions and by means of alliances and cooperation, is increasing competition. New competitors, including Internet-based financial services providers and non-financial companies, are entering the market. This competition has resulted in increased pressure on margins and pressure on us to reduce costs, particularly as our competitors seek to win market share. As a result, we are altering the types of products we offer and the methods by which we distribute them, we are continuing to look at new ways of distributing our products and we are striving to reduce and control costs. This may affect the results of operations and financial condition of our different businesses.


Government policy, legislation and regulation
Changes in government policy or legislation and the policies, rules or regulations of supervisory authorities related to companies in the financial services, insurance, securities and banking industries in any of the jurisdictions in which we are active may affect our results of operations. These include possible changes in the tax, accounting, legal and regulatory treatment of financial products and services, pension arrangements and policies, reserve or capital levels and restrictions on certain banking and non-banking activities. They may affect our existing and future business by, for example, requiring us to alter our range of products and services, redesign our technology or other systems, maintain higher levels of capital or refrain from engaging in certain businesses. Additional regulatory oversight has increased costs on our existing businesses and put pressure on the margins of new business.


Reporting principles
Our consolidated results comprise the results of our six segments and the Corporate Center. Corporate Center costs and revenues attributable to operating businesses have been allocated to the respective segments. The Corporate Center also records expenses related to projects sponsored by the Group, restructuring costs and certain adjustments and reclassifications discussed below.


Inter segment revenue sharing and cost allocation
Responsibility for each of our products is allocated to one of the segments. In cases where one segment contributes to the performance of another, revenue sharing agreements are in place to compensate for such efforts. These agreements are negotiated periodically by the relevant segments on a product-by-product basis. Allocated revenues are added to, or deducted from, the revenue line item of the respective segments.

Certain administrative, processing and information technology services may be based in one segment but shared by other segments. The segment supplying the service receives compensation from the recipient segment on the basis of service level agreements and transfer payments. Service level agreements are negotiated periodically by the relevant segments with regard to each individual product or service. The costs of shared services and their related allocations are added to, or deducted from other operating expenses for the respective segments.

The aim of the revenue sharing and cost allocation agreements is to reflect the pricing structure of an unrelated third party transaction, although this is not achieved in all cases.


Own-use real estate
Own-use real estate in Switzerland, which consists primarily of bank premises, is managed centrally. Real estate costs reflect market rent plus an additional charge if actual costs exceed market rent. These costs are included in other operating expenses for the respective segments.


Valuation adjustments, provisions and losses
Provisions for credit risk at the banking segments within CSFS are generally based on expected credit losses, which are determined according to a statistical model derived from historical losses. Management believes that the statistical model provides a long-term view of credit loss experience. In any year, statistically determined provisions may be higher or lower than the actual credit experience relating to the credit risks covered by this model, depending on the economic environment, interest rates and other factors. The banking segments within CSFS record an expense item for statistically determined expected credit provisions. On a consolidated basis, valuation adjustments, provisions and losses in the income statement reflects actual credit provisions for the year. To reflect the difference between the expected credit provisions recorded and the actual credit provisions for the year, an adjustment is recorded at the Corporate Center . Effective January 1, 2002, while the banking segments within CSFS continue to record an expense item for statistically determined expected credit provisions with an adjustment for the actual credit provisions recorded at the Corporate Center, the segments within CSFB record credit provisions based on actual experience with no adjustment made at the Corporate Center. Non-credit related losses and counterparty defaults other than those relating to the lending business are not covered by the statistical model. Provisions for these losses and defaults are based on actual experience and are recorded at the relevant segment.

In 2002, we recorded a charge as a result of an adjustment we made in the method of estimating inherent losses related to lending activities. This adjustment was considered necessary to better reflect in the loan valuation allowances and provisions the continued deterioration of the credit markets. The after-tax impact on the income statement of this charge was offset by a release from the reserve for general banking risks, which was recorded as extraordinary income.


Reserve for general banking risks
Swiss banking law expressly provides that management may establish a reserve for general banking risks, which we refer to as RGBR. Although RGBR is referred to as a reserve under Swiss banking law for financial reporting purposes, it does not fall under the category of liabilities. RGBR is established as a component of shareholders' equity and qualifies as Tier 1 capital under Swiss banking law. RGBR is not available to shareholders for distribution. Swiss banking law requires that opening and closing balances and movements in RGBR during the year be disclosed in the notes to the financial statements. Allocation to or release from RGBR is reported as extraordinary expense or extraordinary income, respectively, in the year in which it is made. The determination of the level of RGBR is at the discretion of management.

Our Swiss GAAP results may be significantly affected in any given year by the allocation to, or release from, RGBR as permitted by Swiss banking law.


Taxes
Taxes are calculated individually for each segment on the basis of average tax rates across its various geographic markets, as if the segment operated on a stand alone basis. The difference between these average tax rates and our actual consolidated tax expense results in an adjustment to taxes at the Corporate Center. Since certain acquisition-related costs and exceptional items are not allocated to the segments, the tax impact associated with such items is reflected at the business unit level.

In 2002, we changed our accounting principles to allow for the recognition of deferred tax assets on net operating loss carry-forwards in anticipation of our change to US GAAP as the primary basis of accounting in 2004. As a result of this change, a positive cumulative effect of CHF 520 million was recognized from prior years and CHF 1.3 billion was recognized for 2002.


Key performance indicators
In evaluating our consolidated results and the results of our various business units and segments, we focus on certain key performance indicators (e.g., a growth indicator and/or a measure of return on existing investments), which we refer to as KPIs. KPIs are measurements management believes best reflect the performance of our businesses. KPIs are generally not recognized measures under generally accepted accounting principles.

The KPIs described below measure long-term goals set by management. These KPIs are discussed in more detail within the respective discussions of results. As a result of the realignment of our business into two business units effective January 1, 2002, and in line with the development of Group and business unit strategies, Group management has reviewed the KPIs used for measuring long-term objectives. As a result, certain of the KPIs may not be the same as in prior years.

The following table sets forth the rollforward of RGBR:
in CHF m		2002	2001	2000
At beginning of financial year		2'319	2'319	2'131
Allocations	1)	0	0	190
Releases	1)	(580)	0	(8)
Reclassifications	2)	0	0	6
At end of financial year		1'739	2'319	2'319
1) Allocations to RGBR recorded through extraordinary expenses and releases from RGBR through extraordinary income.
2) Reclassifications to RGBR from specific provisions that are no longer required.

Key Performance Indicators





OPERATING AND FINANCIAL REVIEW | CREDIT SUISSE GROUP

In 2002, our operating income was CHF 28,038 million, and we reported a net loss of CHF 3,309 million. As discussed under “Key performance indicators,” we measure our business at the consolidated group level on the basis of growth in net new assets and return on equity. At December 31, 2002, assets under management totaled CHF 1,195.3 billion, and for the year 2002 net asset outflow was CHF 2.6 billion, or 0.2%. Return on equity was -10.0% in 2002. Our results of operations reflect the results of our business units and their segments and certain corporate expenses and consolidation adjustments recorded at the Corporate Center as discussed under “Reporting principles.”


Year ended December 31, 2002 compared to year ended December 31, 2001
Operating income decreased CHF 11,116 million, or 28.4%, in 2002. This decrease was mainly due to a decrease of CHF 6,659 million, or 74.7%, in net trading income primarily within CSFB due to weak market conditions. CSFB's operating income decreased CHF 6,902 million, or 27.3%, in 2002 as a result of significantly lower operating income from the Institutional Securities segment's Equity and Fixed Income divisions, reflecting the depressed markets and low new issue activity. The decline in operating income in 2002 also includes a CHF 2,805 million, or 48.9%, decrease in income from the insurance segments of CSFS, which was primarily attributable to a significant decline in investment income as a result of continuing financial market weakness, partly offset by an increase in premiums earned, net and by a reduction of claims. The decline in investment income from the insurance segments of CHF 5,555 million includes realization of losses on s ecurities sold and the recognition of realized losses from other than temporary impairments in our insurance segments' investment portfolio. Net interest income increased CHF 1,285 million, or 19.0%, and net commission and service fee income decreased CHF 2,781 million, or 15.4%, in 2002, reflecting a shift in fixed income business from commission-based to interest-based activity within the Institutional Securities segment. Other ordinary income/(expenses), net decreased from an expense of CHF 925 million in 2001 to an expense of CHF 898 million in 2002. Unrealized losses on financial investments contributed to this decrease.

Operating expenses decreased CHF 6,755 million, or 22.3%, in 2002 mainly reflecting CSFB's cost reduction initiatives, which reduced CSFB's operating expenses by CHF 5,770 million, or 28.5%. Personnel expenses decreased CHF 4,980 million, or 22.8%, primarily as a result of reduced incentive compensation and headcount reductions at CSFB. Included in personnel expenses are charges related to severance payments and retention awards in connection with staff reductions. Amortization of retention payments was CHF 649 million in 2002 compared to CHF 812 million in 2001. Other operating expenses decreased CHF 1,775 million, or 21.1%, in 2002 primarily as a result of declines in variable expenses, principally at CSFB.

Depreciation of non-current assets decreased CHF 13 million, or 0.6%, in 2002, including an increase of CHF 30 million of amortization of the present value of future profits, or PVFP, from our insurance businesses primarily due to a change in the long-term assumptions regarding investment income. Amortization of acquired intangible assets decreased CHF 100 million, or 12.6%, and amortization of goodwill increased CHF 36 million, or 4.7%, in 2002, mainly due to focusing CSFS' European initiative on private banking clients, resulting in certain impairments of goodwill.

Valuation adjustments, provisions and losses from the banking business increased CHF 1,838 million, or 70.9%, in 2002 primarily as a result of higher corporate credit provisions at CSFB due to a substantial deterioration in credit market conditions and provisioning for CSFB's non-continuing real estate portfolio. This increase also includes a consolidated pre-tax charge of CHF 778 million (CHF 580 million after tax) relating to an adjustment in the method of estimating inherent losses related to lending activities. The impact of this charge, after tax, was offset by a release of a portion of RGBR, which was recorded as extraordinary income. The increase also resulted from pre-tax exceptional items of CHF 702 million related to CSFB's private litigation involving research analyst independence, certain IPO allocation practices, Enron and other related litigation. In addition, a pre-tax charge of CHF 234 million was recorded in 2002 related to the previously announced agreement in principle with various US regulators involving their investigations of research analyst independence and the allocation of IPO shares to corporate executive officers.

Extraordinary income/(expenses), net increased CHF 572 million to an income of CHF 343 million in 2002. This increase mainly resulted from a release of a portion of RGBR as discussed above, which was reflected as extraordinary income in the Group's results. The result also includes gains and losses from the sale of certain Winterthur subsidiaries and Pershing, as described in the respective business unit sections.

Taxes increased from an expense of CHF 486 million to an expense of CHF 596 million on 2002. In 2002, the accounting policy was changed to recognize deferred tax assets on net operating loss carry-forwards when it is considered more likely than not that future taxable profit will be available against which such losses can be utilized. The impact of this change on the financial statements was a tax benefit of CHF 1.3 billion related to 2002. The CHF 520 million recorded in 2002 in cumulative effect of change in accounting principle relates to net operating losses incurred prior to 2002. Prior to 2002, deferred tax assets related to net operating loss carry-forwards were recorded only in the event of sales of businesses at a taxable gain where the realization of the deferred tax asset was certain.

A key driver of our operating income is growth in net new assets, which is a KPI for measuring the progress of our asset gathering strategy.

Assets under management decreased CHF 235.3 billion, or 16.4%, in 2002. The decline was primarily due to the substantial deterioration of the global equity markets. CHF 35.8 billion of the decline resulted from acquisitions/divestitures, primarily from the disposal of CSFB direct , and CHF 2.6 billion was due to net asset outflows.


Year ended December 31, 2001 compared to year ended December 31, 2000
Operating income increased CHF 1,923 million, or 5.2%, in 2001. This increase includes the impact of a full year's operating income from DLJ compared to two months in 2000, partially offset by a decline in revenue from key businesses including equity, investment banking and mergers and acquisitions. Net interest income increased CHF 1,438 million, or 27.1%, and net commission and service fee income increased CHF 1,519 million, or 9.2%, in 2001. Both include the full-year impact of DLJ in 2001 and increased income from the fixed income business of CSFB due to strong investor demand and lower interest rates. Net trading income increased CHF 122 million, or 1.4%, in 2001 due principally to the inclusion of DLJ for a full year, mostly offset by weaker market conditions. Net income from the insurance businesses increased CHF 134 million, or 2.2%, in 2001 primarily due to growth in certain key insurance markets, predominantly in the United King dom, as a result of both organic growth and the full-year impact of acquisitions. This was partially offset by a significant decrease in realized gains on investments as a result of the decline in the equity markets worldwide. Other ordinary income/(expense), net decreased CHF 1,290 million to an expense of CHF 925 million in 2001. This was mainly due to unrealized losses on financial investments. The losses were partially offset by an increase of CHF 286 million from the insurance businesses primarily due to reduced losses from foreign currency exchange.

Operating expenses increased CHF 5,136 million, or 20.4%, in 2001. Personnel expenses increased CHF 3,387 million, or 18.3%, in part due to the full year effect of the DLJ acquisition. Included in personnel expenses are charges related to bonus and severance payments, guaranteed compensation and retention awards in connection with staff reductions. Amortization of retention payments was CHF 812 million in 2001 compared to CHF 181 million in 2000. Charges associated with a fourth quarter headcount reduction of CHF 985 million were incurred in 2001, of which approximately 20% related to guarantees and retention awards for 2002 and 2003. Other operating expenses increased CHF 1,749 million, or 26.3%, in 2001 primarily due to the full year effect of the DLJ acquisition.

Depreciation of non-current assets increased CHF 833 million, or 61.6%, in 2001, which included a full year of depreciation from DLJ compared to two months in 2000. In addition, amortization of PVFP from our insurance businesses increased CHF 223 million, primarily due to the full-year amortization associated with the acquisition of VOPF, Colonial UK and Nicos Life, and depreciation from increased investments at Corporate & Retail Banking increased CHF 106 million. Accelerated depreciation of CHF 48 million was recorded as a consequence of closing down the pan-European online brokerage platform in Luxembourg.

Amortization of acquired intangible assets increased CHF 636 million and amortization of goodwill increased CHF 524 million in 2001, primarily due to the full year effect of the DLJ acquisition compared to two months in 2000.

Valuation adjustments, provisions and losses from the banking business increased CHF 1,327 million in 2001 primarily related to higher credit provisions due to a substantial deterioration in credit market conditions. The increase also resulted from exceptional items of CHF 228 million relating to exiting facilities and non-core businesses in connection with the CSFB cost reduction initiative and a provision of CHF 169 million related to the settlement with the US Securities and Exchange Commission, or SEC, and NASD Regulation, Inc., or NASDR, in connection with their investigations into certain IPO allocation practices.

Extraordinary income/(expenses), net decreased CHF 1,462 million to an expense of CHF 229 million in 2001. The year 2000 was adversely affected by extraordinary expenses due to a restructuring provision of CHF 1,499 million related to the acquisition of DLJ and an allocation to RGBR of CHF 190 million. In 2001, extraordinary expenses reflected realized losses associated with the sale of certain Winterthur subsidiaries.

The effective tax rate increased from 18.3% in 2000 to 21.1% in 2001. In 2001, the accounting policy was changed to allow capitalization of deferred tax assets for net operating loss carry-forwards in the event of sales of businesses at a taxable gain, where the realization of the deferred tax assets is certain. The impact on the financial statements was a tax benefit of CHF 303 million in 2001.

Condensed consolidated income statement
in CHF m		2002	2001	2000
Net interest income		8'036	6'751	5'313
Net commission and service fee income		15'334	18'115	16'596
Net trading income		2'254	8'913	8'791
Net income from the insurance business	1)	3'312	6'300	6'166
Other ordinary income/(expenses), net		(898)	(925)	365
Operating income		28'038	39'154	37'231
Personnel expenses		16'910	21'890	18'503
Other operating expenses		6'619	8'394	6'645
Operating expenses		23'529	30'284	25'148
Gross operating profit		4'509	8'870	12'083
Depreciation of non-current assets	2)	2'173	2'186	1'353
Amortization of acquired intangible assets		693	793	157
Amortization of goodwill		806	770	246
Valuation adjustments, provisions and losses from the banking business		4'430	2'592	1'265
Depreciation, valuation adjustments and losses		8'102	6'341	3'021
Profit/(loss) before extraordinary items, cumulative effect of change in accounting principle and taxes		(3'593)	2'529	9'062
Extraordinary income/(expenses), net		343	(229)	(1'691)
Cumulative effect of change in accounting principle	3)	520	–	–
Taxes	3)	(596)	(486)	(1'349)
Net profit/(loss) before minority interests		(3'326)	1'814	6'022
Minority interests		17	(227)	(237)
Net profit/(loss)		(3'309)	1'587	5'785
Other data:
Return on equity		(10.0%)	4.1%	17.7%
Growth in net new assets		(0.2%)	4.8%	5.1%
Certain reclassifications have been made to conform to the current presentation.
1) For the purpose of the consolidated financial statements, operating income for the insurance business is defined as net premiums earned, less claims incurred and change in technical provisions and expenses for processing claims, less commissions, plus net investment income from the insurance businesses.
2) Includes amortization of Present Value of Future Profits (PVFP) from the insurance businesses.
3) In 2002, Credit Suisse Group adopted a change in accounting principle relating to the recognition of deferred tax assets on net operating losses. If the change in accounting principle had not been adopted in 2002, taxes would have been CHF -1,937 m for 2002. The retroactive application of this change in accounting principle would have resulted in taxes for 2001 and 2000 of CHF -250 m and CHF -1,270 m, respectively.

Assets under management/net new assets
in CHF bn	31.12.02	31.12.01	31.12.00
Advisory	605.1	723.5	724.7
Discretionary	590.2	707.1	667.3
Total assets under management	1'195.3	1'430.6	1'392.0
	2002	2001	2000
Net new assets	(2.6)	67.5	58.1
Certain reclassifications have been made to conform to the current presentation.

Reconciliation of operating to consolidated results


Reconciliation of operating to consolidated results
The Group’s consolidated results are prepared in accordance with Swiss GAAP, while the Group’s segment reporting principles are applied to the presentation of segment results, including business unit results. The business unit results reflect the results of the separate segments constituting the respective business units as well as certain acquisition-related costs, exceptional items and the cumulative effect of a change in accounting principle that are not allocated to the segments. The business unit results also include certain other reclassifications that are adjusted at the Corporate Center in accordance with Swiss GAAP and reflected in the Group’s consolidated results.

The acquisition-related costs and exceptional items excluded from the segment results and from the business unit operating basis results shown below include, among other items, acquisition interest, amortization of retention payments, amortization of acquired intangible assets and goodwill and the exceptional items described on page 67 or in the footnotes to the reconciliation tables. The reclassifications shown for CSFS reflect the amortization of acquired intangible assets and goodwill, exceptional items related to the focusing of the European initiative on private banking clients and the cumulative effect of a change in accounting principle. The reclassifications shown for CSFB reflect acquisition-related costs, exceptional items and the cumulative effect of a change in accounting principle. Acquisition-related costs and exceptional items are excluded from the business unit operating results because management believes that this enable s management and investors to assess the operating results or “cash earnings” and KPIs of the business. The effect of the change in accounting principle has been excluded from the business unit operating results to the extent that the positive current-period tax benefits resulted from prior-period losses.

The results presented in the column “Adjustments including Corporate Center” include the parent company operations, including Group financing initiatives as well as income and expense items related to centrally managed, own-use real estate, mainly comprised of bank premises within Switzerland. In addition, the column includes consolidation adjustments and adjustments to segment accounts related to management reporting policies and the reversal of certain reclassifications made in the business units.

The adjustments made for CSFS business unit results include valuation adjustments, provisions and losses. This adjustment reflects the difference between the expected credit provisions recorded by CSFS’ banking segments and the actual credit provisions for the year, and also includes a charge relating to an adjustment in the method of estimating inherent losses related to lending activities as discussed on page 38. The impact of this charge, after tax, was fully offset by a release from RGBR, which was recorded as extraordinary income at Credit Suisse Group.

The reclassifications made for the CSFB results include, among others, brokerage, execution and clearing expenses and contractor costs. These reclassifications reflect, among others, the deduction from other operating expenses of brokerage, execution and clearing expenses of CSFB, reclassified as a reduction of operating income; the deduction from other operating expenses of contractor costs of CSFB, reclassified as an addition to personnel expenses; and the addition to operating income of expenses related to certain redeemable preferred securities of CSFB, reclassified as minority interests. CSFB’s brokerage, execution and clearing expenses and contractor costs are presented in a manner that brings them in line with its US competitors in the investment banking industry and makes it easier for investors to compare CSFB's operating expenses with those of its competitors. Swiss GAAP does not permit the Group to report brokerage, execu tion and clearing expenses and contractor costs as part of other operating expenses. The presentation of redeemable preferred securities of Credit Suisse First Boston, issued by consolidated special purpose entities as an expense reducing its operating income, is intended to more fairly present its operating results from its core businesses.

The following table sets forth the reconciliation of operating to consolidated results for the year ended December 31, 2002:
	Credit Suisse Financial Services				Credit Suisse First Boston
		Re-		Re-		Re-		Re-	Adjust. incl.		Credit
	Operating	classifi-		classified	Operating	classifi-		classified	Corporate		Suisse
in CHF m	basis	cations		basis	basis	cations		basis	Center	1)	Group
Operating income	11'830			11'830	18'360	(504)	2)	17'856	(1'648)		28'038
Personnel expenses	5'765	50	3)	5'815	9'658	891	2) 4)	10'549	546		16'910
Other operating expenses	3'465	38	3)	3'503	4'815			4'815	(1'699)		6'619
Operating expenses	9'230			9'318	14'473			15'364	(1'153)		23'529
Gross operating profit	2'600			2'512	3'887			2'492	(495)		4'509
Depreciation of non-current assets	1'000	45	3)	1'045	757			757	371		2'173
Amortization of acquired intangible assets and goodwill	–	198	3) 5)	198	–	1'303	2)	1'303	(2)		1'499
Valuation adjustments, provisions and losses	390			390	2'618	984	4)	3'602	438		4'430
Profit/(loss) before extraordinary items, cumulative effect of change in accounting principle and taxes	1'210			879	512			(3'170)	(1'302)		(3'593)
Extraordinary income/(expenses), net	48			48	408	(163)	4)	245	50		343
Cumulative effect of change in accounting principle	–	266	6)	266	–	254	6)< /font>	254	0		520
Taxes	(1'525)	16		(1'509)	48	761		809	104		(596)
Net profit/(loss) before minority interests	(267)			(316)	968			(1'862)	(1'148)		(3'326)
Minority interests		151		151				0	(134)		17
Net profit/(loss)				(165)				(1'862)	(1'282)		(3'309)
1) For a discussion of these items, please refer to “Operating and financial review - Corporate Center”.
2) Reflects acquisition interest of CHF 504 m allocated to operating income, amortization of retention payments of CHF 649 m allocated to personnel expenses and amortization of acquired intangible assets and goodwill of CHF 1,303 m.
3) Reflects exceptional items totaling CHF 192 m (CHF 179 m net of tax) in respect of focusing the European initiative on private banking clients allocated as follows: CHF 50 m to personnel expenses, CHF 38 m to operating expenses, CHF 45 m to depreciation of non-current assets and CHF 59 m to amortization of acquired intangible assets and goodwill.
4) Reflects exceptional items of CHF 1,389 m (CHF 1,269 m net of tax) allocated as follows: CHF 242 m to personnel expenses, CHF 984 m to valuation adjustments, provisions and losses and CHF 163 m to extraordinary expenses.
5) Reflects acquisition-related costs of CHF 139 m allocated to amortization of acquired intangible assets and goodwill.
6) Reflects the cumulative effect of a change in accounting principle related to the recognition of deferred tax assets on net operating losses for Credit Suisse Financial Services of CHF 266 m and Credit Suisse First Boston of CHF 254 m.

The following table sets forth the reconciliation of operating to consolidated results for the year ended December 31, 2001:
	Credit Suisse Financial Services				Credit Suisse First Boston
		Re-		Re-		Re-		Re-	Adjust. incl.		Credit
	Operating	classifi-		classified	Operating	classifi-		classified	Corporate		Suisse
in CHF m	basis	cations		basis	basis	cations		basis	Center	1)	Group
Operating income	15'382			15'382	25'262	(862)	2) 3)	24'400	(628)		39'154
Personnel expenses	5'639			5'639	13'731	1'797	2) 3)	15'528	723		21'890
Other operating expenses	3'686			3'686	6'512			6'512	(1'804)		8'394
Operating expenses	9'325			9'325	20'243			22'040	(1'081)		30'284
Gross operating profit	6'057			6'057	5'019			2'360	453		8'870
Depreciation of non-current assets	818			818	951	12	2)	963	405		2'186
Amortization of acquired intangible assets and goodwill	–	116	4)	116	–	1'455	3)< /sup>	1'455	(8)		1'563
Valuation adjustments, provisions and losses	383			383	1'541	397	2)	1'938	271		2'592
Profit/(loss) before extraordinary items and taxes	4'856			4'740	2'527		< /sup>	(1'996)	(215)		2'529
Extraordinary income/(expenses), net	25			25	(15)			(15)	(239)		(229)
Taxes	(1'113)	2		(1'111)	(524)	1'148		624	1		(486)
Net profit/(loss) before minority interests	3'768			3'654	1'988			(1'387)	(453)		1'814
Minority interests		(69)		(69)		(1)		(1)	(157)		(227)
Net profit/(loss)				3'585				(1'388)	(610)		1'587
1) For a discussion of these items, please refer to “Operating and financial review - Corporate Center”.
2) Reflects exceptional items in respect of cost-reduction initiatives and a settlement with the US Securities and Exchange Commission and the NASDR of CHF 1,428 m (CHF 1,092 m net of tax) allocated as follows: CHF -34 m to operating income, CHF 985 m to personnel expenses, CHF 12 m to depreciation of non-current assets and CHF 397 m to valuation adjustments, provisions and losses.
3) Reflects acquisition interest of CHF 828 m allocated to operating income, amortization of retention payments of CHF 812 m allocated to personnel expenses and amortization of acquired intangible assets and goodwill of CHF 1,455 m.
4) Reflects acquisition-related costs of CHF 116 m allocated to amortization of acquired intangible assets and goodwill.

537

The following table sets forth the reconciliation of operating to consolidated results for the year ended December 31, 2000:

Credit Suisse Financial Services

Credit Suisse First Boston

Re-

Re-

Re-

Re-

Adjust. incl.

Credit

Operating

classifi-

classified

Operating

classifi-

classified

Corporate

Suisse

in CHF m

basis

cations

basis

basis

cations

basis

Center

1)

Group

Operating income

15'771

15'771

22'151

(225)

2)

21'926

(466)

37'231

Personnel expenses

5'361

5'361

12'015

181

2)

12'196

946

18'503

Other operating expenses

3'390

3'390

4'586

4'586

(1'331)

6'645

Operating expenses

8'751

8'751

16'601

16'782

(385)

25'148

Gross operating profit

7'020

7'020

5'550

5'144

(81)

12'083

Depreciation of non-current assets

398

398

673

673

282

1'353

Amortization of acquired intangible assets and goodwill

–

55

3)

55

–

349

2)

349

(1)

403

Valuation adjustments, provisions and losses

723

723

537

5

1'265

Profit/(loss) before extraordinary items and taxes

5'899

5'844

4'340

< /sup>

3'585

(367)

9'062

Extraordinary income/(expenses), net

21

21

(1)

(1)

(1'711)

(1'691)

Taxes

(1'313)

(1'313)

(1'107)

167

(940)

904

(1'349)

Net profit/(loss) before minority interests

4'607

4'552

3'232

2'644

(1'174)

6'022

Minority interests

(176)

(176)

(3)

(3)

(58)

(237)

Net profit/(loss)

4'376

2'641

(1'232)

5'785

1) For a discussion of these items, please refer to “Operating and financial review - Corporate Center”.

2) Reflects acquisition interest of CHF 225 m allocated to operating income, amortization of retention payments of CHF 181 m allocated to personnel expenses and amortization of acquired intangible assets and goodwill of CHF 349 m.

3) Reflects acquisition-related costs of CHF 55 m allocated to amortization of acquired intangible assets and goodwill.

OPERATING AND FINANCIAL REVIEW | CREDIT SUISSE FINANCIAL SERVICES

Credit Suisse Financial Services is a leading provider of comprehensive financial services in Europe and other select markets. Under the main brands Credit Suisse and Winterthur, it offers investment products, private banking and financial advisory services, including insurance and life & pension solutions, for private and corporate clients. For the periods under discussion, CSFS includes the operations of the Private Banking, Corporate & Retail Banking, Life & Pensions and Insurance segments. For information relating to services provided by CSFS, please refer to “Information on the company – Credit Suisse Financial Services.”

The business unit results reflect the results of the separate segments comprising the business unit, as well as certain acquisition-related costs, exceptional items and the cumulative effect of change in accounting principle not allocated to the segments. The exceptional items are discussed in the business unit discussion below. For a complete reconciliation of the business unit results to the Group’s reported results and a discussion of the material reconciling items, please refer to “Operating and Financial Review – reconciliation of operating to consolidated results.”


Year ended December 31, 2002 compared to year ended December 31, 2001
CSFS measures performance based on operating return on average allocated capital. Operating return on average allocated capital decreased 29.4 percentage points to

-2.3% in 2002. Net operating profit excludes amortization of acquired intangible assets and goodwill, exceptional items and cumulative effect of change in accounting principle. In 2002, net profit declined to a loss of CHF 165 million in 2002 from a profit of CHF 3,585 million in 2001.

In 2002, operating income decreased CHF 3,552 million, or 23.1%, compared to 2001. This was primarily due to a significant reduction in investment income in the insurance businesses and reduced equity and foreign exchange transactions in the banking business. Operating expenses decreased CHF 95 million, or 1.0%, in 2002. Personnel expenses increased CHF 126 million, or 2.2%, primarily as a result of acquisitions and organic growth in the insurance and banking segments, which was partially offset by the decrease in bonuses. Other operating expenses decreased CHF 221 million, or 6.0%, mainly due to a reduction in discretionary spending.

Depreciation of non-current assets increased CHF 152 million, or 26.2%, in 2002, primarily related to the European private banking initiative. Amortization of PVFP from our insurance businesses increased CHF 30 million, or 12.7%, in 2002, mainly due to additional write-downs resulting from changes in long-term assumptions related to expected investment returns.

Extraordinary income/(expenses), net increased CHF 23 million, or 92.0%, in 2002. This was primarily related to a realized gain on the sale of a participation of CHF 29 million.

Amortization of acquired intangible assets and goodwill increased CHF 23 million, or 19.8%, in 2002, primarily due to a write-off of goodwill on a participation.

Exceptional items of CHF 192 million pre-tax were recognized in 2002 as a result of focusing the European initiative on private banking clients.

Taxes increased CHF 412 million, or 37.0%, in 2002, primarily as a result of the release of provisions for future policyholder benefits which were taxable and increased realized losses from investments which were not tax deductible in the insurance businesses in Germany. Current year taxes benefited from the change in accounting principle in respect of deferred tax assets on net operating losses in the amount of CHF 472 million, originating mainly from the insurance businesses. Net profit/(loss) also benefited from the cumulative effect of change in accounting principle in the amount of CHF 266 million from prior years related primarily to the insurance businesses.


Year ended December 31, 2001 compared to year ended December 31, 2000
Operating income decreased CHF 389 million, or 2.5%, in 2001. This was primarily the result of lower levels of equity and foreign exchange transactions. Operating expenses increased CHF 574 million, or 6.6%, in 2001. Personnel expenses increased CHF 278 million, or 5.2%, due to a higher number of employees as a result of investments in the technology area. Other operating expenses increased CHF 296 million, or 8.7%. The cost increase was driven by further business expansion in the European private banking and higher costs for marketing and information technology, principally related to strategic initiatives and measures aimed at increasing efficiency in customer relationship management and operations.

Depreciation of non-current assets increased CHF 197 million, or 51.3%, in 2001, primarily due to investments in standard information technology applications. Amortization of PVFP increased CHF 223 million primarily due to the full-year amortization associated with the acquisitions of Colonial UK, which was acquired in spring 2000, Nicos Life, renamed Credit Suisse Life Insurance Co. Ltd., which was acquired in April 2000 and VOPF, which was acquired in January 2001.

Valuation adjustments, provisions and losses decreased CHF 340 million, or 47.0%, in 2001. This decline was principally the result of lower credit risks and repayments of loans already provided for, and reduced losses from operations and litigation.

Amortization of acquired intangible assets and goodwill increased CHF 61 million, or 110.9%, in 2001, primarily due to the full-year amortization of NIG, VOPF, Colonial, and Credit Suisse Life Insurance Co. Ltd., the first-time inclusion of CGU and the complete impairment of goodwill for certain of our UK non-life insurance operations in the amount of CHF 12 million.


Private Banking
The Private Banking segment provides personal investment counseling and professional asset management services for an affluent and high-net-worth clientele and has offices in Switzerland and numerous international markets. Operating income of the Private Banking segment consists primarily of transaction-based and asset-based fee income from assets under management.

Private Banking includes the results of JO Hambro Investment Management Limited since its acquisition in February 2001 and Frye-Louis Capital Management, Inc. since its acquisition in October 2001. JO Hambro and Frye-Louis both operate independently.


Year ended December 31, 2002 compared to year ended December 31, 2001
Private Banking measures overall performance based on growth in net new assets and net margin on average assets under management. Growth in net new assets decreased 3.2 percentage points to 3.4% and net margin on average assets under management decreased 8.6 basis points to 33.7 basis points in 2002. Private Banking reported a net operating profit before exceptional items, cumulative effect of change in accounting principle and minority interests (segment result) of CHF 1,762 million, a decrease of CHF 539 million, or 23.4%, from 2001.

Operating income decreased CHF 784 million, or 10.8%, in 2002. Of the total operating income, 69% was derived from asset-based income components, 27% from transaction-based income and the remaining 4% was from other income components including lending, trading, and asset and liability management. Net interest income decreased CHF 285 million, or 14.4%, mainly due to the low interest liability environment. Net commission and service fee income decreased CHF 305 million, or 6.7%, in 2002 principally as a result of lower transaction volume due to investor passivity and reduced asset-based income.

Operating expenses decreased CHF 162 million, or 4.0%, in 2002. Personnel expenses decreased CHF 109 million, or 4.4%, mainly due to headcount reductions and a decline in performance-related bonuses. Other operating expenses declined CHF 53 million, or 3.5%, as a result of cost saving measures.

Depreciation of non-current assets increased CHF 38 million, or 17.7%, primarily as a result of increased capital assets related to the European private banking initiative.

Valuation adjustments, provisions and losses increased CHF 22 million, or 29.3%, in 2002. This increase was principally the result of higher legal and credit provisions and lower loan recoveries.

A key factor influencing Private Banking's result is the amount of assets under management.

Assets under management decreased CHF 58.8 billion, or 10.8%, as of December 31, 2002. Of this decrease, CHF 77.9 billion was attributable to market movements and structural effects. The decrease was partially offset by an increase in net new assets of CHF 18.7 billion and acquisitions of CHF 0.4 billion. At December 31, 2002, approximately 17% of total assets under management were in equities, 26% were in fixed-income securities, 33% were in investment funds and 24% were in liquidity accounts, money market and other products.


Year ended December 31, 2001 compared to year ended December 31, 2000
Operating income decreased CHF 668 million, or 8.4%, in 2001. Net interest income decreased CHF 145 million mainly due to lower interest rate margins in 2001. Net commission and service fee income decreased CHF 350 million, or 7.2%, in 2001 because of lower transaction-based income partially offset by an increase in asset-based income. Transaction-based fees decreased primarily due to a decline in the brokerage and fund distribution businesses. Asset-based income increased benefiting from a higher volume in distributed funds and structured investment products.

Operating expenses increased CHF 254 million, or 6.7%, in 2001. Personnel expenses increased CHF 82 million, or 3.4%, due to the increase in the number of employees related to European private banking. Other operating expenses increased CHF 172 million, or 12.7%, mainly as a result of the further expansion of the European private banking business and higher marketing and information technology costs related to measures aimed at increasing efficiency in customer relationship management and operations.

Depreciation of non-current assets increased CHF 114 million, or 112.9%, principally as a result of increased capital expenditures related to the European private banking initiative.

Valuation adjustments, provisions and losses decreased CHF 138 million, or 64.8%, in 2001. This decline was principally the result of lower credit risks and loan recoveries and reduced losses from operations and litigation.

Assets under management increased CHF 9.7 billion, or 1.8%, in 2001. Of this increase, CHF 35.7 billion was attributable to net new assets and CHF 7.2 billion was attributable to acquisitions. The increase was partially offset by a market movement decrease of CHF 33.2 billion, principally due to a decline in stock market values. At December 31, 2001, approximately 21% of total assets under management were in equities, 25% were in fixed income securities, 31% were in investment funds and 23% were in liquidity accounts, money market and other products.


Corporate & Retail Banking
Corporate & Retail Banking serves both corporate and retail clients through a multi-channel approach, with a focus on Switzerland.


Year ended December 31, 2002 compared to year ended December 31, 2001
Corporate & Retail Banking measures overall performance based on the return on average allocated capital. The return on average allocated capital increased from 7.8% in 2001 to 9.3% in 2002. The Corporate & Retail Banking segment reported a net operating profit before cumulative effect of change in accounting principle and minority interests (segment result) of CHF 363 million, an increase of CHF 58 million, or 19.0%, from 2001.

Operating income increased CHF 37 million, or 1.5%, in 2002. Net interest income increased CHF 14 million, or 0.8%, in 2002, primarily as a result of a reduced level of non-interest earning loans, which more than offset the negative impact of the lower interest rate environment. Net commission and service fee income increased CHF 17 million, or 3.7%, in 2002, mainly due to increased transaction prices and account-based services. Net trading income remained stable.

Total operating expenses decreased CHF 35 million, or 2.2%, in 2002. Personnel expenses decreased CHF 61 million, or 6.1%, primarily due to a reduced headcount. This amount was partially offset by an increase in other operating expenses of CHF 26 million, or 4.2%, due to increased expenses for information technology projects and marketing.

Valuation adjustments, provisions and losses based on statistically expected losses decreased CHF 15 million, or 4.9%, in 2002. Actual credit provisions were CHF 127 million above the statistical valuation adjustment due to anticipated liquidation of certain credit positions. However, the risk profile of the credit portfolio improved in 2002 as a result of a continued focus on credit risk management. The credit loss ratio, which measures losses in relation to the loan portfolio, increased 11 basis points to 70 basis points in 2002 due to the difficult economic environment.

Assets under management decreased CHF 7.9 billion, or 14.1%, in 2002. Net asset outflows accounted for CHF 3.2 billion of the overall decrease and the impact of the decline in equity markets and foreign exchange impact accounted for CHF 4.7 billion. The outflow of assets was mainly attributable to volatility in the account balances of corporate clients. Of the total assets under management, 52.7% was related to retail clients and 47.3% was related to corporate clients.

Total loans decreased CHF 1.6 billion, or 2.5%, in 2002. Mortgages increased CHF 1.0 billion, or 2.9%. This was more than offset by a decrease of due from customers of CHF 2.6 billion.


Year ended December 31, 2001 compared to year ended December 31, 2000
Operating income decreased CHF 74 million, or 3.2%, in 2001. Net interest income increased CHF 145 million, or 9.6%, in 2001, primarily as a result of higher lending volumes. Net commission and service fee income decreased CHF 45 million, or 8.9%, in 2001. Commission fee income decreased primarily due to overall poor market conditions. This decrease was partially offset by an increase in service fee income. Net trading income decreased CHF 13 million, or 4.9%, in 2001 principally due to lower transaction-based income. Other ordinary income decreased CHF 13 million, or 31.0%, primarily due to unrealized losses recognized on financial investments. In 2001, operating income from private clients decreased due to lower commission fee income reflecting overall poor market conditions. Operating income from the corporate client business remained relatively stable as income is predominantly driven by lending activities, which were not affected by lower commission income.

Total operating expenses increased CHF 7 million, or 0.4%, in 2001. Personnel expenses increased CHF 60 million, or 6.4%, primarily due to a higher number of employees as a result of additions in the technology area. This was offset by a decrease in other operating expenses of CHF 53 million, or 7.9%, primarily as a result of lower transaction volumes in 2001.

Depreciation of non-current assets increased CHF 47 million, or 127.0%, in 2001. This was mainly due to depreciation from increased investment in basic information technology applications.

Valuation adjustments, provisions and losses decreased CHF 202 million, or 39.6%, in 2001. The risk profile of the credit portfolio improved in 2001 as a result of a cautious lending policy and continued focus on credit and risk management. The credit loss ratio, which measures actual credit provision losses in relation to the loan portfolio, decreased 24 basis points to 59 basis points in 2001.

Assets under management remained stable at CHF 55.9 billion in 2001. Net new assets contributed CHF 1.3 billion. This increase was offset by market performance and other effects primarily as a result of the decline in the global equity markets. At December 31, 2001, investment funds made up 13.3% of total assets under management. Of the total assets under management, 49.2% was related to retail clients and 50.8% was related to corporate clients.

Total loans decreased by CHF 0.9 billion, or 1.4%, in 2001. Mortgages accounted for CHF 1.1 billion, or 1.7%, of this decline and other due from customers contributed an increase in volume of CHF 0.2 billion, or 0.3%, related to short-term trade finance business.


Life & Pensions
The Life & Pensions segment is our provider of life and pension solutions for private and corporate clients worldwide. In 2002, Life & Pensions finalized the divestiture of its Paris-based and Austrian operations and acquired the business of Premier Life Ltd., Luxembourg and the portfolio of Premier Life Ltd., Bermuda.

The Swiss Government’s reduction of the guaranteed rate of return for the employee benefit business from 4% to 3.25%, effective January 1, 2003, will partially alleviate the impact of the adverse business environment for group life insurers. The employee benefit business is part of the “second pillar” of the Swiss retirement savings program and represents 20.6% of Life & Pensions technical reserves.


Year ended December 31, 2002 compared to year ended December 31, 2001
Life & Pensions reported a segment loss before cumulative effect of change in accounting principle and minority interests of CHF 1,400 million in 2002. This reflects a CHF 3,328 million, or 69.8%, decline in investment income (general account). After adjustment for provision for future dividends to policyholders, deferred acquisition costs and taxes, the decline in investment income had a negative impact on the segment loss of CHF 1,591 million.

Despite the current unfavorable economic environment, Life & Pensions experienced growth in gross premiums written of CHF 1,606 million, or 9.2%, in 2002. Excluding the effect of the acquisitions and divestitures discussed above and exchange rate impacts, gross premiums written increased CHF 1,718 million, or 10.4%. Premium growth was achieved due to strong performance in almost all core markets and the launch of new products throughout the year. The sale of its Paris-based and Austrian operations led to a reduction in premium volume of CHF 545 million, which was more than offset by premiums of CHF 724 million from the acquisition of Premier Life Ltd., Luxembourg and the portfolio transfer of Premier Life Ltd., Bermuda, and CHF 30 million from a newly formed company in Liechtenstein.

In Switzerland, premium growth was CHF 656 million, or 7.9%, in 2002. Of this amount, CHF 209 million was due to growth in the individual traditional single-premium business, mainly in the first half of the year. Premiums from separate account business decreased CHF 159 million, primarily as a result of the decline in the global equity markets. Group traditional business grew CHF 611 million, or 9.4%, compared to CHF 871 million, or 15.5%, in 2001, reflecting more selective underwriting and renewals. In the United Kingdom, premium growth was CHF 250 million, or 12.0%, in 2002, primarily due to strong growth of personal pension single premium products. In Germany, premium growth remained stable in 2002. Within the rest of Europe and Asia, premium growth was CHF 654 million, or 15.7%, in 2002. Excluding the impact of the acquisitions and divestitures discussed above, premium growth was CHF 475 million, or 13.1%, mainly due to increased prem iums from a tax amnesty in Italy, which ended on May 15, 2002, the launch of new investment type products in select markets, as well as through organic growth. This was partially offset by a decrease in premiums due to the termination of a regulatory requirement in Spain, which required companies to transfer their internal pension funds to external financial institutions.

Death and other benefits incurred increased CHF 2,525 million, or 20.8%, in 2002. Excluding the impact of the acquisitions and divestitures discussed above, death and other benefits incurred increased CHF 2,877 million, or 24.4%. In Switzerland, an increase of CHF 2,837 million, or 40.0%, was mainly due to high surrenders and other benefits paid in group life, primarily due to selective underwriting and renewals reflecting the first effects of the capital-light program. In addition, increased disability benefits paid and strengthened disability claim reserves reflected the economic environment and the changed assumptions of future long-term investment returns. The remaining increase was mainly due to higher surrenders and maturities in all other markets, except for the United Kingdom, where a decrease of CHF 278 million, or 15.9%, was experienced. This was primarily due to high surrenders from Colonial’s closed block of business and principal protected products, which occurred in 2001.

Change in provision for future policyholder benefits (technical) decreased CHF 822 million, or 12.5%, in 2002. Excluding the impact of the acquisitions and divestitures discussed above, the change in provision for future policyholder benefits decreased CHF 1,310 million, or 20.6%. In Switzerland, a decrease of CHF 1,602 million, or 64.7%, resulted primarily from an increase of benefits paid as mentioned above. An increase in the United Kingdom of CHF 313 million, or 101.4%, resulted from premium growth and a reduction in benefits paid. In Germany, other Europe and Asia, the change in provisions for future policyholder benefits (technical) remained relatively stable in relation to premiums.

Dividends to policyholders incurred shifted by CHF 2,045 million from an expense of CHF 287 million in 2001 to an income of CHF 1,758 million in 2002. The dividends paid to policyholders decreased CHF 256 million, or 17.7%, compared with 2001, reflecting the reduced participation rates, primarily in Switzerland and Germany. However, the change in provision for future dividends to policyholders resulted in an income of CHF 1,789 million, primarily in countries with legal or contractual terms for which the allocation to provision for future dividends to policyholders is directly linked to the underlying investment result. The primary impact was in Germany with an increase of CHF 2,139 million from an income of CHF 278 million in 2001 to an income of CHF 2,417 million in 2002, due to the negative performance of the investment income. In the United Kingdom, the change in provision for future dividends to policyholders decreased CHF 362 millio n, or 49.9%, because of a lower investment income than in 2001 due to the exceptional run-off in 2001 of the closed block of business.

Acquisition costs (including the change in deferred acquisition costs (DAC)/present value of future profits PVFP) increased CHF 160 million, or 28.8%, in 2002, primarily due to additional write-downs of DAC of CHF 204 million in Switzerland, Germany, Spain and Italy and of PVFP of CHF 88 million in the United Kingdom, Germany and Japan. These write-downs reflect the reduced expectations of future investment returns.

Non-deferrable costs increased CHF 151 million, or 11.5%, in 2002. Excluding the impact of the acquisitions and divestitures discussed above, non-deferrable cost increased CHF 198 million. This is primarily due to additional software write-downs in Switzerland and Central and Eastern Europe and a pension asset adjustment in the United Kingdom.

Investment income general account decreased CHF 3,328 million, or 69.8%, in 2002. Excluding the impact of the acquisitions and divestitures discussed above, investment income general account decreased CHF 3,204 million, or 69.0%. As a result of the significant decline in the global equity markets, Life & Pensions recognized CHF 2,971 million of other than temporary impairments on the equity investment portfolio. Of the impairment amount recognized in 2002, approximately 41.1% was in Switzerland, 25.9% in the United Kingdom and 20.7% in Germany. Life & Pensions reduced its proportion of investments held in equities from 19% at December 31, 2001, to 8% at December 31, 2002, in an effort to reduce the performance-related risk exposure of the investment portfolio.

Other income/(expenses) increased CHF 127 million from an expense of CHF 53 million in 2001 to an income of CHF 74 million in 2002. Of this amount, approximately CHF 57 million resulted from a realized gain from the sale of the Paris-based branch. In addition, Life & Pensions recorded a gain on foreign exchange of CHF 28 million in 2002 compared to a loss of CHF 45 million in 2001.


Year ended December 31, 2001 compared to year ended December 31, 2000
Gross premiums written increased CHF 1,961 million, or 12.7%, in 2001 largely through organic growth, which contributed 9.7 percentage points of the increase. Premium growth was achieved due to a strong performance in all core markets and the launch of new products throughout the year.

In Switzerland, gross premiums written exceeded market growth, with an increase of CHF 525 million, or 6.7%, in 2001. Traditional premiums grew 12.3% due to higher vested benefits and an increase in new business premium. Life & Pensions experienced a decrease of 57.8% in unit-linked business principally due to uncertainties in the equity markets. In Germany, premiums increased CHF 69 million, or 2.5%, primarily due to the single-premium business. In the United Kingdom, premiums increased CHF 643 million, or 44.5%, reflecting a full year of Colonial premiums compared to a half year in 2000, strong growth in the individual personal pension business, and the introduction of a new with-profit bond during 2001.

Premiums in the rest of Europe and Asia increased CHF 724 million, or 21.0%, in 2001. In Spain, the 23.4% increase in premium growth of CHF 164 million was principally due to growth in group life of CHF 125 million resulting from a regulatory change requiring companies to transfer their internal pension funds to external financial institutions and growth in individual life of CHF 39 million, primarily due to increased sales of investment-type contracts. In Italy, premiums grew CHF 214 million, or 31.1%, benefiting from growth in traditional products of CHF 301 million, or 72.2%, following the launch of a new product, partially offset by a decrease of CHF 87 million, or 32.0%, in separate account business. In the pension markets of Central and Eastern Europe, premiums increased CHF 144 million, or 46.8%, of which CHF 105 million was from the acquisition of VOPF. This trend was further supported by customer growth in Hungary and Poland. Pre mium increases in Asia of CHF 144 million, or 25.5%, reflected growth in new business, primarily in separate account products and a full year of premiums from Credit Suisse Life Insurance Co. Ltd., Japan compared to nine months in 2000.

Death and other benefits incurred increased CHF 2,433 million, or 25.0%, in 2001. Excluding the impact of acquisitions, which amounted to CHF 653 million, and including two significant surrenders from Colonial's closed block of business totaling CHF 282 million, death and other benefits incurred increased CHF 1,780 million. Business in Switzerland was the main driver of the remaining increase primarily due to higher vested benefits in group life of CHF 604 million, more maturities in individual life and group life of CHF 284 million and CHF 392 million, respectively, and CHF 231 million from an increased number of retirements following a tax law change in 2001.

Change in provision for future policyholder benefits (technical) decreased CHF 135 million, or 2.0%, in 2001, primarily due to an increase of benefits paid as mentioned above, as well as premium growth.

Dividends to policyholders incurred decreased CHF 1,695 million, or 85.5%, in 2001. The dividends paid to policyholders remained at the same level as 2000; however, the provisions for future dividends decreased CHF 1,549 million in countries with legal or contractual obligations for which the allocation to the provision for future dividends is directly linked to the underlying investment result. Of this decrease, Germany contributed CHF 702 million, the United Kingdom CHF 686 million, France CHF 113 million and Italy CHF 48 million. The remaining decrease related to a reduction of the bonus rates reflecting market conditions.

Acquisition costs (including the change in DAC/PVFP) increased CHF 4 million, or 1.0%, in 2001 primarily due to PVFP amortization of newly acquired companies and revised assumptions in Germany, partially offset by decreased DAC in Switzerland also reflecting revised assumptions.

Non-deferrable costs increased CHF 184 million, or 16.3%, in 2001, primarily due to acquisitions of CHF 97 million and software impairments in Switzerland of CHF 26 million.

Investment income general account decreased CHF 1,615 million, or 25.3%, in 2001. Of this amount, CHF 1,022 million was due to the recognition of impairments on investment securities for other than temporary declines in the market value below the cost value, as a result of the general decline in the global equity markets. This decline also resulted in the low realization of gains on equity holdings.

Other income/(expenses), net, decreased CHF 363 million, or 87.3%, in 2001 to an expense of CHF 53 million primarily due to a reduced foreign exchange loss.


Insurance
The Insurance segment is a provider of non-life insurance solutions for private clients and small corporate clients worldwide. In June 2001, Insurance sold Winterthur International to XL Capital Ltd. In 2002, Insurance finalized the divestitures of Paris-based and Austrian operations.

In September 2001, the Insurance segment acquired the non-life insurance operations of CGU in Belgium. In June 2001, Churchill Insurance, the Insurance segment’s UK operations, entered into a strategic alliance with AMP Pearl and in November 2001 it entered into an alliance with Prudential plc to underwrite and administer branded general insurance business in the United Kingdom.


Year ended December 31, 2002 compared to year ended December 31, 2001
The Insurance segment result before cumulative effect of change in accounting principle and minority interests decreased CHF 1,574 million from a segment profit of CHF 582 million in 2001 to a segment loss of CHF 992 million in 2002. This decrease was primarily the result of other than temporary impairments on investments and the realization of losses from reducing the equity exposure of the investment portfolio.

The net underwriting result improved by CHF 720 million, or 62.7%, in 2002, reflecting continuing improvements in the claims experience and the implementation of cost saving initiatives as well as a reduction in dividends to policyholders as a direct result of the realization of investment losses in 2002.

The Insurance segment measures underwriting performance based on the combined ratio. This ratio is intended to measure the net underwriting result by comparing the claims and annuities incurred, net, acquisition costs and non-deferrable costs as a percentage of net premiums earned. At December 31, 2002, the combined ratio was 103.4%, an improvement of 2.2 percentage points compared to 2001, benefiting from an improved claims ratio and the implementation of cost saving initiatives.

Gross premiums written decreased CHF 21 million, or 0.1%, in 2002. Excluding the effect of the acquisitions and divestitures discussed above and exchange rate impacts, gross premiums written increased CHF 1,466 million, or 9.5%, mainly attributable to an increase in tariff rates. The sale of Winterthur International and the combined sales of the Paris-based and Austrian operations led to a reduction in gross premiums of CHF 2,072 million. These reductions were in part offset by increases in premiums of CHF 830 million from the strategic alliance with Prudential plc and approximately CHF 230 million from the acquisition of CGU in Belgium.

In the United Kingdom, the Insurance segment recorded premium growth of CHF 1,243 million, or 33.1%, of which approximately CHF 830 million was attributable to the strategic alliance with Prudential plc. This result was boosted by strong organic growth of CHF 415 million, or 11.0%, due to new business development in motor and home lines of business. In Switzerland, premiums increased CHF 191 million, or 7.0%, primarily due to product initiatives and innovations. In North America and Iberia, premiums increased CHF 155 million and CHF 72 million, or 4.8% and 5.0%, respectively, in 2002, primarily due to rate increases partially offset by a slight decrease in the number of in-force policies. In Italy, premiums increased CHF 81 million, or 4.5%, in 2002, primarily resulting from an increase in non-motor business, while motor suffered from the unfavorable auto market conditions in the first half of 2002. Premiums from other countries decrease d CHF 248 million, or 17.4%, in 2002 primarily due to the disposal of the Paris-based and Austrian operations, which had aggregate gross premiums of CHF 472 million in 2001. This was in part offset by a premium increase in Belgium of CHF 238 million primarily due to the full-year result from CGU in 2002 compared to three months in 2001.

Claims and annuities incurred, net increased CHF 240 million, or 2.1%, in 2002 principally as a result of business growth. However, net premiums earned increased at a higher rate than claims, which led to an improvement in the claims ratio from 76.7% in 2001 to 74.8% in 2002. The greatest improvement was reported in North America due to the one-time reserve strengthening of accident and health business in 2001, reduced catastrophe losses, appropriate pricing and a reduction in the number of claims. In Italy and the United Kingdom the motor business showed strong performance. The withdrawal from businesses and markets that had previously produced unsatisfactory results, such as Winterthur International, the Paris-based and Austrian operations, also contributed to the improvement of the claims ratio in 2002. This was in part offset by a deterioration in the claims ratio in Switzerland and Germany as a result of weather-related claims and la rge losses especially in the fire line of business. By line of business, the claims ratio in motor improved from 81.8% in 2001 to 75.6% in 2002, with significant progress in nearly every key market. In non-motor, the claims ratio increased from 69.4% in 2001 to 70.5% in 2002, principally resulting from adverse weather conditions in many European countries.

Dividends to policyholders incurred, net decreased CHF 417 million, or 134.1%, to an income of CHF 106 million in 2002. This decrease was mainly due to the decline in the global equity markets, which resulted in the realization of losses on investments through either sale or other than temporary impairments. These losses directly affected the amount of dividends payable to policyholders and led to a reversal of the provision for future dividends to policyholders in the German health business, where the amount of dividends to policyholders incurred was an income of CHF 209 million in 2002 compared to an expense of CHF 193 million in 2001.

Acquisition costs (including the change in DAC/PVFP) increased CHF 138 million, or 5.8%, in 2002. The acquisition cost ratio (acquisition costs/net premiums earned) increased from 15.9% in 2001 to 16.1% in 2002, mainly as a result of growth in business with our alliance partners in the United Kingdom.

Non-deferrable costs increased CHF 15 million, or 0.8%, in 2002. The Insurance segment's non-deferrable cost ratio (non-deferrable costs/premiums earned) improved in line with expense-saving measures from 13.0% in 2001 to 12.5% in 2002.

Overall, the expense ratio improved from 28.9% in 2001 to 28.6% in 2002 as a result of the aforementioned factors, with Germany, Spain, Switzerland and North America mainly contributing to this improvement.

Net investment income decreased CHF 2,227 million in 2002 to a loss of CHF 10 million. The result reflects the recognition of CHF 891 million of impairments on investment securities for an other than temporary decline in the market value below the cost value primarily as a result of the decline in the global equity markets compared to CHF 130 million in 2001. In addition, in 2002, Insurance sold a significant portfolio of equity securities in an effort to minimize exposure to further declines in the equity markets, which resulted in an increase in realized net losses of CHF 1,232 million.

Other income/(expenses), net, decreased CHF 184 million, or 111.5%, to an expense of CHF 349 million in 2002. The sale of Winterthur International and the Paris-based operations resulted in a loss of CHF 141 million and CHF 35 million, respectively. In addition, CHF 58 million was due to restructuring expenses primarily in Italy, Spain and Bermuda. Furthermore, exchange rate variations resulted in a net currency loss of CHF 51 million.


Year ended December 31, 2001 compared to year ended December 31, 2000
Gross premiums written increased CHF 1,904 million, or 11.5%, in 2001. The increase in premiums primarily resulted from the expansion of our activities including acquisitions in the UK market and the acquisition of CGU in Belgium, partly offset by a decrease in premiums due to the disposal of Winterthur International.

In 2001, Insurance had premium growth in all its key markets as a result of rate increases, new products and a focus on more profitable regions. In Iberia, premiums increased CHF 127 million, or 11.5%, primarily due to organic growth in accident and health and the fire and property line of business. In the United Kingdom, Insurance recorded premium growth of CHF 1,616, million, or 75.4%. This included an impact of approximately CHF 450 million due to a full year's result from the NIG operations compared to nine months in 2000 and an increase of approximately CHF 647 million from the AMP Pearl strategic alliance, which commenced in June 2001. This result was boosted by organic growth and rate increases on existing business. In North America, premiums increased CHF 376 million, or 13.2%, primarily as a result of rate increases in line with industry trends. In Germany, premiums increased CHF 158 million, or 6.6%, mainly driven by growth in t he motor business. Premiums from other countries increased CHF 30 million, or 2.2%, which includes an increase of approximately CHF 42 million attributable to the acquisition of CGU in Belgium in the fourth quarter 2001.

Claims and annuities incurred, net increased CHF 1,077 million, or 10.3%, in 2001. The increase was also impacted by the first-time inclusion of CGU, which contributed CHF 46 million, and a full-year impact of NIG compared to nine months in 2000. NIG contributed approximately CHF 205 million in 2001. The claims ratio improved from 77.2% in 2000 to 76.7% in 2001 primarily as a result of the lack of major large losses and natural catastrophes in Switzerland and other countries in 2001. While we experienced significant improvements in Italy, Iberia and Switzerland, the claims ratio in North America deteriorated by 6.6%. This was primarily attributable to an adverse development in the workers' compensation and commercial automobile lines and emerging mold claims under personal and commercial line policies.

Acquisition costs (including the change in DAC/PVFP) increased CHF 286 million, or 13.6%, in 2001. The acquisition cost ratio increased from 15.7% in 2000 to 15.9% in 2001 primarily due to commissions paid on the higher premium volume.

Non-deferrable costs increased CHF 80 million, or 4.3%, in 2001. The Insurance segment's non-deferrable cost ratio improved in line with expense-saving measures from 13.7% in 2000 to 13.0% in 2001.

Overall, the expense ratio decreased from 29.3% in 2000 to 28.9% in 2001, as a result of the aforementioned factors with Iberia and Italy reflecting the most improvement.

Net investment income decreased CHF 168 million, or 7.0%, in 2001. Of this amount, CHF 130 million was due to the recognition of impairments on investment securities for an other than temporary decline in the market value below the cost value, as a result of the general decline in the global equity markets. This decline also resulted in the low realization of gains on equity holdings.

Other income/(expenses) decreased CHF 218 million from an income of CHF 53 million in 2000 to an expense of CHF 165 million in 2001, primarily due to the recognition of realized losses of CHF 231 million from the disposals of our Hong Kong subsidiary and Winterthur International and the sale of the Austrian subsidiaries. In addition, our UK non-life subsidiaries established a provision of CHF 26 million as required by the Financial Services Compensation scheme, for a levy based on gross premiums written to compensate those policyholders who suffered a loss when Independent, a UK insurance company, collapsed.


Investments for Life & Pensions and Insurance
Investment portfolios are managed within a defined process and set of guidelines to meet diversification, credit quality, yield and liquidity requirements of the policy liabilities. Investments include debt instruments, such as government bonds, loans and mortgage loans, real estate and equities and alternative assets. The weighting of asset classes within the investment portfolios is determined by the Investment Committee at meetings, which are held periodically.

Net investment income from the insurance business, excluding income from separate accounts, decreased CHF 5,554 million, or 79.5%, in 2002. This decrease was significantly impacted by the recognition of other than temporary impairments of CHF 3,887 million in 2002 compared to CHF 1,152 million in 2001. Of this amount, CHF 3,852 million was related to impairments on equity securities for other than temporary declines in the market value below the cost value, as a result of the general decline in the global equity markets. Net realized gains, excluding other than temporary impairments, decreased CHF 2,324 million, or 76.8%, in 2002 primarily due to the recognition of net losses from the significant sales of equity securities in an effort to minimize the exposure to further declines in the equity markets. In addition, CHF 511 million was due to a decline in current investment income. Loss from separate account business was CHF 1,730 million for the year ended December 31, 2002. This was primarily due to a significant portion of the unit-linked business being invested in the equity markets, which were negatively impacted during 2002.

Total investments decreased CHF 2.3 billion, or 1.8%, in 2002. Excluding investments of CHF 4.0 billion associated with the sale of the Paris-based and Austrian operations, total investments increased CHF 1.7 billion. This increase primarily reflects new premium income offset by a decrease in the fair value of equities resulting from a decline of global equity markets.

Excluding the impact of CHF 2.0 billion associated with the sale of the Paris-based and Austrian operations, debt securities increased CHF 10.5 billion, or 11.1%, in 2002. This was primarily due to higher investment in debt securities due to the reduction in exposure to equity securities and increased investment from premium income. Excluding the impact of CHF 1.0 billion associated with the sale of the Paris-based and Austrian operations, equity securities decreased CHF 12.4 billion, or 54.9%, in 2002. This was primarily due to the significant sale of equity securities in an effort to reduce exposure to further declines in equity markets. In addition, those securities where the decline in value below cost was considered to be other than temporary were deemed to be impaired and written-down through earnings. Winterthur reduced its proportion of investments held in equities from 19% at December 31, 2001, to 8% at December 31, 2002. The sa le of equity securities was in part offset by an increase in short-term investments of CHF 3.3 billion, primarily due to further investment in short-term deposits. Gains on hedging transactions in an effort to protect investments from further declines in equity markets led to an increase in the value of derivative instruments of CHF 0.8 billion at December 31, 2002.

Investments for separate account business decreased CHF 0.6 billion, or 4.9%, in 2002 primarily due to a decrease in investment income credited to the policyholders as a result of the decline in the global equity markets. The majority of investments for separate account business support the non-traditional separate account life insurance products. The return to policyholders from these products is based on the performance of investments as defined in contracts with clients. The performance of the unit-linked investments is offset by a corresponding adjustment in separate account provision. Of the total amount of separate account life business, 58.0% was in the United Kingdom, 13.7% in Switzerland, with the remaining 28.3% in other countries in which Life & Pensions operates, with funds predominantly invested in equities.

Credit Suisse Financial Services business unit income statement 1)
in CHF m		2002	2001	2000
Operating income	2)	11'830	15'382	15'771
Personnel expenses		5'765	5'639	5'361
Other operating expenses		3'465	3'686	3'390
Operating expenses		9'230	9'325	8'751
Gross operating profit		2'600	6'057	7'020
Depreciation of non-current assets		733	581	384
Amortization of Present Value of Future Profits (PVFP)		267	237	14
Valuation adjustments, provisions and losses		390	383	723
Net operating profit before extraordinary and exceptional items, cumulative effect of change in accounting principle and taxes		1'210	4'856	5'899
Extraordinary income/(expenses), net		48	25	21
Taxes	3) 4)	(1'525)	(1'113)	(1'313)
Net operating profit/(loss) before exceptional items, cumulative effect of change in accounting principle and minority interests		(267)	3'768	4'607
Amortization of acquired intangible assets and goodwill		(139)	(116)	(55)
Exceptional items		(192)	–	–
Tax impact		16	2	0
Cumulative effect of change in accounting principle	3)	266	–	–
Net profit/(loss) before minority interests		(316)	3'654	4'552
Minority interests		151	(69)	(176)
Net profit/(loss)		(165)	3'585	4'376
Other data:
Return on average allocated capital	5)	(2.6%)	26.3%	–	7)
Return on average allocated capital (operating)	6)	(2.3%)	27.1%	–	7)
1) Certain reclassifications have been made to conform to the current presentation. The business unit results reflect the results of the separate segments comprising the business unit. Certain acquisition-related costs, including amortization of acquired intangible assets and goodwill, exceptional items and cumulative effect of change in accounting principle not allocated to the segments are included in the business unit results. The exceptional items relate to focusing the European initiative on private banking clients. For a complete reconciliation of the business unit results to the Group’s reported results and a discussion of the material reconciling items, please refer to “Reconciliation of operating to consolidated results”.
2) For the purpose of the consolidated financial statements, operating income for the insurance business is defined as net premiums earned, less claims incurred and change in technical provisions and expenses for processing claims, less commissions, plus net investment income from the insurance business.
3) In 2002, Credit Suisse Group adopted a change in accounting principle relating to the recognition of deferred tax assets on net operating losses. If the change in accounting principle had not been adopted in 2002, taxes would have been CHF -1,997 m for 2002. The retroactive application of this change in accounting principle would have resulted in taxes for 2001 and 2000 for Credit Suisse Financial Services of CHF -1,153 m and CHF -1,234 m, respectively.
4) Excluding tax impact on amortization of acquired intangible assets and goodwill as well as exceptional items.
5) Based on the business unit results including certain acquisition-related costs, exceptional items and cumulative effect of change in accounting principle not allocated to the segments.
6) Based on the results of the separate segments comprising the business unit, which exclude certain acquisition-related costs, exceptional items and cumulative effect of change in accounting principle not allocated to the segments.
7) Return on average allocated capital and operating return on average allocated capital as previously reported were 12.1% and 12.9%, respectively. Due to the realignment effective January 1, 2002, these numbers are not comparable to subsequent periods.

Reconciliation to net operating profit/(loss)
in CHF m		2002	2001	2000
Net profit/(loss)		(165)	3'585	4'376
Amortization of acquired intangible assets and goodwill	1)	119	116	55
Exceptional items		192	–	–
Tax impact		(16)	(2)	–
Cumulative effect of change in accounting principle		(266)	–	–
Net operating profit/(loss)		(136)	3'699	4'431
1) Excluding a CHF 20 m write-off in 2002 relating to a participation.

Private Banking income statement 1)
in CHF m		2002	2001	2000
Net interest income		1'691	1'976	2'121
Net commission and service fee income		4'214	4'519	4'869
Net trading income		495	640	837
Other ordinary income		61	110	86
Operating income		6'461	7'245	7'913
Personnel expenses		2'393	2'502	2'420
Other operating expenses		1'469	1'522	1'350
Operating expenses		3'862	4'024	3'770
Gross operating profit		2'599	3'221	4'143
Depreciation of non-current assets		253	215	101
Valuation adjustments, provisions and losses	2)	97	75	213
Net operating profit before extraordinary and exceptional items, cumulative effect of change in accounting principle and taxes		2'249	2'931	3'829
Extraordinary income/(expenses), net		44	12	1
Taxes	3)	(531)	(642)	(865)
Net operating profit before exceptional items, cumulative effect of change in accounting principle and minority interests (segment result)		1'762	2'301	2'965
Other data:
Increased/(decreased) credit-related valuation adjustments	2)	(7)	(25)	(74)
Growth in net new assets		3.4%	6.6%	–	4)
Net margin	5)	33.7 bp	42.3 bp	55.7 bp
1) Certain reclassifications have been made to conform to the current presentation. Certain acquisition-related costs, including amortization of acquired intangible assets and goodwill, exceptional items and cumulative effect of change in accounting principle not allocated to the segments are included in the business unit results.
2) Increased/(decreased) valuation adjustments taken at Group level resulting from the difference between the statistical and actual credit provisions.
3) In 2002, Credit Suisse Group adopted a change in accounting principle relating to the recognition of deferred tax assets on net operating losses. If the change in accounting principle had not been adopted in 2002, taxes would have been CHF -508 m.
4) Net new assets growth as previously reported was 4.2%. Due to the realignment effective January 1, 2002, this number is not comparable to subsequent periods.
5) Net operating profit before exceptional items, cumulative effect of change in accounting principle and minority interests (segment result)/average assets under management.

The following tables set forth details of assets under management:
in CHF bn	31.12.02	31.12.01	31.12.00
Advisory	366.4	415.3	424.6
Discretionary	121.6	131.5	112.5
Assets under management	488.0	546.8	537.1
		2002	2001
Net new assets in CHF bn		18.7	35.7
Growth in assets under management		(10.8%)	1.8%
of which net new assets		3.4%	6.6%
of which market movement and structural effects		(14.2%)	(6.1%)
of which acquisitions/(divestitures)		0.1%	1.3%
Certain reclassifications have been made to conform to the current presentation.

Corporate & Retail Banking income statement 1)
in CHF m		2002	2001	2000
Net interest income		1'672	1'658	1'513
Net commission and service fee income		478	461	506
Net trading income		249	250	263
Other ordinary income		36	29	42
Operating income		2'435	2'398	2'324
Personnel expenses		939	1'000	940
Other operating expenses		646	620	673
Operating expenses		1'585	1'620	1'613
Gross operating profit		850	778	711
Depreciation of non-current assets		89	84	37
Valuation adjustments, provisions and losses	2)	293	308	510
Net operating profit before extraordinary items, cumulative effect of change in accounting principle and taxes		468	386	164
Extraordinary income/(expenses), net		4	13	20
Taxes	3)	(109)	(94)	(42)
Net operating profit before cumulative effect of change in accounting principle and minority interests (segment result)		363	305	142
Other data:
Increased/(decreased) credit-related valuation adjustments	2)	127	47	(117)
Return on average allocated capital	4)	9.3%	7.8%	–	5)
1) Certain reclassifications have been made to conform to the current presentation. Certain acquisition-related costs, including amortization of acquired intangible assets and goodwill and cumulative effect of change in accounting principle not allocated to the segments are included in the business unit results.
2) Increased/(decreased) valuation adjustments taken at Group level resulting from the difference between the statistical and actual credit provisions.
3) In 2002, Credit Suisse Group adopted a change in accounting principle relating to the recognition of deferred tax assets on net operating losses, which did not have an impact on taxes reported.
4) Based on the segment results, which exclude certain acquisition-related costs and cumulative effect of change in accounting principle not allocated to the segment.
5) Return on average allocated capital as previously reported was 15.0%. Due to the realignment effective January 1, 2002, this number is not comparable to subsequent periods.

The following tables set forth details of assets under management:
in CHF bn	31.12.02	31.12.01	31.12.00
Advisory	46.4	54.2	54.3
Discretionary	1.6	1.7	1.6
Assets under management	48.0	55.9	55.9
		2002	2001
Net new assets in CHF bn		(3.2)	1.3
Growth in assets under management		(14.1%)	0.0%
of which net new assets		(5.7%)	2.3%
of which market movement and structural effects		(8.4%)	(2.3%)

The following tables set forth the loan portfolio:
in CHF m	31.12.02	31.12.01	31.12.00
Due from customers	26'292	28'889	28'686
Mortgages	35'267	34'279	35'353
Total loans	61'559	63'168	64'039
	2002	2001	2000
Mortgage growth	2.9%	(3.0%)	(3.9%)
Loan growth	(2.5%)	(1.4%)	(1.9%)

The following table shows a breakdown of gross premiums written by market units for the years ended December 31:
in CHF m	2002	2001	2000
Switzerland	8'996	8'340	7'815
Germany	2'861	2'815	2'746
United Kingdom	2'338	2'088	1'445
Rest of Europe and Asia	4'824	4'170	3'446
Gross premiums written	19'019	17'413	15'452

Life & Pensions income statement 1)
in CHF m		2002	2001	2000
Gross premiums written		19'019	17'413	15'452
Reinsurance ceded		(40)	(210)	(280)
Net premiums written		18'979	17'203	15'172
Change in provision for unearned premiums		(4)	(15)	(1)
Net premiums earned		18'975	17'188	15'171
Death and other benefits incurred		(14'692)	(12'167)	(9'734)
Change in provision for future policyholder benefits (technical)		(5'750)	(6'572)	(6'707)
Change in provision for future policyholder benefits (separate account)	2)	1'730	1'115	330
Dividends to policyholders incurred		1'758	(287)	(1'982)
Acquisition costs (including change in DAC/PVFP)		(716)	(556)	(552)
Non-deferrable costs		(1'463)	(1'312)	(1'128)
Investment income general account		1'438	4'766	6'381
Investment income separate account	2)	(1'730)	(1'115)	(330)
Interest received and paid		(92)	(139)	(151)
Interest on bonuses credited to policyholders		(146)	(135)	(116)
Other income/(expenses), net		74	(53)	(416)
Net operating profit/(loss) before cumulative effect of change in accounting principle and taxes		(614)	733	766
Taxes	3)	(786)	(153)	(101)
Net operating profit/(loss) before cumulative effect of change in accounting principle and minority interests (segment result)		(1'400)	580	665
Other data:
Growth in gross premiums		9.2%	12.7%	9.0%
1) The presentation of segment results differs from the presentation of the Group's consolidated results as it reflects the way the insurance business is managed, which is in line with peers in the insurance industry. Certain acquisition-related costs, including amortization of acquired intangible assets and goodwill and cumulative effect of change in accounting principle not allocated to the segments are included in the business unit results.
2) This represents the market impact for separate account (or unit-linked) business, where the investment risk is borne by the policyholder.
3) In 2002, Credit Suisse Group adopted a change in accounting principle relating to the recognition of deferred tax assets on net operating losses. If the change in accounting principle had not been adopted in 2002, taxes would have been CHF -1,006 m.

Insurance income statement 1)
in CHF m		2002	2001	2000
Gross premiums written		18'391	18'412	16'508
Reinsurance ceded		(1'150)	(1'572)	(1'876)
Net premiums written		17'241	16'840	14'632
Change in provision for unearned premiums and in provision for future policy benefits (health)		(1'538)	(1'833)	(1'113)
Net premiums earned		15'703	15'007	13'519
Claims and annuities incurred, net		(11'749)	(11'509)	(10'432)
Dividends to policyholders incurred, net		106	(311)	(376)
Acquisition costs (including change in DAC/PVFP)		(2'529)	(2'391)	(2'105)
Non-deferrable costs		(1'959)	(1'944)	(1'864)
Underwriting result, net		(428)	(1'148)	(1'258)
Net investment income		(10)	2'217	2'385
Interest received and paid		(106)	(98)	(40)
Other income/(expenses), net		(349)	(165)	53
Net operating profit/(loss) before cumulative effect of change in accounting principle and taxes		(893)	806	1'140
Taxes	2)	(99)	(224)	(305)
Net operating profit/(loss) before cumulative effect of change in accounting principle and minority interests (segment result)		(992)	582	835
Other data:
Combined ratio (excluding dividends to policyholders)		103.4%	105.6%	106.5%
1) The presentation of segment results differs from the presentation of the Group's consolidated results as it reflects the way the insurance business is managed, which is in line with peers in the insurance industry. Certain acquisition-related costs, including amortization of acquired intangible assets and goodwill and cumulative effect of change in accounting principle not allocated to the segments are included in the business unit results.
2) In 2002, Credit Suisse Group adopted a change in accounting principle relating to the recognition of deferred tax assets on net operating losses. If the change in accounting principle had not been adopted in 2002, taxes would have been CHF -375 m.

The following table shows a breakdown of gross premiums written by market units for the years ended December 31:					1)
in CHF m		2002	2001	2000
Switzerland		2'927	2'736	2'642
Germany		2'523	2'497	2'399
Italy		1'892	1'811	1'783
Iberia (Spain and Portugal)		1'496	1'424	1'277
United Kingdom		5'001	3'758	2'142
Winterthur International	2)	–	1'541	2'026
North America		3'375	3'220	2'844
Other		1'177	1'425	1'395
Gross premiums written		18'391	18'412	16'508
1) Certain reclassifications have been made to conform to the current presentation.
2) Winterthur International was sold effective June 30, 2001. Any business excluded from the disposal, but maintained by the local Winterthur entity, has been allocated to the relevant market unit for all years presented.

Investment income by investment type
in CHF m		2002	2001	2000
Investment income		5'096	5'607	5'568
Realized gains and losses		(3'183)	1'876	3'770
Depreciation on real estate		(153)	(153)	(133)
Investment expenses		(332)	(348)	(439)
Net investment income, general account		1'428	6'982	8'766
Investment income separate account	1)	(1'730)	(1'114)	(330)
Net investment income		(302)	5'868	8'436
Net investment income/(loss) by segment:
Life & Pensions		(292)	3'651	6'051
Insurance		(10)	2'217	2'385
Net investment income		(302)	5'868	8'436
Return on invested assets (exluding separate account business):	2)
Current income		4.0%	4.4%	4.4%
Other than current income/(expenses), net		(2.9%)	1.0%	2.3%
Total	3)	1.1%	5.3%	6.6%
1) Includes investment income/(loss) and realized gains and losses on separate account business.
2) Prior-period ratios have been recalculated to conform with the current year. Other interest bearing assets previously not included in the investment category, such as policy loans, are now included in calculating the investment return.
3) Total investment return includes depreciation on real estate and investment expenses as well as investment income and realized gains and losses.

Investment portfolio
in CHF bn	31.12.02	31.12.01	31.12.00
Debt securities	76.9	68.4	63.6
Equity securities	9.1	22.6	31.7
Mortgages loan	10.2	9.8	9.4
Loans	4.3	4.6	4.3
Real estate	7.4	7.5	7.1
Other investments	7.1	3.8	3.6
Investments, general account	115.0	116.7	119.7
Investments separate account	11.6	12.2	12.9
Investments	126.6	128.9	132.6
Investments by segment:
Life & Pensions	99.0	101.3	105.0
Insurance	27.6	27.6	27.6
Investments	126.6	128.9	132.6
Amounts exclude separate account business acquired as part of SLC Pooled Pensions Limited.

OPERATING AND FINANCIAL REVIEW | CREDIT SUISSE FIRST BOSTON

Credit Suisse First Boston serves global institutional, corporate, government and high-net-worth clients in its role as a financial intermediary. CSFB’s businesses include securities underwriting, sales and trading, investment banking, financial advisory services, lending, investment research, private equity investments and brokerage services. It also provides asset management products and services. For the periods under discussion, CSFB includes the operations of the Institutional Securities segment (formerly the Investment Banking segment) and the CSFB Financial Services segment. For information relating to services provided by CSFB, please refer to “Information on the Company – Credit Suisse First Boston.”

CSFB acquired DLJ on November 3, 2000, and the results of operations of DLJ after the date of acquisition are included in the results for the years ended December 31, 2002, 2001 and 2000. Certain charges in connection with the DLJ acquisition relating to amortization of acquired intangible assets and goodwill, expenses associated with employee retention payments and interest expense related to funding the cost of the acquisition were incurred. These charges and other restructuring and merger-related costs are not allocated to either of CSFB’s reporting segments, but are included in the business unit results.

The business unit results reflect the results of the separate segments comprising the business unit. Certain acquisition-related costs, including acquisition interest, amortization of retention payments and amortization of acquired intangible assets and goodwill, as well as exceptional items and cumulative effect of change in accounting principle not allocated to the segments are included in the business unit results. These exceptional items are discussed below. Current year taxes benefited from the change in accounting principle in respect of deferred tax assets on net operating losses in the amount of CHF 868 million. The result also benefited from the cumulative effect of change in accounting principle in the amount of CHF 254 million from prior years. Certain other items, including brokerage, execution and clearing expenses, contractor costs and expenses related to certain redeemable preferred securities classified as minority interes ts, have been reclassified in the segment and business unit results and are adjusted at the Corporate Center in accordance with Swiss GAAP and are reflected in the Group’s consolidated results. For a complete reconciliation of the business unit results to the Group’s reported results and a discussion of the material reconciling items, please refer to “Reconciliation of operating to consolidated results.”

Although the amounts for CSFB and its segments are presented in Swiss francs, the US dollar is CSFB's functional currency.


Year ended December 31, 2002 compared to year ended December 31, 2001
In 2002, operating income was CHF 18,360 million compared with CHF 25,262 million in 2001. CSFB reported a net loss of CHF 1,862 million in 2002 compared with CHF 1,388 million in 2001. CSFB measures performance based on operating return on average allocated capital and operating pre-tax margin. In 2002, operating return on average allocated capital was 1.5%, a decrease of 4.2 percentage points from the prior year. In 2002, operating pre-tax margin was -1.3%, a decrease of 4.8 percentage points from the prior year. In 2002, return on average allocated capital including certain acquisition-related costs, exceptional items and cumulative effect of change in accounting principle was -12.9%, a decrease of 4.1 percentage points from the prior year, and pre-tax margin on this basis was -15.0%, a decrease of 6.8 percentage points from the prior year.

Operating income decreased CHF 6,902 million, or 27.3%, in 2002, compared with 2001. This decrease was primarily due to a CHF 6,092 million, or 28.7%, decline in the Institutional Securities segment that resulted from lower Fixed Income operating income, reflecting stable rather than declining interest rates, weaker Equity operating income, reflecting difficult equity markets, and charges related to certain non-continuing businesses, including real estate and distressed assets further described under “Institutional Securities,” in Other. A CHF 810 million, or 20.0%, decline in the CSFB Financial Services segment was a result of negative economic and financial market conditions, and a net outflow of assets mainly due to performance issues and the sales of its CSFB direct business in the United States and the United Kingdom and its brokerage service subsidiary Autranet Inc. in the first quarter of 2002, as further described under “CSFB Financial Services.” Institutional Securities contributed CHF 15,125 million and CSFB Financial Services contributed CHF 3,235 million to total operating income.

The distribution of operating income in 2002 was generally consistent with 2001. The percentage of 2002 operating income for North America decreased compared with 2001 as a result of a somewhat greater impact in the United States from the difficult equity markets, including reduced equity new issuances, reduced merger and acquisition activity and charges related to the non-continuing business. Europe experienced a decrease in operating income in the Fixed Income division, particularly in the developed markets credit business. While the operating income in all regions declined, the decreases were more significant in North America and Europe. Operating income in South America increased year-on-year as 2001 results were adversely impacted by the Argentina crisis.

Operating expenses decreased CHF 5,770 million, or 28.5% in 2002. Personnel expenses decreased CHF 4,073 million, or 29.7%, to CHF 9,658 million, primarily as a result of decreased headcount, reduced incentive compensation and the sales of non-core businesses. Year-on-year, headcount decreased 14%, or approximately 3,900, as a result of management’s steps to align more closely the size of the business to market conditions and to bring CSFB’s cost structure in line with competitors. Other operating expenses decreased CHF 1,697 million, or 26.1%, to CHF 4,815 million, primarily due to reduced discretionary expenses including travel and entertainment, consulting and market data services. The reduction of operating expenses also reflected cost reduction initiatives and lower business volumes.

Depreciation of non-current assets decreased CHF 194 million, or 20.4%, in 2002, compared with 2001 due to reduced capital expenditures and leasehold improvements, and the reduction in fixed assets related to reduced headcount and office facilities.

Valuation adjustments, provisions and losses increased CHF 1,077 million in 2002, or 69.9%, compared with 2001. The increase was due primarily to additional credit provisions, including a CHF 530 million provision related to a change in estimate of the risk of loss inherent in the portfolio of non-impaired loans and commitments, in the Institutional Securities segment and increased reserves related to the non-continuing real estate portfolio. Additionally, 2002 reflected CHF 169 million of provisions related to excess office facilities.

Extraordinary income/(expenses), net increased CHF 423 million in 2002. The Group released a portion of its RGBR, and allocated CHF 382 million to CSFB to offset the after-tax impact of the provision for the risk of loss inherent in the portfolio of non-impaired loans and commitments.

Acquisition interest decreased CHF 324 million, or 39.1%, to CHF 504 million. The decrease was attributable to lower interest rates and a decrease in the amount of interest expense resulting from the acquisition of DLJ, which corresponded with the decline in the goodwill balance following the sale of CSFB direct and Autranet. Amortization of retention payments decreased CHF 163 million, or 20.1%, to CHF 649 million, primarily due to forfeitures under the terms of the retention awards and the acceleration of awards related to headcount reductions. Amortization of acquired intangible assets and goodwill decreased CHF 152 million, or 10.4%, to CHF 1,303 million primarily due to the sale of CSFB direct and Autranet.

Exceptional items in 2002 of CHF 1,389 million (CHF 1,269 million, net of tax) consisted of a pre-tax loss of CHF 134 million, or CHF 390 million after tax, related to the sale of Pershing, a pre-tax charge of CHF 234 million, or CHF 193 million after tax related to the provision for the agreement in principle with various US regulators involving research analyst independence and the allocation of IPO shares to corporate executive officers, a pre-tax provision of CHF 702 million, or CHF 456 million after tax, for private litigation involving research analyst independence, certain IPO allocation practices and Enron and other related litigation, and a pre-tax charge of CHF 319 million, or CHF 230 million after tax, related to a cost reduction program initiated in the fourth quarter of 2002. Expenses associated with the cost reduction initiative include CHF 257 million of severance-related costs, CHF 33 million of excess facilities costs and CHF 28 million of costs associated with the sale of a 90% participation in CSFB’s non-core South African equity brokerage business to a management empowerment company in the first half of 2003. The provision relating to private litigation represents management’s current estimate after consultation with counsel of the probable aggregate costs associated with such matters. CSFB believes that it has substantial defenses in these private litigation matters, which are at an early stage. Given that it is difficult to predict the outcome of these matters, where claimants seek large or indeterminate damages or where the cases present novel theories or involve a large number of parties, CSFB cannot state with confidence what the timing or eventual outcome will actually be. The provision for private litigation may be subject to revision in the future. Had the 2002 pre-tax exceptional items been recorded through the operating results, approximately CHF 242 million would have been reflected as personnel exp enses, approximately CHF 984 million would have related to valuation adjustments, provisions and losses and approximately CHF 163 million would have related to extraordinary expenses.

Exceptional items in 2001 of CHF 1,428 million (CHF 1,092 million, net of tax) included a pre-tax restructuring charge of CHF 1,259 million related to cost reduction initiatives and a pre-tax charge of CHF 169 million for a settlement with the SEC and NASDR regarding their investigations into certain IPO allocation practices. The restructuring charge, pursuant to a plan to implement cost cutting initiatives, was in reaction to the difficult market conditions and involved, among other things, CSFB's termination of approximately 2,500 employees in an effort to align more closely the size of its businesses in relation to changing market conditions and to begin to bring its cost structure in line with competitors. Approximately CHF 985 million of the restructuring charge related to personnel expenses (a significant portion of which would have been recorded as compensation expense in 2001 if such terminations had not occurred). Approximately 2 0% of these personnel expenses related to employee guarantees and amortization of retention awards for 2002 and 2003. The restructuring charge also included CHF 174 million related to facilities and approximately CHF 100 million related primarily to exiting non-core businesses. Had the 2001 pre-tax exceptional items been recorded through the operating results, approximately CHF 985 million would have been reflected as personnel expenses, CHF 397 million as valuation adjustments, provisions and losses, CHF 12 million as depreciation of non-current assets and CHF 34 million as operating income.

A cumulative effect of change in accounting principle of CHF 254 million was reported in 2002 with respect to previous periods, reflecting the change in accounting principle relating to the recognition of deferred tax assets on net operating losses. The change in accounting principle led to a reduction of taxes of CHF 868 million in 2002.


Year ended December 31, 2001 compared to year ended December 31, 2000
Operating income increased CHF 3,111 million, or 14.0%, in 2001. This was primarily due to an increase of 71.2% in operating income from the Fixed Income division of the Institutional Securities segment, which benefited from multiple interest rate cuts throughout the year, and the full-year impact of the acquisition of DLJ compared with two months in 2000. These increases were partially offset by significantly lower operating income from the Equity and Investment Banking divisions, which declined 22.4% and 23.6%, respectively. Institutional Securities contributed CHF 21,217 million and CSFB Financial Services contributed CHF 4,045 million to total operating income.

The percentage of 2001 operating income for North America increased compared with 2000 due to the full-year impact of the DLJ acquisition, particularly in the residential mortgage and leveraged finance areas within the Fixed Income division of the Institutional Securities segment and the CSFB Financial Services segment. Operating income from the interest rate and credit products groups in the Fixed Income division was also positively impacted by US interest rate cuts in 2001. The relative percentages of operating income for Europe and Asia/South America decreased in 2001 compared with 2000. Although European operating income increased in interest rate products, operating income in Europe and Asia/South America was adversely impacted by declines in Fixed Income emerging market activities. Operating income in the Equity and Investment Banking divisions declined in each region, particularly in North America.

Operating expenses increased CHF 3,642 million, or 21.9%, in 2001. Personnel expenses increased CHF 1,716 million, or 14.3%, primarily related to the full-year effect of the DLJ acquisition and increased headcount. Partially offsetting these increases was a reduction in incentive compensation costs in line with reduced revenue compared with 2000. In 2001, management initiated steps to align more closely the size of its businesses in relation to changing market conditions and to bring its cost structure in line with competitors. Other operating expenses increased CHF 1,926 million, or 42.0%, to CHF 6,512 million, primarily related to the full-year effect of the DLJ acquisition. Professional services fees (primarily consulting and legal fees associated with increased business volumes), technology and communication costs (primarily market quotation services and maintenance fees) and occupancy costs reflected the largest increases.

Depreciation of non-current assets increased CHF 278 million, or 41.3%, in 2001, primarily due to the full-year impact of the DLJ acquisition compared with two months in the previous year.

Valuation adjustments, provisions and losses increased CHF 1,004 million, or 187.0%, in 2001. The increase was primarily related to higher credit provisions recorded in Institutional Securities due to a substantial deterioration in the economic environment.

Acquisition interest increased CHF 603 million to CHF 828 million, amortization of retention payments increased CHF 631 million to CHF 812 million and amortization of acquired intangible assets and goodwill increased CHF 1,106 million to CHF 1,455 million in 2001. These increases were primarily a result of a full-year impact of the DLJ acquisition compared with two months in the previous year.

In 2001, CSFB recorded the exceptional items described above. In 2000, no exceptional items were recorded.


Institutional Securities
The Institutional Securities segment of CSFB provides financial advisory, lending and capital raising services and sales and trading for users and suppliers of capital globally and is operated and managed through three principal divisions:

• The Fixed Income division, which is active in underwriting, trading and distributing fixed-income financial instruments, offers derivatives and risk management products and provides research across its product range;

• The Equity division, which engages in sales, trading and research in equity and equity-related products, including listed and over-the-counter derivatives and risk management products, and securities lending; and

• The Investment Banking division, which serves a broad range of users and suppliers of capital, provides financial advisory and securities underwriting and placement services and, through the private equity group, makes privately negotiated equity investments.

Operating income for the Institutional Securities segment consists primarily of realized and unrealized net trading gains, net interest income from trading and lending activities, fee-based earnings from capital market activities, commissions on customer transactions and gains and losses on private equity investments. The results of certain non-continuing activities are recorded within Other.

For divisional reporting of operating income, equity capital market underwriting fees are shared between the Investment Banking and Equity divisions, and debt capital market underwriting fees are shared between the Investment Banking and Fixed Income divisions. Beginning in 2002, corporate derivatives income was shared among the Investment Banking, Fixed Income and Equity divisions based upon client relationships. Income from corporate lending was shared between the Investment Banking and Fixed Income divisions in 2001, and among the Investment Banking, Fixed Income and Equity divisions in 2002. Beginning in 2002, global prime banking revenues were shared between the Equity division of the Institutional Securities segment and the Pershing business of the CSFB Financial Services segment.

CSFB acquired DLJ on November 3, 2000, and the results of operations of DLJ after the date of acquisition are included in the results for the years ended December 31, 2002, 2001 and 2000. Consequently, results of Institutional Securities may not be fully comparable between periods.

In 2002, CSFB determined that certain non-continuing businesses, including real estate and distressed assets aggregating approximately CHF 2.5 billion and CHF 1.3 billion, respectively, as of June 30, 2002, would no longer be managed as part of the Fixed Income division, and, accordingly, the related results for the current and prior periods were reclassified from Fixed Income to Other. These assets are managed together with the already existing non-continuing real estate portfolios held for disposition and previously reported in Other. These assets include real estate and related loans and distressed assets, such as debt and equity positions in companies that have experienced, or may experience, debt restructuring.


Year ended December 31, 2002 compared to year ended December 31, 2001
Institutional Securities reported a net operating profit before exceptional items, acquisition-related costs, cumulative effect of change in accounting principle and minority interests (segment result) of CHF 615 million in the year ended December 31, 2002 compared with CHF 1,551 million in 2001. Institutional Securities measures performance based on pre-tax margin. At December 31, 2002, pre-tax margin was 2.8%, a decrease of 6.6 percentage points from December 31, 2001.

In 2002, operating income of Institutional Securities was CHF 15,125 million, a decrease of 28.7% from CHF 21,217 million in 2001 due to decreases in the Fixed Income and Equity divisions as well as write-downs related to the legacy asset portfolio reported within Other consisting of certain non-continuing real estate and distressed assets.

Operating income from Fixed Income decreased CHF 2,902 million, or 30.6%, in 2002, compared with 2001. The decrease was primarily attributable to an approximate 46% decline in the developed markets interest rate products business. This business operated in a more favorable environment of interest rate reduction in 2001 compared with a more stable interest rate environment in 2002. Additionally, operating income from the interest rate products business decreased due to a reduction in proprietary trading. Operating income from the credit products business also decreased compared with the prior year. The decline was partly attributable to a loss associated with notes issued by affiliates of National Century Financial Enterprises, Inc. in the principal amount of USD 258 million held by CSFB for its own account, which were written down by USD 214 million (CHF 332 million) to 17% of their principal amount. Approximately one-half of the write-do wn was recorded through operating income and the other half was recorded through valuation adjustments, provisions and losses. Additionally, a decrease in high-yield bond underwritings, a reduction in average loan inventory and a write-down of telecommunications positions contributed to an approximate 19% decline in operating income from leveraged and bank finance activity. Fixed Income's operating income also declined as a result of the revenue sharing agreement related to corporate derivatives instituted with the Equity and Investment Banking divisions in 2002.

The 2002 equity market was challenging, with reduced volumes in US new issuances, depressed trading volumes and reduced commission margins in the cash customer business. Several major market indices posted declines for the year. Operating income from Equity decreased CHF 2,065 million, or 31.4%, in 2002 compared with 2001. Operating income from the derivatives business fell approximately 36%, most significantly in convertible instruments, adversely impacted by corporate defaults, widening spreads, declines in the telecommunications and energy sectors and reduced new issuance activity, and index arbitrage, due to low market volatility and reduced activity. In addition, the over-the-counter business reflected reduced client activity, reduced option volatility and declining underlying stock prices.

Operating income from Investment Banking decreased CHF 228 million, or 4.9%, in 2002 compared with 2001. With the exception of the private equity business and the result of benefits from a new revenue-sharing arrangement with the Fixed Income and Equity divisions for certain derivative transactions, the decrease in Investment Banking was spread broadly across most business lines in the division. The most significant decline was attributable to merger and acquisition fee income, which decreased approximately 36%, generally consistent with the 30% global reduction in merger and acquisition transactions.

Offsetting these declines was an increase in the operating income from private equity due to increased gains on the sales of investments, including Swiss Re and reduced write-downs of investments. Private equity net gains (realized and unrealized gains and losses) were CHF 568 million in 2002, compared with a net loss of CHF 436 million in 2001. These amounts include gains from the sale of the strategic investment in Swiss Re of CHF 981 million and CHF 251 million in 2002 and 2001, respectively. The entire investment in Swiss Re has been sold. Management and performance fees were CHF 351 million and CHF 428 million in 2002 and 2001, respectively. The book value of the private equity investments was CHF 2.7 billion and CHF 3.7 billion as of December 31, 2002 and 2001, respectively. Fair value was CHF 2.8 billion and CHF 3.9 billion as of December 31, 2002 and 2001, respectively. During 2002, CSFB began to explore the sale of certain priva te equity investments, including investments in mature third-party leveraged buyout funds. During 2002, the aggregate amount of losses reported against operating income for these private equity investments, which are included above, totaled CHF 430 million.

For divisional reporting of operating income, equity capital market underwriting fees are shared between the Investment Banking and Equity divisions and debt capital market underwriting fees are shared between the Investment Banking and Fixed Income divisions.

Other operating income decreased CHF 897 million, from an operating income of CHF 451 million in 2001, to an operating loss of CHF 446 million in 2002, primarily as a result of losses associated with the non-continuing distressed trading and real estate portfolios held for disposition. Other operating income includes the results of investments and transactions that are not associated with any particular division in the Institutional Securities segment, including the non-continuing distressed trading and real estate portfolios held for disposition and unallocated interest income. The net exposure, including unfunded commitments, of the non-continuing real estate portfolio was CHF 2.1 billion as of December 31, 2002, a decrease of CHF 2.8 billion from December 31, 2001. As of December 31, 2002, the carrying amount of distressed portfolio assets totaled CHF 712 million compared with CHF 1.9 billion as of December 31, 2001. The aggregate amou nt of 2002 charges related to these non-continuing businesses totaled CHF 1.2 billion, of which CHF 1.0 billion was netted against operating income and CHF 240 million was reported in valuation adjustments, provisions and losses.

Operating expenses decreased CHF 5,044 million, or 29.8%, in 2002, compared with 2001. Personnel expenses decreased CHF 3,678 million, or 31.3%, to CHF 8,086 million, primarily due to the impact of reduced headcount and lower incentive compensation. Institutional Securities’ ratio of personnel expenses to operating income improved to 53.5% in 2002, from 55.4% in 2001. Other operating expenses decreased CHF 1,366 million, or 26.4%, to CHF 3,810 million, primarily as a result of reduced discretionary costs including travel and entertainment, professional services such as consulting, recruiting and advertising fees, and market data services.

Depreciation of non-current assets decreased CHF 160 million, or 20.7% compared with 2001, primarily due to reduced capital expenditures and leasehold improvements and a reduction in office facilities.

Valuation adjustments, provisions and losses increased CHF 1,081 million, or 71.4%, to CHF 2,595 million in 2002 compared with 2001. The increase was primarily related to corporate credit provisions, which increased 50%, and included a CHF 530 million provision related to a change in estimate for the risk of loss inherent in the portfolio of non-impaired loans and commitments. The Group released a portion of its RGBR, allocating CHF 382 million of the release to CSFB to offset the after-tax impact of the provision. The release was reflected as extraordinary income at the segment. Credit provisions related to non-continuing real estate lending activity increased to CHF 241 million in 2002 compared with a net release of provisions of CHF 64 million in 2001.

At December 31, 2002 and 2001, credit reserves related to the proprietary real estate business totaled approximately CHF 355 million and CHF 559 million, respectively. Institutional Securities had aggregate credit reserves related to loans outstanding of CHF 2,803 million at December 31, 2002. This included CHF 1,628 million in the Americas compared with CHF 1,365 million at December 31, 2001, CHF 895 million in Europe and CHF 255 million in Asia.


Year ended December 31, 2001 compared to year ended December 31, 2000
Operating income from Fixed Income increased CHF 3,947 million, or 71.2%, in 2001. The increase was primarily attributable to operating income from the interest rate products group, which increased by approximately 90% compared with 2000. Fixed Income operating income was positively impacted by a shift in client risk appetites that contributed to a general reallocation by market participants of investment into debt in 2001 and interest rate cuts in the United States and Europe. The developed markets credit group, which benefited from increased capital markets activity, as well as a substantial increase in refinancings of commercial and residential mortgages and lower financing costs due to interest rate declines, generated an operating income more than double that of the prior year. The Fixed Income division results were also strengthened by the full-year impact of the leveraged and bank finance and residential mortgage business lines acq uired from DLJ in November 2000. Emerging markets operating income declined, reflecting the difficult conditions in many emerging economies, including Argentina. Fourth quarter losses related to Argentina and Enron were CHF 244 million and CHF 53 million, respectively.

Operating income from Equity decreased CHF 1,896 million, or 22.4%, in 2001, primarily due to decreased customer-related trading revenues and fee revenues from capital market activities. The major market indices in the United States, the United Kingdom, Germany and Brazil were all lower in 2001 than in 2000, and global equity new issuance activity declined compared with the prior year. The cash customer business of brokerage and market-making activities declined approximately 30% across the United States, partially as a result of the impact of decimalization, Europe, Latin America and Asia. Operating income from risk arbitrage activities was significantly lower than the preceding year due to reduced merger and acquisition activity and a number of failed transactions. Equity derivatives operating income declined by approximately 10% due, in part, to the Enron bankruptcy in the fourth quarter of 2001, index arbitrage and reduced customer-re lated business in Switzerland. Results reflected trading losses of CHF 145 million related to Enron.

Operating income from Investment Banking decreased CHF 1,450 million, or 23.6%, in 2001, primarily due to a 21% decline in fees from global merger and acquisition activity, reflecting a 50% decline industry-wide. Operating income from equity new issuances decreased by 26%, reflecting the industry's 30% decline in this activity. Operating income from debt capital markets increased nearly 90% compared with 2000 due in part to the full-year impact of the DLJ acquisition, the shift away from equity securities and the effect of interest rate cuts. Operating income from the private equity group of the Investment Banking division decreased CHF 441 million primarily due to unrealized losses on its portfolio of investment funds. The decrease was partially offset by a CHF 251 million realized gain on the sale of an additional portion of a strategic investment in Swiss Re, the disposition of certain investments in the ordinary course of business and recurring investment advisory and management fee income from the portfolio of global investment funds. A gain of CHF 326 million on the sale of investments in Swiss Re was recorded in 2000. Management and performance fees were CHF 428 million and CHF 115 million in 2001 and 2000, respectively. The book value of the private equity investments was CHF 3.7 billion and CHF 4.2 billion as of December 31, 2001 and 2000, respectively. Fair value was CHF 3.9 billion and CHF 4.7 billion as of December 31, 2001 and 2000, respectively.

Other operating income increased CHF 524 million in 2001. The increase was primarily due to an increase in gains from the disposition of assets from the non-continuing real estate trading portfolio. Additionally, distressed trading operating income increased compared with 2000. Lower unallocated interest partially offset these increases, reflecting the interest rate decreases in 2001. As a result of the dispositions that began in 1999, the size of the non-continuing real estate portfolios has been significantly reduced. The net exposure, including unfunded commitments of the non-continuing real estate portfolio was CHF 4.9 billion and CHF 7.9 billion as of December 31, 2001 and 2000, respectively. The carrying amount of distressed portfolio assets totaled CHF 1.9 billion and CHF 2.4 billion as of December 31, 2001 and 2000, respectively. The aggregate amount of 2001 gains related to these non-continuing businesses totaled CHF 181 million, of which CHF 118 million was recorded as operating income and CHF 63 million was reported as a release in valuation adjustments, provisions and losses.

Operating expenses increased CHF 1,811 million, or 12.0%, in 2001. Personnel expenses increased CHF 540 million, or 4.8%, primarily as a result of the full-year effect of the DLJ acquisition and increased headcount. Partially offsetting these increases was a reduction in incentive compensation costs in line with reduced revenue compared with 2000. Institutional Securities’ ratio of personnel expenses to operating income decreased to 55.4% in 2001 from 55.9% in 2000. In 2001, management initiated steps to align more closely the size of its businesses in relation to changing market conditions and to bring its cost structure in line with competitors. Other operating expenses including brokerage, execution and clearing expenses increased CHF 1,271 million, or 32.5%, to CHF 5,176 million, primarily as a result of the full-year effect of the DLJ acquisition. Professional services fees (primarily consulting and legal fees associated with i ncreased business volumes), technology and communication costs (primarily market quotation services and maintenance fees) and occupancy costs reflected the largest increases.

Depreciation of non-current assets increased CHF 176 million, or 29.5%, primarily due to the full-year impact of the DLJ acquisition compared with two months in the prior period.

Valuation adjustments, provisions and losses increased CHF 978 million, or 182.5%, in 2001. The increase was primarily related to higher credit provisions due to a substantial deterioration in the economic environment in 2001. Fourth quarter provisions relating to Argentina were CHF 116 million and to Enron were CHF 16 million. Aggregate credit provisions charged in 2001 totaled CHF 1,213 million compared with CHF 910 million in 2000, which included recoveries related to assets previously written down. At December 31, 2001 and 2000, credit reserves related to the proprietary real estate business totaled approximately CHF 559 million and CHF 1,088 million, respectively. Institutional Securities had aggregate credit reserves related to loans outstanding of CHF 2,733 million at December 31, 2001. This included CHF 1,365 million in the Americas, principally the United States, compared with CHF 421 million at December 31, 2000, and CHF 568 mil lion in Asia compared with CHF 512 million at December 31, 2000.


CSFB Financial Services
The CSFB Financial Services segment provides international asset management services to institutional, mutual fund and private investors through its asset management business, which operates under the main brand name Credit Suisse Asset Management, or CSAM, financial services to broker-dealers and investment managers through Pershing, and financial advisory services to high-net-worth individuals and corporate investors through Private Client Services. Its main sources of operating income are asset-based fee income and transaction fees from its investment advisory business.

In 2001 and 2002, the results of CSFB Financial Services include a full-year contribution from DLJ's business, which was included from November 3, 2000. In addition, on December 7, 2001, CSFB Financial Services acquired SLC Asset Management Limited, SLC Pooled Pensions Limited and Sun Life of Canada Unit Managers Limited, the principal UK asset management subsidiaries of Sun Life Financial Services of Canada Inc, which we refer to collectively as SLCAM. The companies are asset management companies with contracts for the management of the insurance assets (including property) of their former affiliate, Sun Life Assurance Company of Canada (U.K.) Limited and third-party institutional and retail funds. The 2002 results include for the first time the full-year contribution of SLCAM.

In the first quarter of 2002, CSFB sold its CSFB direct business in the United States and the United Kingdom and its brokerage service subsidiary Autranet Inc. The combined operating income and operating expenses of these operations was CHF 255 million and CHF 363 million, respectively, in 2001. Assets under management for CSFB direct totaled CHF 34.6 billion as of December 31, 2001. Beginning in the second quarter of 2002, CSFB Financial Services results included the Swiss transaction services business, which provides transactional services (cash clearing, payments and custody) to financial institutions.

As a result of the acquisitions and dispositions noted above, the results between periods may not be fully comparable.

In January 2003, CSFB announced a definitive agreement to sell its Pershing operation to The Bank of New York Company, Inc. for USD 2.0 billion (CHF 2.8 billion) in cash, together with the repayment of a USD 480 million (CHF 667 million) subordinated loan and an additional contingent payment of up to USD 50 million (CHF 70 million) based on future performance. The 2002 operating income and operating expenses of Pershing were CHF 1,332 million and CHF 1,031 million, respectively.


Year ended December 31, 2002 compared to year ended December 31, 2001
CSFB Financial Services measures business performance based on growth of discretionary institutional net new assets and Private Client Services net new assets. As a result of negative economic and market conditions, discretionary institutional assets under management fell CHF 85.5 billion, or 23.5%, during 2002, compared with an increase of CHF 4.1 billion, or 1.1%, in 2001. Private Client Services net new assets decreased CHF 7.8 billion, or 49.4%, during the year ended December 31, 2002, compared with an increase of CHF 11.3 billion, or 251.1%, in 2001.

Operating income was CHF 3,235 million in 2002, a decrease of 20.0% compared to 2001. Net operating profit before exceptional items, acquisition-related costs, cumulative effect of change in accounting principle and minority interests (segment result) was CHF 353 million, reflecting a decrease of CHF 84 million, or 19.2%, in 2002 as a result of net outflows of assets under management at CSAM, a decline in major market indices globally, lower trading volumes, an overall decline in customer debit balances at Pershing and Private Client Services and the sale of CSFB direct and Autranet. Net commission and service fee income decreased CHF 522 million, or 16.3%, and net interest income decreased CHF 196 million, or 36.4%.

Operating expenses decreased CHF 726 million, or 22.0%, with personnel expenses declining CHF 395 million, or 20.1%, and other operating expenses declining CHF 331 million, or 24.8%, in 2002 primarily as a result of the sales of CSFB direct and Autranet and cost reduction measures, including a 16% headcount reduction. Excluding divestitures, expenses were down 12% compared with 2001.

In 2002, assets under management decreased CHF 154.0 billion, or 24.0%, of which CSAM’s discretionary institutional assets decreased CHF 85.5 billion, or 23.5%. Of the decline in discretionary institutional assets under management, CHF 26.2 billion was attributable to foreign exchange movements, CHF 28.0 billion was related to performance issues and CHF 31.3 billion was attributed to a net outflow of assets. CSAM's advisory assets under management decreased CHF 10.5 billion to CHF 134.1 billion, and Private Client Services’ discretionary and advisory assets under management decreased by CHF 25.4 billion to CHF 71.7 billion.


Year ended December 31, 2001 compared to year ended December 31, 2000
Operating income was CHF 4,045 million, reflecting an increase of CHF 1,986 million, or 96.5%, in 2001. Net operating profit before exceptional items, acquisition-related costs, cumulative effect of change in accounting principle and minority interests (segment result) was CHF 437 million in 2001, reflecting a small increase from 2000. Net commission and service fee income increased CHF 1,388 million, or 76.6%, and net interest income increased CHF 343 million, or 175.9%. The overall movements reflect the full-year contribution from DLJ in 2001 compared to two months in 2000, partially offset by reduced CSAM revenues adversely affected by lower equity market values. Business levels in the Pershing and Private Client Services businesses were negatively impacted by a lower level of retail investor activity in the equity markets in 2001.

Operating expenses increased CHF 1,831 million, or 124.4%, with personnel expenses increasing CHF 1,176 million, or 148.7%, and other operating expenses increasing CHF 655 million, or 96.2%, in 2001 as a result of the full-year impact of the acquisition of DLJ compared with two months in 2000. The increases were partially offset by cost control measures implemented at CSAM during 2001.

In 2001, assets under management increased CHF 10.6 billion, or 1.7%, with discretionary institutional assets increasing CHF 4.1 billion, or 1.1%. Of the increase in discretionary institutional assets under management, CHF 9.2 billion was attributable to net new business and CHF 26.2 billion to the SLCAM acquisition. This increase was offset by a CHF 31.3 billion decrease due to financial market movements. Private Client Services’ discretionary and advisory assets under management decreased CHF 10.5 billion, primarily due to adverse financial market movements and the effect of foreign exchange movements of CHF 26.3 billion offset by net new business of CHF 15.8 billion.

Credit Suisse First Boston business unit income statement 1)
in CHF m		2002	2001	2000
Operating income		18'360	25'262	22'151
Personnel expenses		9'658	13'731	12'015
Other operating expenses		4'815	6'512	4'586
Operating expenses		14'473	20'243	16'601
Gross operating profit		3'887	5'019	5'550
Depreciation of non-current assets		757	951	673
Valuation adjustments, provisions and losses	2)	2'618	1'541	537
Net operating profit/(loss) before extraordinary and exceptional items, acquisition-related costs, cumulative effect of change in accounting principle and taxes		512	2'527	4'340
Extraordinary income/(expenses), net		408	(15)	(1)
Taxes	3) 4)	48	(524)	(1'107)
Net operating profit/(loss) before exceptional items, acquisition-related costs, cumulative effect of change in accounting principle and minority interests		968	1'988	3'232
Acquisition interest		(504)	(828)	(225)
Amortization of retention payments		(649)	(812)	(181)
Amortization of acquired intangible assets and goodwill		(1'303)	(1'455)	(349)
Exceptional items		(1'389)	(1'428)	0
Tax impact		761	1'148	167
Cumulative effect of change in accounting principle	3)	254	–	–
Net profit/(loss) before minority interests		(1'862)	(1'387)	2'644
Minority interests		0	(1)	(3)
Net profit/(loss)		(1'862)	(1'388)	2'641
Other data:
Pre-tax margin	5)	(15.0%)	(8.2%)	16.3%
Pre-tax margin (operating)	6)	(1.3%)	3.5%	17.8%
Return on average allocated capital	5)	(12.9%)	(8.8%)	–	7)
Return on average allocated capital (operating)	6)	1.5%	5.7%	–	7)
1) Certain reclassifications have been made to conform to the current presentation. The business unit results reflect the results of the separate segments comprising the business unit. Certain acquisition-related costs, including acquisition interest, amortization of retention payments and amortization of acquired intangible assets and goodwill, exceptional items and cumulative effect of change in accounting principle not allocated to the segments are included in the business unit results. The exceptional items are discussed on page 67. Certain other items, including brokerage, execution and clearing expenses and contractor costs have been reclassified in the segment and business unit results and are adjusted at the Corporate Center in accordance with Swiss GAAP and reflected in the Group’s consolidated results. For a complete reconciliat ion of the business unit results to the Group’s consolidated results and a discussion of the material reconciling items, please refer to “Reconciliation of operating to consolidated results”.
2) The amounts in 2001 and 2000 include valuation adjustments taken at Group level of CHF 194 m and CHF 6 m, respectively, resulting from the difference between the statistical and the actual credit provisions. As of 01.01.02, no such adjustments are recorded within Credit Suisse First Boston and the amounts reported in 2002 reflect actual credit provisions.
3) In 2002, Credit Suisse Group adopted a change in accounting principle relating to the recognition of deferred tax assets on net operating losses. The retroactive application of this change in accounting principle would have resulted in taxes for 2001 of CHF -248 m. 2000 figures were not impacted.
4) Excluding tax impact on acquisition-related costs as well as exceptional items.
5) Based on the business unit results including certain acquisition-related costs, exceptional items and cumulative effect of change in accounting principle not allocated to the segments as well as certain reclassifications.
6) Based on the results of the separate segments comprising the business unit, which exclude certain acquisition-related costs, exceptional items and cumulative effect of change in accounting principle not allocated to the segments and include certain reclassifications.
7) Return on average allocated capital and operating return on average allocated capital as previously reported were 19.7% and 21.8%, respectively. Due to the realignment effective January 1, 2002, these numbers are not comparable to subsequent periods.

Reconciliation to net operating profit
in CHF m	2002	2001	2000
Net profit/(loss)	(1'862)	(1'388)	2'641
Amortization of acquired intangible assets and goodwill	1'303	1'455	349
Exceptional items	1'389	1'428	0
Tax impact	(357)	(602)	(43)
Cumulative effect of change in accounting principle	(254)	–	–
Net operating profit	219	893	2'947

Exceptional items
in CHF m	2002	2001
Operating income	0	34
Personnel expenses	242	985
Depreciation of non-current assets	0	12
Valuation adjustments, provisions and losses	984	397
Extraordinary expenses	163	0
Taxes	(120)	(336)
Exceptional items	1'269	1'092

Institutional Securities income statement 1)
in CHF m		2002	2001	2000
Fixed Income	2)	6'586	9'488	4'894
Equity		4'516	6'581	8'477
Investment Banking		4'469	4'697	6'147
Other	2)	(446)	451	574
Operating income		15'125	21'217	20'092
Personnel expenses		8'086	11'764	11'224
Other operating expenses		3'810	5'176	3'905
Operating expenses		11'896	16'940	15'129
Gross operating profit		3'229	4'277	4'963
Depreciation of non-current assets		612	772	596
Valuation adjustments, provisions and losses		2'595	1'514	536
Net operating profit/(loss) before extraordinary and exceptional items, acquisition-related costs, cumulative effect of change in accounting principle and taxes		22	1'991	3'831
Extraordinary income/(expenses), net		408	(1)	0
Taxes	3)	185	(439)	(1'033)
Net operating profit/(loss) before exceptional items, acquisition-related costs, cumulative effect of change in accounting principle and minority interests (segment result)		615	1'551	2'798
Other data:
Pre-tax margin	4)	2.8%	9.4%	19.1%
1) Certain reclassifications have been made to conform to the current presentation. Certain acquisition-related costs, including acquisition interest, amortization of retention payments and amortization of acquired intangible assets and goodwill, exceptional items and cumulative effect of change in accounting principle not allocated to the segments are included in the business unit results.
2) Reflects the movement of the results of certain non-continuing real estate and distressed assets from Fixed Income to Other.
3) In 2002, Credit Suisse Group adopted a change in accounting principle relating to the recognition of deferred tax assets on net operating losses. If the change in accounting principle had not been adopted in 2002, taxes would have been CHF -641 m.
4) Based on the segment results, which exclude certain acquisition-related costs, exceptional items and cumulative effect of change in accounting principle not allocated to the segment.

The following table sets forth the capital market revenues for the years ended December 31:
in CHF m	2002	2001	2000
Equity capital markets	1'216	1'869	2'613
Debt capital markets	900	1'156	477

CSFB Financial Services income statement 1)
in CHF m		2002	2001	2000
Net interest income		342	538	195
Net commission and service fee income		2'677	3'199	1'811
Net trading income		168	254	48
Other ordinary income		48	54	5
Operating income		3'235	4'045	2'059
Personnel expenses		1'572	1'967	791
Other operating expenses		1'005	1'336	681
Operating expenses		2'577	3'303	1'472
Gross operating profit		658	742	587
Depreciation of non-current assets		145	179	77
Valuation adjustments, provisions and losses		23	27	1
Net operating profit before extraordinary and exceptional items, acquisition-related costs, cumulative effect of change in accounting principle and taxes		490	536	509
Extraordinary income/(expenses), net		0	(14)	(1)
Taxes	2)	(137)	(85)	(74)
Net operating profit before exceptional items, acquisition-related costs, cumulative effect of change in accounting principle and minority interests (segment result)		353	437	434
Other data:
Growth in discretionary institutional assets under management		(23.5%)	1.1%	11.1%
of which net new assets		(8.6%)	2.6%	7.5%
Growth in net new assets Private Client Services		8.2%	14.6%	n/a
1) Certain reclassifications have been made to conform to the current presentation. Certain acquisition-related costs, including acquisition interest, amortization of retention payments and amortization of acquired intangible assets and goodwill, exceptional items and cumulative effect of change in accounting principle not allocated to the segments are included in the business unit results.
2) In 2002, Credit Suisse Group adopted a change in accounting principle relating to the recognition of deferred tax assets on net operating losses. If the change in accounting principle had not been adopted in 2002, taxes would have been CHF -179 m.

The following tables set forth details of assets under management:
in CHF bn	31.12.02	31.12.01	31.12.00
Advisory	189.3	246.9	245.8
Discretionary	297.2	393.6	384.1
of which institutional asset management	278.7	364.2	360.1
Assets under management	486.5	640.5	629.9
	2002	2001	2000
Growth in discretionary assets under management	(23.5%)	1.1%	11.1%	1)
of which growth in net new assets	(8.6%)	2.6%	7.5%	1)
of which market movement and structural effects	(14.9%)	(8.8%)	(8.1%)	1)
of which acquisitions/(divestitures)	–	7.3%	11.7%	1)
Certain reclassifications have been made to conform to the current presentation.
1) Growth ratios related to assets under management and net new assets for 2000 reflecting the realignment have not been restated.

OPERATING AND FINANCIAL REVIEW | CORPORATE CENTER

The results presented as Corporate Center include our parent company operations including Group financing initiatives and income and expense items related to centrally managed, own-use real estate, mainly comprised of bank premises within Switzerland. In addition, it includes consolidation adjustments and adjustments to segment accounts related to management reporting principles and reclassifications. For a discussion of these adjustments, please refer to “Reporting principles.”

The Corporate Center performs typical parent company functions for the benefit of the Group as a whole. Overhead costs attributable to operating businesses are allocated to the respective segments. Certain Corporate Center expenses, primarily if they are associated with Group-sponsored projects and restructuring provisions are not allocated to the segments.

The following are part of the Corporate Center:

• Group internal audit reporting to the Chairman of the Board of Directors;

• Group communications reporting to the Group Co-Chief Executive Officers;

• Group-level functions assigned to the Chief Financial Officer, including accounting and financial reporting, group accounting policies, legal and compliance, tax, investor relations, capital, liquidity management and corporate development; and

• Various functions assigned to the Chief Risk Officer, including risk management, management support, security/investigations, executive relations and special advisory services.

Typically, the Corporate Center reports negative operating income, which is primarily related to an offset of a reclassification between operating income and expenses within the Institutional Securities segment. Institutional Securities’ operating income and expenses differ from the Group’s consolidated operating income and expenses because brokerage, execution and clearing expenses are included in operating expenses instead of being netted against operating income. This allows Institutional Securities' presentation of the income statement to be more consistent with certain of its US competitors. Please refer to "Operating and financial review Credit Suisse First Boston" and "Reconciliation of operating to consolidated results" for further information. The reclassification from operating income to operating expenses recorded at the Corporate Center was CHF 897 million, CHF 901 million and CHF 472 million in 2002, 2001 and 2000 , respectively.


Year ended December 31, 2002 compared to year ended December 31, 2001
A comparison of the gross operating profit/(loss) is discussed, as it is more meaningful than discussing operating income and operating expenses on a gross basis because of the offsetting reclassifications from operating income to operating expenses mentioned above.

Gross operating loss was CHF 495 million in 2002 compared to a gross operating profit of CHF 453 million in 2001. This was primarily due to the income statement recognition of significantly lower valuations of investments held at the Corporate Center, which had a negative effect on the operating income of the Corporate Center of CHF 838 million. In addition, the following reclassifications, which do not have an impact on net profit/(loss) of the Corporate Center, were recorded: a loss of CHF 141 million resulting from the sale of Winterthur International, CHF 21 million related to expected losses on disposals to be completed in 2003 and a gain of CHF 30 million resulting from the sale of its Paris-based operations. These amounts were recorded as operating income at the insurance segments and reclassified to extraordinary income/(expense), net within the Corporate Center result in line with the treatment of other dispositions within the Gr oup. In addition, minority interests in the amount of CHF 79 million, which were offset against operating income within CSFB, were reclassified to minority interests at the Corporate Center.

Depreciation of non-current assets decreased CHF 34 million, or 8.4%, in 2002 primarily as a result of lower depreciation on own-use real estate.

Valuation adjustments, provisions and losses increased CHF 167 million, or 61.6%, in 2002. This increase primarily resulted from a charge relating to an adjustment in the method of estimating inherent losses related to lending activities as discussed under “Reporting Principles”. The impact of this charge, after tax, was offset by a release from RGBR, which is recorded as extraordinary income in the consolidated income statement. Expected credit-related losses within CSFS were CHF 120 million higher than actual credit-related losses in 2002 and primarily resulted from anticipated liquidations of certain positions in the credit portfolio of Corporate & Retail Banking.

Extraordinary income/(expenses), net increased CHF 289 million from an expense of CHF 239 million in 2001 to an income of CHF 50 million in 2002, primarily related to the reclassifications associated with the release of RGBR and the disposals of certain insurance operations as discussed above.


Year ended December 31, 2001 compared to year ended December 31, 2000
Gross operating profit was CHF 453 million in 2001 compared to a gross operating loss of CHF 81 million in 2000. This was primarily due to the following reclassifications, which did not have an impact on net profit/(loss) of the Corporate Center. There was a realized loss from the sale of Winterthur International and the insurance subsidiaries in Austria and Hong Kong of CHF 231 million, recorded as operating income at Insurance and reclassified to extraordinary income/(expense), net within the Corporate Center result in line with the treatment of other dispositions within the Group. In addition, minority interests, which were offset against operating income within CSFB, were reclassified to minority interests at the Corporate Center.

Depreciation of non-current assets increased CHF 123 million, or 43.6%, in 2001. This was due to a restructuring charge of CHF 48 million associated with the closing down of the Luxembourg-based Pan-European online brokerage platform and higher depreciation on own-use real estate.

Valuation adjustments, provisions and losses increased CHF 266 million primarily due to the higher than expected credit-related losses of CHF 216 million, of which CHF 194 million related to CSFB, as a result of the substantial deterioration of the economic environment in the second half of 2001. In addition, a provision of CHF 50 million was recorded in 2001 in respect of assets of employees of SAir Group held in the SAir staff deposit accounts after SAir Group filed for bankruptcy protection.

Extraordinary income/(expenses), net decreased CHF 1,472 million in 2001. This was primarily due to a restructuring provision of CHF 1,499 recorded in 2000 related to the acquisition of DLJ and an allocation to RGBR in 2000 of CHF 190 million, which was partially offset by a realized loss in 2001 associated with the sale of certain Winterthur subsidiaries, as mentioned above.

Corporate Center income statement
in CHF m	2002	2001	2000
Operating income	(1'648)	(628)	(466)
Personnel expenses	546	723	946
Other operating expenses	(1'699)	(1'804)	(1'331)
Operating expenses	(1'153)	(1'081)	(385)
Gross operating profit/(loss)	(495)	453	(81)
Depreciation of non-current assets	371	405	282
Amortization of acquired intangible assets and goodwill	(2)	(8)	(1)
Valuation adjustments, provisions and losses	438	271	5
Profit/(loss) before extraordinary items, cumulative effect of change in accounting principle and taxes	(1'302)	(215)	(367)
Extraordinary income/(expenses), net	50	(239)	(1'711)
Taxes	104	1	904
Net profit/(loss) before minority interests	(1'148)	(453)	(1'174)
Minority interests	(134)	(157)	(58)
Net profit/(loss)	(1'282)	(610)	(1'232)

OPERATING AND FINANCIAL REVIEW | SUPPLEMENTAL INFORMATION

The following tables provide the results of CSFB and its segments on US dollar basis.

Credit Suisse First Boston business unit income statement 1)
in USD m		2002	2001	2000
Operating income		11'769	14'948	13'264
Personnel expenses		6'191	8'125	7'194
Other operating expenses		3'086	3'852	2'745
Operating expenses		9'277	11'977	9'939
Gross operating profit		2'492	2'971	3'325
Depreciation of non-current assets		485	562	403
Valuation adjustments, provisions and losses	2)	1'679	912	322
Net operating profit before extraordinary and exceptional items, acquisition-related costs, cumulative effect of change in accounting principle and taxes		328	1'497	2'600
Extraordinary income/(expenses), net		262	(10)	(1)
Taxes	3) 4)	30	(310)	(663)
Net operating profit before exceptional items, acquisition-related costs, cumulative effect of change in accounting principle and minority interests		620	1'177	1'936
Acquisition interest		(323)	(489)	(135)
Amortization of retention payments		(416)	(480)	(109)
Amortization of acquired intangible assets and goodwill		(835)	(862)	(210)
Exceptional items		(890)	(845)	0
Tax impact		488	679	101
Cumulative effect of change in accounting principle	3)	162	–	–
Net profit/(loss) before minority interests		(1'194)	(820)	1'583
Minority interests		0	(1)	(2)
Net profit/(loss)		(1'194)	(821)	1'581
1) Certain reclassifications have been made to conform to the current presentation. The business unit results reflect the results of the separate segments comprising the business unit. Certain acquisition-related costs, including acquisition interest, amortization of retention payments and amortization of acquired intangible assets and goodwill, exceptional items and cumulative effect of change in accounting principle not allocated to the segments are included in the business unit results. Certain other items, including brokerage, execution and clearing expenses, contractor costs and expenses related to certain redeemable preferred securities classified as minority interests, have been reclassified in the segment and business unit results and are adjusted at the Corporate Center in accordance with Swiss GAAP and reflected in the Group’s c onsolidated results.
2) The amounts in 2001 and 2000 include valuation adjustments taken at Group level of USD 115 m and USD 4 m, respectively, resulting from the difference between the statistical and the actual credit provisions. As of 01.01.02, no such adjustments are recorded within Credit Suisse First Boston and the amounts reported in 2002 reflect actual credit provisions.
3) In 2002, Credit Suisse Group adopted a change in accounting principle relating to the recognition of deferred tax assets on net operating losses. The retroactive application of this change in accounting principle would have resulted in taxes for 2001 of USD -147 m. 2000 figures were not impacted.

Reconciliation to net operating profit
in USD m	2002	2001	2000
Net profit/(loss)	(1'194)	(821)	1'581
Amortization of acquired intangible assets and goodwill	835	862	210
Exceptional items	890	845	0
Tax impact	(229)	(356)	(27)
Cumulative effect of change in accounting principle	(162)	–	–
Net operating profit	140	530	1'764

Exceptional items
in USD m	2002	2001
Operating income	0	20
Personnel expenses	155	583
Depreciation of non-current assets	0	7
Valuation adjustments, provisions and losses	631	235
Extraordinary expenses	104	0
Taxes	(77)	(199)
Exceptional items	813	646

Institutional Securities income statement 1)
in USD m		2002	2001	2000
Fixed Income	2)	4'222	5'614	2'930
Equity		2'895	3'894	5'076
Investment Banking		2'864	2'779	3'681
Other	2)	(286)	268	344
Operating income		9'695	12'555	12'031
Personnel expenses		5'183	6'961	6'720
Other operating expenses		2'442	3'062	2'338
Operating expenses		7'625	10'023	9'058
Gross operating profit		2'070	2'532	2'973
Depreciation of non-current assets		392	457	357
Valuation adjustments, provisions and losses		1'664	896	321
Net operating profit before extraordinary and exceptional items, acquisition-related costs, cumulative effect of change in accounting principle and taxes		14	1'179	2'295
Extraordinary income/(expenses), net		262	(1)	0
Taxes	3)	118	(260)	(619)
Net operating profit before exceptional items, acquisition-related costs, cumulative effect of change in accounting principle and minority interests (segment result)		394	918	1'676
1) Certain reclassifications have been made to conform to the current presentation. Certain acquisition-related costs, including acquisition interest, amortization of retention payments and amortization of acquired intangible assets and goodwill, exceptional items and cumulative effect of change in accounting principle not allocated to the segments are included in the business unit results.
2) Reflects the movement of the results of certain non-continuing real estate and distressed assets from Fixed Income to Other.
3) In 2002, Credit Suisse Group adopted a change in accounting principle relating to the recognition of deferred tax assets on net operating losses. If the change in accounting principle had not been adopted in 2002, taxes would have been USD -411 m.

CSFB Financial Services income statement 1)
in USD m		2002	2001	2000
Net interest income		219	318	117
Net commission and service fee income		1'716	1'893	1'084
Net trading income		108	150	29
Other ordinary income		31	32	3
Operating income		2'074	2'393	1'233
Personnel expenses		1'008	1'164	474
Other operating expenses		644	790	407
Operating expenses		1'652	1'954	881
Gross operating profit		422	439	352
Depreciation of non-current assets		93	105	46
Valuation adjustments, provisions and losses		15	16	1
Net operating profit before extraordinary and exceptional items, acquisition-related costs, cumulative effect of change in accounting principle and taxes		314	318	305
Extraordinary income/(expenses), net		0	(9)	(1)
Taxes	2)	(88)	(50)	(44)
Net operating profit before exceptional items, acquisition-related costs, cumulative effect of change in accounting principle and minority interests (segment result)		226	259	260
1) Certain reclassifications have been made to conform to the current presentation. Certain acquisition-related costs, including acquisition interest, amortization of retention payments and amortization of acquired intangible assets and goodwill, exceptional items and cumulative effect of change in accounting principle not allocated to the segments are included in the business unit results.
2) In 2002, Credit Suisse Group adopted a change in accounting principle relating to the recognition of deferred tax assets on net operating losses. If the change in accounting principle had not been adopted in 2002, taxes would have been USD -115 m.

RISK MANAGEMENT





CREDIT SUISSE GROUP RISK MANAGEMENT


Introduction
We pursue a comprehensive approach to risk management. The primary objectives of our risk management strategy are to preserve the Group's capital base, to optimize the allocation of capital and to foster a proactive risk culture. Significant personnel and technological resources are focused on ensuring that we remain a leader in risk management. We use refined quantitative and qualitative tools aimed at permitting our experienced decision makers to minimize the potential for undesired risk exposures and optimize the allocation of capital throughout our businesses. We are exposed to many risks and differentiate among them using the following eight major risk categories. A business activity can involve exposure to more than one of the following categories:

• Market risk – defined as the risk of a potential loss in fair values arising from adverse changes in market rates and prices;

• Credit risk – primarily the risk of counterparty default, i.e. the risk that a counterparty is unable to meet its financial obligations. In the event of a default, a bank generally incurs a loss equal to the amount owed by the debtor, less a recovery amount resulting from foreclosure, liquidation of collateral or the restructuring of the company;

• Insurance risk – the risk that product pricing and reserves do not appropriately cover claims experience;

• Business risk – the risk that our businesses are not able to cover their ongoing expense with ongoing income subsequent to a severe crisis – excluding expense and income items already captured by the other risk categories;

• Liquidity and funding risk – the risk that we are unable to fund assets or meet obligations at a reasonable or, in case of extreme market disruptions, any price;

• Operational risk – the risk of loss resulting from inadequate or failed internal processes, people and systems or from external events;

• Strategy risk – the risk that our business activities are not responsive to changes in industry trends; and

• Reputation/brand risk – the risk that our market or service image declines.

While most segments are exposed to all risk types, their relative significance varies. Market risk of trading portfolios is concentrated at Institutional Securities and market risk of non-trading portfolios is found at Institutional Securities and our insurance business while credit and liquidity risks are significant at Corporate & Retail Banking and within Institutional Securities. Insurance risks are found exclusively at Insurance and Life & Pensions. All segments are exposed to business, operational, reputation/brand and strategy risks.

The Group structure as a set of distinct operating segments is intended to enhance transparency and to focus management's specific expertise on those risks particularly important to their businesses. Group-wide risk management approaches are applied uniformly where appropriate and relevant.


Risk management governance
The systematic quantification of risks and subsequent establishment of appropriate limits represent only part of the approach applied to risk management. Integrated risk management also includes the development and maintenance of an appropriate risk and control culture as part of an overall corporate culture. Aspects of our risk management oversight are performed at several levels:

• Group Board of Directors and other legal entities' Boards of Directors – responsible for all direction, supervision and control of the Group, including delegated and retained risk management oversight and strategic risk management. The Group Board of Directors sets guidelines for the Group's general risk policy and strategy and regularly reviews major risk exposures.

• Audit Committee – primary function is to assist the Boards of Directors in fulfilling their oversight responsibilities by monitoring management's approach to ensuring the adequacy of the financial reporting process and systems of internal controls, accounting, risk management, and legal and regulatory compliance, as well as monitoring the independence and performance of the external and internal auditors. Moreover, a separate Risk Committee of the Group Board of Directors is planned to be functional by May 2003, which will among other items regularly review major risk exposures.

• Internal and external auditors – assist the Boards of Directors, the Audit Committees and management in fulfilling their responsibilities by providing an objective and independent evaluation of financial accounts or effectiveness of control, risk management and governance processes.

• Group Management (Group Executive Board, Group Chief Risk Officer, various risk committees) – review and approve risk management standards, processes and general instructions, review aggregated risk reports, assess developments, monitor the implementation of the Group's and business units' risk management strategies and offer guidance when appropriate.

• Business Unit Executive Boards and Boards of Directors of the subsidiaries including their Audit Committees – establish, where relevant, risk limits after review by Group bodies and provide general oversight of risk limit adherence, risk management conduct and results.

• Various business unit and segment risk committees – approve processes and procedures, recommend high-level limits for further approval by the Group and legal entities Boards of Directors and regularly monitor and manage the development of risks.

We encourage a disciplined risk culture by valuing integrity and setting high ethical standards, clear lines of responsibility and accountability, segregation of duties and control systems. Our Boards of Directors view internal and external auditors as important evaluators of the internal control systems.

Our business units and segments are responsible for implementing the Group's overall risk management strategy. Each business unit has a risk management organization tailored to manage the risk exposures of its particular business. The structures include risk committees, assessment tools, systems, procedures and controls. The control systems are based on a comprehensive set of internal controls with control activities such as approvals, authorizations, compliance checks and follow-ups on non-compliance defined at every level of the business. The relevant measurement and monitoring and control functions are independent of the front office.


Economic Risk Capital

Introduction
In our industry, economic capital represents the emerging best practice for measuring and reporting all quantifiable risks. It is called “economic” capital because it measures risk in terms of economic realities rather than regulatory or accounting rules. We have established an economic capital model – called Economic Risk Capital (ERC) – as

• A consistent and comprehensive risk management tool;

• An important element in the capital management and planning process; and

• An important element in the performance measurement process.

Representing the common standard for assessing risk, ERC considerably strengthens our ability to manage the risk profile on a consolidated basis and to assess our risk-bearing capacity in relation to the financial resources. By providing a common language and terminology for risk across the Group, the ERC effort has also created considerable side benefits in terms of increased risk transparency and know-how sharing across the Group. As with other risk measures, the primary merit of ERC lies in its ability to provide meaningful signals regarding risk trends over time. In contrast, comparisons with other firms’ economic capital estimates are not meaningful, as there is substantial variation across institutions in terms of the definition of economic capital, model coverage, assumptions, data series and implementation specifics.


Concept
The ERC model is designed to measure all quantifiable risks associated with the Group’s activities on a consistent and comprehensive basis. It is based on the following general definition:

Economic Risk Capital is the economic capital needed to remain solvent and in business even under extreme market, business and operational conditions, given the institution’s target financial strength (e.g. credit rating, in our case AA).

Depending on the underlying source of risk, we distinguish among three fundamental risk categories:

• Position risk ERC the level of unexpected loss in economic value on the Group’s portfolio of positions over a one-year horizon, that is exceeded with a given, small probability (1% for risk management purposes; 0.03% for capital management purposes).

• Operational risk ERC the estimated worst-case loss resulting from inadequate or failed internal processes, people and systems or from external events;

• Business risk ERC the difference between expenses and revenues in a severe market-event, exclusive of the elements captured by Position risk ERC and Operational risk ERC.

Position risk ERC: This includes all risks associated with the Group’s positions, regardless of whether they translate into balance sheet exposures. The term position risk is not confined to the positions typically held by banks, but also includes the risks associated with the Group’s private equity and strategic investments, as well as the risks incurred by the insurance and asset management activities undertaken by the Winterthur entities. In order to represent a comprehensive risk measure, ERC aims to reflect the underlying sources of risk in an integrated way. ERC therefore not only treats all financial positions on a consistent economic basis, ignoring potential differences along other dimensions (e.g. in terms of their accounting treatment), it also does not distinguish between market and credit risks in the conventional way. Instead, the associated risks are treated on an integrated basis according to the underlying so urce of risk. For example, while the foreign exchange risk associated with a rouble FX position is typically treated as a market risk, it is considered an emerging market country risk in the ERC model, because the underlying source of risk is an emerging market country risk. Hence, ERC reflects the Group’s risk universe in a way that allows for an integrated measure based on the underlying source of risk, while maintaining sufficient granularity to take account of the different modeling approaches needed to capture the subtleties of the different businesses or risks.

While position risks constitute the most direct and significant source of risks for the Group, ERC also takes account of more indirect risks to the Group’s financial resources. Although these indirect risks may not easily lend themselves to quantification (operational risk) or give rise to challenging conceptual issues (business risk), they can have a substantial impact on the Group and therefore must be identified, addressed and reflected in the assessment of the Group’s solvency.

Operational risk ERC: While we do not believe that capital charges – either external or internal – represent an effective substitute for adequate management processes, the ability to absorb operational risk-related losses must be reflected in the ERC framework. Due to the limitations of current modelling techniques for operational risks (especially with respect to the so-called “low frequency – high impact” operational risks that are relevant from a capital and risk perspective), the ERC estimates for operational risks are primarily intended to integrate operational risks into the overall risk capital process and to provide an adequate capital reserve for those risks. Given the rudimentary stage of operational risk modeling, the operational risk ERC numbers were derived using quantitative approaches (estimates using industry loss data and scenario analysis) complemented by reviews by senior management to refl ect the context-specific nature of operational risk and to ensure the integration of qualitative aspects deriving from business experience. Moreover, the Group’s operational risk efforts have not been confined to deriving operational risk ERC numbers, but have focused on strengthening the operational risk process in a more comprehensive way.

Business risk ERC: It is now widely accepted that any sensible economic capital model must take account of the fact that financial organizations do not simply represent warehouses of financial assets but also act as originators and distributors of financial services. Origination, asset management and advisory services have become important sources of firm-wide income. They have also become important sources of firm-wide risks. Although there is widespread recognition that the risk and return characteristics of non-warehouse businesses have profound implications for the need for economic capital and the capacity to bear risks, no industry consensus has emerged as to how exactly to alter the asset-based economic capital calculations (e.g. based on Value-at-Risk type calculations) to reflect the non-warehouse businesses. Given the lack of consensus regarding the economic capital needs related to business risk, we have adopted a pragmatic and prudent approach. Specifically, the Group’s business risk ERC numbers are designed to measure the potential shortfall in revenues relative to the expense base in a crisis situation, using conservative assumptions regarding the earnings capacity and the ability to reduce the cost base in a crisis situation.


Applications
The ERC model has a variety of applications, the most important being risk management, capital management and performance measurement. The objective is to use ERC as a tool that allows for more efficient usage of the Group’s risk-taking capacity, to the benefit of shareholders and other stakeholders.

• Risk management – ERC is used as the primary tool to assess, monitor and limit risk exposures as well as the prime tool to guide and prioritize risk management actions;

• Capital management – ERC is used in the capital allocation process, which defines the capital requirement as the higher of Total ERC or the "respectability capital", which is the minimum capital base a business needs in order to be accepted as a reliable business partner or as defined by peer consideration. Moreover, ERC serves as a reference point for the structured assessment of the Group’s risk-bearing capacity in relation to its financial resources, recognizing that a comprehensive analysis must also take into account factors that are outside the scope of the ERC framework (e.g. strategy, economic and competitive environment, external constraints such as those imposed by regulators or rating agencies);

• Performance measurement – ERC forms the base for an additional performance metric introduced in 2002. This measure – called Economic Return on ERC – provides information on the economic return of a business in relation to the total amount of ERC needed to support that business.

Key risk trends 2002
The following table summarizes the evolution of the Group’s risk profile, using ERC as the common risk denominator.2'097< td align="right">3'840

Key Position Risk Trends 1)

Credit Suisse Financial Services

Credit Suisse First Boston

2)

Credit Suisse Group

3)

In CHF m

31.12.02

31.12.01

31.12.00

31.12.02

31.12.01

31.12.00

31.12.02

31.12.01

31.12.00

Interest Rate, Credit Spread & FX ERC

3'316

4'671

6'334

1'118

2'130

1'833

3'666

4'619

6'857

Equity Investment ERC

1'744

6'341

6'589

1'820

2'825

2'676

3'674

10'522

11'929

Swiss & Retail Lending ERC

2'097

2'310

2'434

0

0

0

2'310

2'434

International Lending ERC

373

319

342

3'467

3'692

3'064

4'011

3'406

Emerging Markets ERC

305

339

295

1'672

2'341

2'413

1'977

2'680

2'708

Real Estate & Structured Asset ERC

4)

1'968

2'048

1'926

2'032

2'375

2'525

3'953

4'371

4'428

Insurance Underwriting ERC

819

753

722

0

0

0

819

753

722

Simple Sum across Risk Categories

10'621

16'780

18'642

10'109

13'364

12'511

20'025

29'266

32'485

Diversification Benefit

(4'448)

(7'861)

(8'126)

(2'334)

(3'256)

(3'114)

(6'723)

(11'309)

(13'215)

Total Position Risk ERC

6'173

8'919

10'517

7'775

10'108

9'396

13'303

17'958

19'270

1) 99%, 1-Year Position Risk ERC, excluding Foreign Exchange translation risk. For an assessment of the total risk profile, Operational risk ERC and Business risk ERC have to be considered as well.

2) Note that CSFB is managed using the US Dollar as base currency. The Total Position Risk ERC numbers for CSFB expressed in USD are as follows: USD 5,748 m (31.12.00), USD 6,033 m (31.12.01), USD 5,593 m (31.12.02).

3) Credit Suisse Group amounts are inclusive of the Corporate Center, but net of diversification benefits between CSFS, CSFB and the CSG Corporate Center (numbers therefore do not add).

4) This category comprises the Real Estate investments of Winterthur, CSFB’s Commerical Real Estate exposures, CSFB’s Residential Real Estate exposures, CSFB’s Asset-Backed-Securities exposures as well as the Real Estate Acquired at Auction and Real Estate for own use in Switzerland.

Market risk

Introduction
This section focuses on providing quantitative and qualitative disclosure of our market risk and information related to their preparation and analysis, in conjunction with

• The nature of our businesses as discussed in the section “Information on the company”; and

• The information required on our derivatives accounting policies as disclosed in the section "Financial information".

The term "market risk" refers to the risk of potential loss arising from adverse changes in interest rates, foreign exchange rates, equity prices and other relevant market rates and prices, such as commodity prices and volatilities. A typical transaction may be exposed to a number of different market risks. We define our market risk as potential changes in fair values of financial instruments in response to market movements.

At the two business units significant risk management responsibilities are assigned to risk management committees. This includes the CSFS Asset and Liability Management Committee, which is responsible for supervision and analysis of the development of the balance sheet and which considers interest rate forecasts and the corresponding risk implications and the CSFS Risk Management Committee which supervises and oversees the development of all major and relevant risk exposures of the respective risk categories. At CSFB equivalent monitoring functions are assigned to the CSFB Capital Allocation and Risk Management Committee, which is responsible for approving market risk management policies and procedures and recommending overall market risk limits and market risk limit changes (total risk limit) to the CSFB Board of Directors for review and approval. These committees also approve concentration limits (market value limits and sub-limits, nam e and country limits); limit excesses within their authority; and criteria for stress/scenario analyses.

At both business units the Strategic Risk Management (SRM) function supports these committees and the Executive Boards. SRM is responsible for assessing the overall risk profile of the business unit on a global and consolidated basis for the respective business unit and for recommending corrective action where appropriate. SRM is independent of the front office and reports to the respective Executive Board's Risk Committees.

At the segment level (as indicated on page 8), several independent risk management units are responsible for risk identification, risk measurement and control, including compliance against different risk limits. Groups of specialists focus on the various risk components and implement concepts and tools.

Our consolidated primary market risk exposures in the trading portfolios at December 31, 2002 were to interest rates, equity instrument prices and foreign exchange rates. Exchange rate exposures of the CHF to the USD and the EUR as well as to equity instrument price levels in Western Europe and North America constituted major elements of our market risks embedded in the non-trading portfolios. Our segments may use derivative instruments to modify market risk positioning. The effects of this derivative usage are reflected in our quantitative disclosures. Derivatives may be used either to alter the market risk of non-derivative financial instrument positions or other derivative instrument positions. The derivative instruments used in such hedging or trading activities primarily include forwards, options, futures, swaps and combinations of these instruments.

Our segments are responsible for the implementation of their own market risk management strategies within the Group's overall framework. At each segment, the market risk measurement and monitoring functions are independent of the respective front office line being monitored. Our risk management techniques and policies are subject to routine reassessment and improvement in an effort to ensure that the risks implicit in the evolving financial markets are fully captured and appropriately managed.

We have included our derivative financial instruments, financial instruments and any commodity or derivative commodity financial instruments in preparing our disclosures. The source of these estimates is the market risk management reports used by our segments and managers in running our businesses. It is important to note that we do not manage our trading and non-trading portfolios on a consolidated basis at the Group level. We have presented our market risk exposure estimates consolidated at a Group level to better understand the aggregate risk inherent in our businesses.

The core tools used to measure market risk exposures include the following:

• The Value-at-Risk (VaR) method estimates the potential loss arising from a given portfolio for a predetermined probability and holding period, using market movements determined from historical data. The VaR methodology is most useful for day-to-day risk monitoring in the context of "normal" markets. The Group uses backtesting to assess the accuracy of the VaR model. Backtesting, the comparison of daily revenue fluctuations with the daily VaR estimate, is the primary method used to test the accuracy of a VaR model. It is performed at various levels from the segment level to specific business lines.

• Scenario analysis estimates the potential loss after stressing market parameters. These changes are modelled on past extreme events and hypothetical scenarios. Scenario analysis is especially useful for assessing sensitivity to large price movements and for examining risk in cases where market conditions are disrupted.

• Other models measure interest rate sensitivity risk, default risk and Economic Risk Capital. Regular assessments of mark-to-market revaluations of all balance sheet positions and interest rate scenarios are the basis for these analyses.

The major modeling and measurement techniques are described in more detail at the end of this section under the heading "How we measure market risk" on page 113.


Overview of market risk exposures

Trading portfolios
The distribution of trading portfolio-related market risks reflects the distribution of activities among the different segments. The Group's trading portfolios and the associated market risks are focused primarily within Institutional Securities. Corporate & Retail Banking and Private Banking conduct trading activities to a more limited degree, primarily in order to offer a complete product mix to their respective customers. Insurance and Life & Pensions do not engage in trading activities.

The segments with trading book activity perform daily VaR calculations to assess market risk. The calculations are based on a ten-day holding period with a 99% confidence level and risk movements that are generally determined from two years of historical data. For some purposes, such as backtesting, the resulting VaR figures are scaled down or calculated as one-day holding period values.

The table below shows the trading-related market risk exposure for Credit Suisse Group, as measured by 99%, one-day VaR. Note that numbers are shown in CHF, which is the base currency in the VaR calculations for two of the three segments using VaR. Institutional Securities manages market risk utilizing VaR calculated using USD as the base currency. For inclusion in the estimates below, the 2002 and 2001 values were translated using the respective year-end spot exchange rates.

We compute the VaR estimates separately for each risk type and for the whole portfolio using the historical simulation methodology. Diversification benefit reflects the net difference between the sum of the 99th percentile loss for each individual risk type and for the total portfolio.

At year-end 2002, 88.8% of the Group's trading-related market risks were with CSFB and 11.2% with the CSFS banking segments.

Institutional Securities and other segments with trading portfolios use "backtesting" for the assessment of the accuracy of the VaR model. Actual daily profit and loss is compared to VaR with a one-day holding period. Backtesting is performed at various levels, from segment level down to more specific trading areas. On average, an accurate one-day, 99% VaR model should have no more than four backtesting exceptions per annum. A backtesting exception occurs when the daily loss exceeds the daily VaR estimate. Results of the process at the aggregate level demonstrated one exception when comparing the 99% one-day VaR with the backtesting profit and loss. (Backtesting profit and loss is a subset of actual trading revenue and includes only the P&L effects of the previous night's positions. It is appropriate to compare this measure with VaR for backtesting purposes. Actual trading revenue includes other P&L elements, and is used in the c hart “2002 vs 2001 Distribution of CSFB's daily trading revenue” on page 93). The graph on page 93 illustrates the relationship between daily backtesting profit and loss and daily VaR over the course of 2002 for CSFB, where most of our market risk from trading activities is concentrated. VaR values for CSFS are significantly smaller than for CSFB and are not presented in the chart.


Non-trading portfolios
In the non-trading portfolios, including all non-trading books of the banking segments and the financial investments of the insurance segments, the major elements of our market risk were exposures to changes in interest and exchange rates as well as equity instrument price levels. The table below shows the non-trading-related market risk exposure for Credit Suisse Group, as measured by 99%, one-day VaR.

At year-end 2002, 58.6% of the Group's non trading-related market risks were with the CSFS insurance segments, 4.5% with the CSFS banking segments, 26.3% with CSFB and 10.6% with the Corporate Center.


Business specific market risk disclosures

Corporate Center
The Corporate Center undertakes certain corporate financing activities such as the funding of business initiatives and holding of investments in other financial services companies.


Credit Suisse Financial Services
Significant risk management responsibilities are delegated to each of the segments within CSFS.


Trading portfolio
Private Banking and Corporate and Retail Banking occasionally act as principal for their customers in order to offer a complete product mix. Additional risk originates from limited proprietary trading. Neither Private Banking nor Corporate and Retail Banking take large positions in their trading portfolios and therefore generally have small residual trading positions, which are monitored and managed through VaR limits.


Non-trading portfolio
The most important component of market risk in the non-trading portfolio of Corporate and Retail Banking and Private Banking is CHF-denominated interest rate risk. Foreign exchange risk is normally shifted to the trading portfolio's foreign exchange book, leaving only small residual foreign exchange risks in the non-trading portfolio. The segments attempt to minimize interest rate risk using the majority of the common trading and hedging products, including derivatives such as swaps, futures, options and structured products (which are customized transactions using combinations of derivatives and executed to meet specific client or proprietary needs). In general, interest rate risk is concentrated in European markets including Switzerland. The equity instrument market risk in the insurance business is globally diversified among the world's leading industrialised countries and the equity instrument price risk of Corporate and Retail Banking and Private Banking relates to European and US stock market movements.

The insurance businesses' assets are held for the purpose of coverage for future obligations arising from insurance policies. The quality of assets is generally high: holdings are primarily bonds with AA and higher ratings, with an A rating being the minimum requirement for new portfolio investments. The insurance businesses are exposed to three types of financial market risk: interest rate, foreign exchange and equity price changes. The insurance business invests in typical asset classes, such as money market instruments, bonds, loans, mortgages, stocks and real estate. The asset allocation strategy is reviewed on a regular basis by investment committee meetings, taking regulatory, local and product related restrictions into consideration.

For the purpose of assessing performance and risk control, securities positions are marked to market. In order to promote diversification of risk, asset management controls are in place, which are designed to prevent over-weighted counterparty specific accumulations in assets of different classes. Derivatives are used as risk management instruments and are not an asset class in their own right. Currency derivatives are used primarily to reduce foreign-exchange risk. Overall position monitoring also includes examining derivatives positions according to their underlying risk content.

The market risk of Life & Pensions reflects reductions to shareholders' exposure to market risk due to the "participating" characteristics of life products. For participating contracts, the policyholder shares in the earnings or surplus of the insurance company through the distribution of policyholder dividends. Therefore, policyholders and Life & Pensions shareholders share risk and reward. Such material risk and reward participation does not exist for Insurance.


Credit Suisse First Boston
The majority of our trading portfolio and the associated market risk are concentrated at CSFB. CSFB's market risk exposures in its trading and non-trading portfolios are broadly diversified. CSFB operates under market risk limits structured at three levels: for CSFB as a whole, by segments and within segments. In addition, there are asset class VaR limits used to manage risk exposure within a particular risk class (e.g., interest rate risk). Trading management, in consultation with the independent Risk Measurement and Management department or RMM, imposes limits at lower levels including trading desks to assist them in identifying potential risk concentrations and to allocate the business line market risk limits to individual regions and desks. CSFB also uses various other types of limits to limit potential risk concentrations.


Trading portfolio
CSFB is active in most of the principal trading markets of the world, using the majority of the common trading and hedging products, including derivatives such as swaps, futures, options and structured products (which are customized transactions using combinations of derivatives and executed to meet specific client or proprietary needs). As a result of its broad participation in products and markets, CSFB's trading strategies are correspondingly diverse and variable, and exposures are generally spread across a diversified range of risk factors and locations.


Non-trading portfolio
CSFB's business includes a substantial volume of non-trading-related banking activities both in the provision of products and services to its clients and as proprietary investments. These activities include equity instrument participations; investments in bonds and other money market instruments; loans of both money and securities; and deposit taking.

After the impact of derivatives and other risk modification strategies, the primary exposure in CSFB's non-trading portfolio is to equity instrument price risk, principally due to equity instrument positions CSFB may invest in enterprises whose shares are not traded or are not yet widely traded. CSFB's current policy is to take neutral positions on interest rate exposures at the treasury and corporate center. This means that, to the extent practical and possible, hedging instruments and other measures are used to transfer the market risk resulting from changes in interest rates to the trading portfolio. Swaps, forward rate agreements and options are used as hedging instruments.

Market risk in the Credit Suisse Group trading portfolios (99%, 1-day VaR)
in CHF m	31.12.02	31.12.01
Interests rate	66.9	58.4
Foreign exchange rate	14.5	18.0
Equity prices	15.6	46.7
Commodity prices	1.4	4.1
Subtotal	98.4	127.2
Diversification benefit	(40.8)	(55.4)
Total market risk	57.6	71.8

Market risk in the Credit Suisse Group non-trading portfolios (99%, 1-day VaR)
in CHF m	31.12.02	31.12.01
Interests rate	187.6	167.7
Foreign exchange rate	72.8	177.5
Equity prices	369.6	846.1
Commodity prices	0.1	2.6
Subtotal	630.1	1'193.9
Diversification benefit	(222.4)	(456.7)
Total market risk	407.7	< font style="font-family:arial,helvetica,sans-serif;font-size:8pt">737.2

Credit risk for the banking businesses

Definition of credit risk
Credit risk is the possibility of loss incurred as a result of a borrower or counterparty failing to meet its financial obligations. In the event of a default, a bank generally incurs a loss equal to the amount owed by the debtor, less a recovery amount resulting from foreclosure, liquidation of collateral or the restructuring of the debtor company.

The majority of our credit risk is concentrated at Corporate & Retail Banking (within CSFS) and Institutional Securities (within CSFB). The credit risks taken on by Private Banking are mostly collateralized and primarily have an operational risk nature. Credit risk exists within lending products, commitments and letters of credit, and results from counterparty exposure arising from derivative, foreign exchange and other transactions.


Credit risk management approach
Effective credit risk management is a structured process to assess, quantify, price, monitor and manage risk on a uniform basis. This requires a careful consideration of proposed extensions of credit, the setting of specific limits, diligent ongoing monitoring during the life of the exposure, including the active utilization of credit mitigation tools and a disciplined approach to recognizing credit impairment. All of these elements are integral parts of our approach.

This credit risk management framework is regularly refined and covers all banking businesses that are exposed to credit risk. Our framework is designed to cover virtually all of the credit exposures of Corporate & Retail Banking and Private Banking as well as the majority of CSFB's credit related exposures. The remaining portion of CSFB's credit related exposures is covered by either the VaR methodology or the application of credit risk adjustments.

We evaluate credit risk through a credit request and approval process, ongoing credit and counterparty monitoring and a credit quality review process. Experienced credit officers prepare credit requests and assign internal ratings based on their analysis and evaluation of the clients' creditworthiness and the type of credit transaction. We have established a counterparty credit risk classification system with which we regularly rate and classify our counterparties. This system affords consistency in:

• statistical and other credit risk analysis;

• credit risk monitoring;

• risk-adjusted performance measurement;

• economic risk capital usage/allocation; and

• certain financial accounting purposes.

Each counterparty that generates a potential or actual credit risk exposure is rated and assigned to a risk class. Additionally, we assign a transaction code to recognize potential loss in the event of default as a result of different recovery assumptions based on transaction structure. The counterparty credit rating is used in combination with credit (or credit equivalent) exposure and the transaction code to estimate our potential credit loss, which also allows us to price transactions involving credit risk more accurately using risk/return calculations. This pricing approach, which is reflected in the terms of the credit, is sensitive to many of the credit risk factors described in this section, and is intended to assess more accurately the situation of the borrower as well as our interests and priorities in negotiating the credit.

Credit committees and senior credit managers make credit decisions on a transaction-by-transaction basis, determined by levels appropriate to the amount and complexity of the transactions, as well as based on the overall exposures to counterparties and their related entities. These authority levels are set out within the governing principles of the legal entities. Transactions and exposures of a high level or of a significant and unusual nature are discussed with and ratified by the Group Chief Risk Officer.

A system of individual credit limits is used to manage singular counterparty credit risk while a comprehensive set of country and regional limits or product limits is in place to address concentration issues in the portfolio. Credit exposures to individual counterparties or segments and adherence to the related limits are monitored by credit officers, industry analysts and other relevant specialists. In addition, credit risk is regularly supervised by credit and risk management committees taking current market conditions and trends analysis into consideration. We regularly analyse our industry diversification and concentration in selected segments.

A rigorous credit quality review process has been established to provide an early identification of possible changes of the creditworthiness of our clients and includes regular asset and collateral quality reviews, business and financial statement analysis and relevant economic and industry studies. Other key factors considered in the review process include business and economic conditions, our historical experience, regulatory requirements and concentrations of credit volume by industry, country, product and counterparty rating. Regularly updated watch-lists and review meetings are used for the identification of counterparties where adverse changes in creditworthiness could occur due to events such as announced mergers, earnings weakness, lawsuits, etc. In addition, credit protection, such as credit derivatives, is used in particular to mitigate some exposures with multinational companies.

The review process culminates in a quarterly determination of the appropriateness of our allowances for credit losses. A systematic provisioning methodology is used to identify potential credit risk related losses. Impaired transactions are classified as potential problem exposure, non-performing exposure, or non-interest earning exposure and the exposures are generally managed within our credit recovery units.

The risk management and credit committees of the segments and the Group determine the adequacy of allowances, taking into consideration whether the levels are sufficient for credit losses and whether allowances can be released or if they should be increased.

In summary, the framework comprises seven core components: (i) an individual counterparty and country rating system; (ii) a transaction rating system; (iii) a counterparty credit limit system; (iv) country and regional concentration limits; (v) a risk-factored pricing methodology; (vi) active credit portfolio management and (vii) a credit risk provisioning methodology.


Loans

Due from banks, due from customers and mortgages
The categories used for 2002, 2001, 2000, 1999 and 1998 are consistent with the classifications of loans for reporting to the Swiss Federal Banking Commission and the Swiss National Bank.

Switzerland and foreign designations are based on the primary location of the risk. For example, loans secured by real estate are based on the legal domicile of such real estate.

The following tables present our mandated loan portfolio disclosures, valuation adjustment disclosures and certain other items relevant to the discussion of credit risk. These tables summarize our credit extensions by business units to clients and other banks and are presented on a consolidated basis. Credit risk provisioning, including movements in the allowance for loan losses is also shown. In addition, we explain our country risk management approach and show countries that represent a significant credit risk exposure.


Risk element lendings

Non-performing loans
We consider a loan impaired when we believe we will be unable to collect all principal and/or interest in accordance with the contractual terms of the loan agreement. A loan is automatically classified as non-performing when the contractual payments of principal and/or interest are in arrears for 90 days. A loan can also be classified as non-performing if the contractual payments of principal and/or interest are less than 90 days past due, based on the judgment of the respective credit officer. We continue to accrue interest for collection purposes; however, a corresponding provision against the accrual is booked through the income statement. In addition, for any accrued but unpaid interest at the date the loan is placed on non-performing status, a corresponding provision is booked against the accrual through the income statement. At the time a loan is placed on non-performing status and on a periodic basis going forward, the remaining pr incipal is evaluated for collectibility and an allowance is established for the shortfall between the net recoverable amount and the remaining principal balance.

A loan can be further downgraded to non-interest earning when the collection of interest is in such a doubtful state that further accrual of interest is deemed not necessary and ceased. At that time and on a periodic basis going forward, any unreserved remaining principal balance is evaluated for collectibility and an additional provision is established as required. Write-off of a loan occurs when the Group is certain that there is no possibility to recover the principal. Write-offs also occur due to sales, settlements or restructurings of loans or when uncertainty as to the repayment of either principal or accrued interest exists.

Interest collected on non-performing loans is accounted for using the cash basis, cost recovery method or a combination of both, as appropriate. Interest collected on non-interest earning loans is accounted for using the cost recovery method only. Generally, a loan may be restored to performing status when all delinquent principal and interest payments are brought current in accordance with the terms of the loan agreement and certain performance criteria are met. We apply these policies worldwide.

The level of non-performing loans showed a decreasing trend in 2002 compared to 2001 and 2000. The decrease is mainly attributable to the resolution of older non-performing loans as well as to a decline in the US dollar.


Restructured loans
The following table shows restructured loans for the five years ended 31 December 2002, which consist of loans accruing at interest rates different from the original terms of such loans; restructurings involving the forgiveness of principal and/or accrued interest; and restructurings involving the receipt of an equity interest from the counterparty.


Potential problem loans
At December 31, 2002, 2001, 2000, 1999 and 1998 we had potential problem loans amounting to CHF 3,408 million, CHF 4,683 million, CHF 6,382 million, CHF 3,593 million and CHF 6,411 million, respectively. These loans are considered potential problem loans because, although interest payments are being made, there exists some doubt in the credit officer's judgment as to the timing and/or certainty of the repayment of contractual principal.


Loan valuation allowances and provisions
We maintain valuation allowances on loans as well as provisions for off-balance sheet lending related exposures (contingent liabilities and irrevocable commitments) which we consider adequate to absorb losses arising from our existing credit portfolio. Both valuation allowances and provisions are included in valuation adjustments, provisions and losses from the banking units shown on the income statement; however, valuation allowances are deducted from total assets while provisions are included in total liabilities. We provide for credit losses based on a regular and detailed analysis of each counterparty taking collateral value into consideration. If uncertainty exists as to the repayment of either principal or interest, a valuation allowance is either provided or adjusted accordingly. Each business unit creates valuation allowances based on Group guidelines, and are reviewed on a quarterly basis by senior management at both the segment and the Group level. On the consolidated balance sheet, the valuation allowances are deducted from due from banks, due from customers and mortgages. The net additions to or subtractions from such balance sheet valuation allowances are reflected in Valuation adjustments, provisions and losses from the banking business in our income statement.

In determining the amount of the valuation allowances, loans are assessed on a case-by-case basis, and the following factors are considered:

• The financial standing of a customer, including a realistic assessment – based on financial and business information – of the likelihood of repayment of the loan within an acceptable period of time considering the net present value of future cash flows;

• The extent of the Group's other commitments to the same customer;

• The realizable fair value of any collateral for the loans;

• The recovery rate; and

• The costs associated with obtaining repayment and realization of any such collateral.

Judgment is exercised in determining the extent of the valuation allowance and is based on management's evaluation of the risk in the portfolio, current economic conditions, the recent loss experience, credit and geographic concentration trends. Vulnerable sectors continue to be tracked and monitored closely, with active management leading to the addition of collateral, purchase of credit protection facilities and/or tightening of maturities where justified.


Loan valuation allowances and provisions for inherent credit losses
During the year 2002 we adjusted our method of estimating inherent losses related to our lending activities. This change resulted from continued deterioration in the credit markets and was made to better reflect our estimate of the probable losses in our portfolio. The inherent loss allowance is for all loans not specifically identified as impaired, which on a portfolio basis, are considered to contain probable inherent loss. Inherent losses in the consumer portfolio are determined by applying a historical loss experience, adjusted to reflect current market conditions, to unimpaired homogenous pools based on risk rating and product type. For commercial loans, we segregate loans by risk, industry or country rating in order to estimate the inherent losses. Inherent losses on loans and lending-related commitments are estimated based on historical loss and recovery experience and recorded in Valuation Allowances and Provisions. We also comput e a provision for inherent loss for off-balance sheet lending related exposure (contingent liabilities and irrevocable commitments) using a methodology similar to that used for the loan portfolio.


Summary of loan valuation allowance experience

Year ended December 31, 2002 compared to year ended December 31, 2001
The increase in the net addition to the loan valuation allowance amounted to CHF 1,003 million. This represents an increase by 62.2% in 2002. During 2002, the net additions to valuation allowance were a result of weakened economic conditions and the related difficult credit environment.

In 2002, gross write-offs remained stable at CHF 3.9 billion.


Year ended December 31, 2001 compared to year ended December 31, 2000
The net additions to loan valuation allowance increased CHF 640 million, or 65.8%, in 2001. This was largely due to the general deterioration in economic conditions on the portfolio as a whole, and defaults on a number of specific exposures. This increase occurred mainly in the fourth quarter of 2001.

Gross write-offs increased CHF 266 million, or 7.4%, in 2001. In 2001, we made substantial write-offs in the domestic impaired loans portfolio, as these positions were resolved.


Year ended December 31, 2000 compared to year ended December 31, 1999
The net additions to loan valuation allowance decreased CHF 42 million, or 4.1%, in 2000. During 2000, net additions to valuation allowance continued to decrease due to improvements in the Swiss economy and improved credit practices.

Gross write-offs increased CHF 725 million or 25.3% in 2000. In 2000, we made substantial write-offs in the remaining Russia portfolio and continued to write-off seasoned Swiss impaired loans, as these positions were resolved.

On November 3, 2000, we acquired DLJ, which resulted in an increase in the loan valuation allowance of CHF 352 million.


Country risk
Country risk is the risk of a substantial, systemic loss of value in the financial assets in a country which may be caused by the inability or unwillingness of a sovereign to meet contractual obligations and/or the imposition of controls on capital flows. Given the international character of their activities, all segments are exposed to country risk, although the largest portion is held at CSFB.

Country ratings and country limits are the two primary instruments used to manage country risk. Country ratings provide an assessment of the risk of sovereign default and identify approval authority levels. The independent Credit Risk Management department, or CRM, of CSFB – in cooperation with the economic research department and the Group Chief Risk Officer – periodically updates these rating assessments. Country limits cap our exposure to individual countries. They are supplemented by regional limits, which restrict the maximum exposure to a specific region in order to limit the impact of contagion. Regional limits are lower than the numerical addition of all the country limits of the respective regions. The Board of Directors approves country, regional and global limits. Within CSFB, the Credit Policy and Capital Allocation and Risk Management Committee – in cooperation with the Group Chief Risk Officer – perio dically reviews these limits. In addition, its independent Risk Measurement and Management department (RMM) assesses exposures against country limits. RMM and CRM provide independent supervision to ensure that the divisions operate within their limits. CRM, in conjunction with the Group Chief Risk Officer, also assumes responsibility for actively managing exposures to reflect changing credit fundamentals.


Cross-border outstandings
Cross-border outstandings represent net claims against non-local country counterparties. These include loans plus accrued interest, acceptances, interest earning deposits with other banks, other interest earning investments and any other monetary assets, including securities. To the extent material local currency outstandings are hedged or are funded by local currency borrowings, such amounts are not included as cross border outstandings.

The following table represents cross border outstandings as of the end of each of the last three years, stating the name of the country and the aggregate amount of cross border outstandings to borrowers in each foreign country where such outstandings exceed 0.75% of our total banking assets at December 31, 2002, 2001 and 2000. Deducted from the gross outstandings are guaranteed or secured loans, provided the political and transfer risks are also covered explicitly by the guarantee or security.

Total credit risk exposure 1)
		Credit Suisse Financial Services			Credit Suisse First Boston			Credit Suisse Group
in CHF m		31.12.02	31.12.01	31.12.00	31.12.02	31.12.01	31.12.00	31.12.02	31.12.01	31.12.00
Due from banks	2)	32'752	35'560	34'027	44'016	40'931	38'079	39'469	40'084	38'946
Due from customers and mortgages	2)	132'353	134'796	129'915	82'395	87'438	91'892	213'206	221'108	220'444
Total due from banks and customers, gross	2)	165'105	170'356	163'942	126'411	128'369	129'971	252'675	261'192	259'390
Contingent liabilities		12'349	13'849	12'639	27'862	32'286	8'564	39'104	43'586	20'005
Irrevocable commitments		2'263	1'579	852	86'599	128'918	126'146	90'048	130'498	126'998
Total banking products		179'717	185'784	177'433	240'872	289'573	264'681	381'827	435'276	406'393
Derivative instruments	3)	2'375	1'635	2'355	54'243	51'160	44'107	54'757	51'029	45'038
Securities lending – banks		0	0	0	0	71	174	0	71	174
Securities lending – customers		0	0	0	64	5	9	64	5	9
Reverse repurchase agreements – banks		2'270	968	791	158'544	165'930	182'749	156'397	163'666	179'494
Reverse repurchase agreements – customers		13'944	7'122	4'863	57'571	59'801	48'249	71'384	66'921	53'100
Total traded products		18'589	9'725	8'009	270'422	276'967	275'288	282'602	281'692	277'815
Total credit risk exposure, gross		198'306	195'509	185'442	511'294	566'540	539'969	664'429	716'968	684'208
Loan valuation allowances and provisions		(4'092)	(5'717)	(8'059)	(3'817)	(3'638)	(2'750)	(7'911)	(9'357)	(10'812)
Total credit risk exposure, net		194'214	189'792	177'383	507'477	562'902	537'219	656'518	707'611	673'396
1) Credit Suisse Financial Services/Credit Suisse First Boston reflect business unit amounts. Total consolidated Credit Suisse Group amounts include adjustments and Corporate Center.
2) Excluding securities lending and reverse repurchase transactions.
3) Positive replacement values considering netting agreements.

The following table presents due from banks, including receivables from credit institutions and excluding cash and current accounts as of:
in CHF m		31.12.02	1)	31.12.01	1)	31.12.00	1)	31.12.99	31.12.98
Demand balances		2'607		1'501		4'397		1'219	678
Time balances		504		903		717		302	867
Securities lending	2)	0		0		0		14	1'932
Reverse repurchase agreements	2)	1'752		1'429		1'428		935	11
Switzerland		4'863		3'833		6'542		2'470	3'488
Demand balances		17'194		17'659		15'662		8'813	7'104
Time balances		19'164		20'021		18'170		26'294	54'011
Securities lending	2)	0		71		174		35	32'417
Reverse repurchase agreements	2)	154'645		162'237		178'066		127'601	43'929
Foreign		191'003		199'988		212'072		162'743	137'461
Due from banks, gross		195'866		203'821		218'614		165'213	140'949
Loan valuation allowances		(88)		(36)		(93)		(330)	(507)
Total due from banks, net		195'778		203'785		218'521		164'883	140'442
1) Reflects the acquisition of DLJ.
2) In 1999, there was a change in accounting principle, which was not retroactively applied. This required securities lending and borrowing transactions to be recorded on the balance sheet when the control is relinquished. Control is defined as the ability of the lender to substitute the security on short notice or by early termination of the contract. In addition, securities lending and borrowing transactions with cash collateral and daily margining were reclassified to repurchase and reverse repurchase agreements as required by FBC guidelines.

The following table presents due from customers and mortgages including loans, mortgages and lease financings to corporate and individual customers as of:
in CHF m		31.12.02	1)	31.12.01	1)	31.12.00	1)	31.12.99	31.12.98
Commercial		46'291		54'061		52'230		50'783	54'954
Consumers		61'986		55'184		53'324		45'472	42'779
Public authorities		1'707		2'588		2'313		1'999	2'250
Lease financings		3'010		2'829		2'365		2'004	1'323
Switzerland		112'994		114'662		110'232		100'258	101'306
Commercial		66'248		70'327		69'407		46'821	43'322
Consumers		30'433		31'174		34'112		12'678	7'872
Public authorities		3'316		2'412		2'504		1'369	1'583
Lease financings		148		306		288		247	292
Foreign		100'145		104'219		106'311		61'115	53'069
Due from customers and mortgages before professional securities transactions and securitized loans		213'139		218'881		216'543		161'373	154'375
Securities lending	2)	64		5		9		136	11'823
Reverse repurchase agreements	2)	71'384		66'921		53'100		27'932	18'262
Securitized loans		67		2'227		3'901		5'412	3'482
Due from customers and mortgages, gross		284'654		288'034		273'553		194'853	187'942
Loan valuation allowances		(7'615)		(9'228)		(10'693)		(12'159)	(12'8 00)
Total due from customers and mortgages, net		277'039		278'806		262'860		182'694	175'142
Percentage of allowances to loans		2.7%		3.2%		3.9%		6.2%	6.8%
1) Reflects the acquisition of DLJ.
2) In 1999, there was a change in accounting principle which was not retroactively applied. This required securities lending and borrowing transactions to be recorded on the balance sheet when the control is relinquished. Control is defined as the ability of the lender to substitute the security on short notice or by early termination of the contract. In addition, securities lending and borrowing transactions with cash collateral and daily margining were reclassified to repurchase and reverse repurchase agreements as required by FBC guidelines.

Set forth below is a further analysis of due from customers and mortgages by collateral amounts as of:
in CHF m	31.12.02	31.12.01	31.12.00	31.12.99	31.12.98
Receivables	455	459	713	890	2'269
Cash and securities	42'632	45'691	46'224	24'558	20'089
Guarantees	4'044	5'901	5'629	6'326	6'886
Insurance claims	2'062	1'924	2'625	1'628	1'241
Real Estate	102'452	101'271	102'872	88'304	82'322
of which commercial and industrial premises	26'555	23'014	24'403	15'294	18'707
of which apartment buildings	20'823	19'732	20'343	24'972	24'493
of which single-family houses and owner occupied flats	48'717	46'086	38'707	30'006	25'945
of which other mortgages	6'357	12'439	19'419	18'032	13'177
Other types of collateral	7'514	9'335	8'636	4'498	2'830
Total collateral	159'159	164'581	166'699	126'204	115'637
Unsecured	50'822	51'165	47'191	32'918	37'123
Lease financings	3'158	3'135	2'653	2'251	1'615
Total due from customers and mortgages before professional securities transactions and securitized loans	213'139	218'881	216'543	161'373	154'375

The following table presents further analysis of due from customers and mortgages by economic sector as of:
in CHF m	31.12.02	31.12.01	31.12.00	31.12.99	31.12.98
Financial services	38'279	39'213	39'013	28'916	22'090
Real estate companies	16'472	17'627	16'870	14'872	12'844
Other services including technology companies	15'316	22'860	22'000	10'920	12'649
Manufacturing	13'273	12'791	12'536	13'595	14'784
Wholesale and retail trade	11'165	10'970	13'411	9'320	13'193
Construction	4'314	3'676	3'970	6'845	7'744
Transportation and communication	6'482	10'904	5'005	5'440	3'252
Health and social services	2'340	1'854	2'813	2'887	2'215
Hotels and restaurants	2'390	2'866	3'103	2'721	2'752
Agriculture and mining	2'317	1'600	2'706	1'269	1'661
Non-profit and international organizations	191	27	210	819	5'092
Commercial	112'539	124'388	121'637	97'604	98'276
Consumers	92'419	86'358	87'436	58'150	50'651
Public authorities	5'023	5'000	4'817	3'368	3'833
Lease financings	3'158	3'135	2'653	2'251	1'615
Total due from customers and mortgages before professional securities transactions and securitized loans	213'139	218'881	216'543	161'373	154'375

The following table shows due from customers and mortgages by time remaining until contractual maturity as of December 31, 2002:
				Loans with		Self-
	1 year	1 year to	After	no stated		amortizing
in CHF m	or less	5 years	5 years	maturity	1)	loans	2)	Total
Commercial	17'513	11'914	1'292	15'572		0		46'291
Consumers	16'317	29'721	1'206	13'433		1'309		61'986
Public authorities	595	824	199	89		0		1'707
Lease financings	0	0	0	0		3'010		3'010
Switzerland	34'425	42'459	2'697	29'094		4'319		112'994
Commercial	48'760	9'372	6'987	1'127		2		66'248
Consumers	17'215	2'434	9'973	811		0		30'433
Public authorities	1'366	943	1'007	0		0		3'316
Lease financings	0	0	0	0		148		148
Foreign	67'341	12'749	17'967	1'938		150		100'145< /td>
Total due from customers and mortgages before professional securities transactions and securitized loans	101'766	55'208	20'664	31'032		4'469		213'139
1) Loans with no stated maturity include primarily certain loan products within Switzerland without a stated maturity within the original loan agreement.
2) Self-amortizing loans include loans with monthly interest and principal payments. These loans are principally consumer loans and lease financings.

The following table shows the interest rate sensitivity of demand and time balances which are included in due from banks by time remaining until contractual maturity as of December 31, 2002:
	1 year	1 year to	After
in CHF m	or less	5 years	5 years	Total
Fixed rate	1'985	1	0	1'986
Variable rate	1'125	0	0	1'125
Switzerland	3'110	1	0	3'111
Fixed rate	23'413	114	351	23'878
Variable rate	12'279	201	0	12'480
Foreign	35'692	315	351	36'358
Total demand and time balances due from banks	38'802	316	351	39'469

The following table shows the interest rate sensitivity of total due from customers and mortgages before professional securities transactions and securitized loans as of December 31, 2002:
					Loans with		Self-
		1 year	1 year to	After	no stated		amortizing
in CHF m		or less	5 years	5 years	maturity	1)	loans	2)	Total
Fixed rate	3)	75'182	46'030	17'064	2		4'469		142'747
Variable rate		26'584	9'178	3'600	31'030		0		70'392
Total due from customers and mortgages before professional securities transactions and securitized loans		101'766	55'208	20'664	31'032		4'469		213'139
1) Loans with no stated maturity include primarily certain loan products within Switzerland without a stated maturity within the original loan agreement.
2) Self-amortizing loans include loans with monthly interest and principal payments. These loans are principally consumer loans and lease financings.
3) The majority of our fixed rate loans are perpetual loans. The terms of these loans are fixed for a period of 3 to 5 years and upon maturity, a majority of these loans we expect will be renewed based on historical experience.

Total loan portfolio exposure and allowances and provisions for credit risk 1)
	Credit Suisse Financial Services			Credit Suisse First Boston				Credit Suisse Group
in CHF m	31.12.02	31.12.01	31.12.00	31.12.02	31.12.01	31.12.00		31.12.02	31.12.01	31.12.00
Non-performing loans	3'004	4'893	6'854	3'351	3'067	1'324		6'355	7'960	8'178
Non-interest earning loans	2'108	2'331	3'313	217	476	301		2'325	2'808	3'615
Total non-performing loans	5'112	7'224	10'167	3'568	3'543	1'625		8'680	10'768	11'793
Restructured loans	52	114	157	229	0	111		281	114	268
Potential problem loans	1'723	2'199	2'769	1'685	2'484	3'613	< /sup>	3'408	4'683	6'382
Total other impaired loans	1'775	2'313	2'926	1'914	2'484	3'724		3'689	4'797	6'650
Total impaired loans	6'887	9'537	13'093	5'482	6'027	5'349	< sup>	12'369	15'565	18'443
Due from banks and customers, gross	165'105	170'356	163'942	126'411	128'369	129'971		252'675	261'192	259'390
Valuation allowances	4'053	5'709	8'047	3'647	3'553	2'736		7'703	9'264	10'786
of which on principal	3'201	4'324	6'140	3'416	3'227	2'600		6'617	7'553	8'741
of which on interest	852	1'385	1'907	231	326	136		1'086	1'711	2'045
Due from banks and customers, net	161'052	164'647	155'895	122'764	124'816	127'235		244'972	251'928	248'604
Provisions for contingent liabilities and irrevocable commitments	39	8	12	170	85	14		208	93	26
Total valuation allowances and provisions	4'092	5'717	8'059	3'817	3'638	2'750		7'911	9'357	10'812
Ratios
Valuation allowances as % of total non-performing loans	79.3%	79.0%	79.1%	102.2%	100.3%	168.4%		88.7%	86.0%	91.5%
Valuation allowances as % of total impaired loans	58.9%	59.9%	61.5%	66.5%	59.0%	51.1%		62.3%	59.5%	58.5%
1) Credit Suisse Financial Services/Credit Suisse First Boston reflect business unit amounts. Total consolidated Credit Suisse Group amounts include adjustments and Corporate Center.

The following table sets forth management's estimate of non-performing loans at book value, without giving effect to available collateral or related specific loan valuation allowances and provisions as of:										1)
						Interest income		Interest income
						which would have		which was
						been recognized		recognized
in CHF m	31.12.02	31.12.01	31.12.00	31.12.99	31.12.98	2002	2001	2002	2001
Switzerland	3'870	4'972	6'647	8'434	9'663	176	284	61	122
Foreign	2'485	2'988	1'531	1'786	3'300	150	155	30	46
Non-performing loans	6'355	7'960	8'178	10'220	12'963	326	439	91	168
Switzerland	1'986	2'261	3'191	4'218	3'795	157	218	0	0
Foreign	339	547	424	518	282	11	52	0	9
Non-interest earnings loans	2'325	2'808	3'615	4'736	4'077	168	270	0	9
Total non-performing and non-interest earnings loans	8'680	10'768	11'793	14'956	17'040	494	709	91	177
1) 31.12.00 and 31.12.01 restated.

Restructured loans
						Interest income		Interest income
						which would have		which was
						been recognized		recognized
in CHF m	31.12.02	31.12.01	31.12.00	31.12.99	31.12.98	2002	2001	2002	2001
Switzerland	52	114	157	380	782	4	9	3	7
Foreign	229	0	111	39	74	18	0	13< /td>	0
Total restructured loans	281	114	268	419	856	22	9	16	7

Potential problem loans 1)
in CHF m	31.12.02	31.12.01	31.12.00	31.12.99	31.12.98
Switzerland	1'796	2'169	2'616	3'038	5'146
Foreign	1'612	2'514	3'766	555	1'265
Total potential problem loans	3'408	4'683	6'382	3'593	6'411
1) 31.12.00 and 31.12.01 restated.

The following table shows the movements of loan valuation allowance on due from banks, due from customers and mortgages for the years ended December 31:
in CHF m	2002	2001	2000	1999	1998
At beginning of financial year	9'264	10'786	12'489	13'307	11'712
Switzerland	1'244	952	853	921	1'274
Foreign	1'982	1'487	1'106	1'097	2'177
Additions	3'226	2'439	1'959	2'018	3'451
Switzerland	(379)	(438)	(527)	(403)	(585)
Foreign	(231)	(388)	(459)	(600)	(129)
Releases	(610)	(826)	(986)	(1'003)	(714)
Net additions to loan valuation allowance	2'616	1'613	973	1'015	2'737
Switzerland	(3'775)	(2'861)	(2'551)	(1'915)	(1'314)
Foreign	(93)	(990)	(1'034)	(945)	(310)
Gross write-offs	(3'868)	(3'851)	(3'585)	(2'860)	(1'624)
Recoveries	65	46	76	39	10
Net write-offs	(3'803)	(3'805)	(3'509)	(2'821)	(1'614)
Allowances acquired/(sold)	0	(3)	352	0	0
Provisions for interest	187	400	248	489	457
Foreign currency impact and other adjustments, net	(561)	273	233	499	15
At end of financial year	7'703	9'264	10'786	12'489	13'307
Average loan balance (Total due from banks, customers and mortgages)	452'250	467'001	414'835	354'760	357'588
Ratio of net write-offs to average loans	0.84%	0.81%	0.85%	0.80%	0.45%

The following table summarizes gross write-offs of loans by industry for the years ended December 31:
in CHF m	2002	2001	2000	1999	1998
Due from banks	6	42	194	551	9
Commercial:
Financial services	114	482	683	166	123
Real estate companies	712	734	893	739	23
Other services including technology companies	310	523	618	272	203
Manufacturing	645	349	238	371	168
Wholesale and retail trade	335	263	191	169	125
Construction	175	316	198	112	456
Transportation and communication	595	393	24	23	106
Health and social services	15	80	2	22	0
Hotels and restaurants	81	120	91	52	1
Agriculture and mining	201	32	96	40	7
Non-profit and international organizations	2	8	6	27	1
Commercial	3'185	3'300	3'040	1'993	1'213
Consumers	666	509	348	306	376
Public authorities	0	0	0	4	19
Lease financings	11	0	3	6	7
Total gross write-offs	3'868	3'851	3'585	2'860	1'624

The following table shows the components of valuation adjustments, provisions and losses from the banking business for the years ended December 31:
in CHF m		2002	2001	2000	1999	1998
Loan valuation allowance	1)	2'616	1'613	973	1'015	2'737
Balance sheet risks	2)	269	25	(83)	38	344
Off-balance sheet risks	3)	202	80	(11)	7	48
Other provisions		1'311	828	304	435	(2)
Losses on financial investments		32	46	82	45	48
Total valuation adjustments, provisions and losses from the banking business		4'430	2'592	1'265	1'540	3'175
1) Net additions to loan valuation allowance on due from banks, due from customers and mortgages.
2) Including valuation allowances for money market papers and debt instruments from the banking business.
3) Includes provisions for contingent liabilities and irrevocable commitments.

The following table shows the analysis of the loan valuation allowance by region and sector on due from banks, due from customers and mortgages as of:
		31.12.02		31.12.01		31.12.00			31.12.99			31.12.98
			% of loans on		% of loans on		% of loans on			% of loans on			% of loans on
			each category		each category		each category			each category			each category
		in CHF m	to total loans	in CHF m	to total loans	in CHF m	to total loans		in CHF m	to total loans		in CHF m	to total loans
Private sector	1)	4'275	44.1%	5'634	43.1%	7'682	43.3%		9'548	49.4%		10'604	45.8%
Public authorities		18	0.7%	19	1.0%	18	0.9%		14	1.0%		6	1.0%
Lease financings		41	1.2%	47	1.1%	46	0.9%	50	1.0%		25	0.6%
Switzerland		4'334	46.0%	5'700	45.2%	7'746	45.1%		9'612	51.4%		10'635	47.4%
Private sector	1)	3'355	52.6%	3'556	53.8%	2'925	53.8%		2'728	47.8%		2'601	51.8%
Public authorities		14	1.3%	8	0.9%	115	1.0%		149	0.7%		71	0.7%
Lease financings		0	0.1%	0	0.1%	0	0.1%	< font style="font-family:arial,helvetica,sans-serif;font-size:7pt">	0	0.1%		0	0.1%
Foreign		3'369	54.0%	3'564	54.8%	3'040	54.9%		2'877	48.6%		2'672	52.6%
Total loan valuation allowance		7'703	100.0%	9'264	100.0%	10'786	100.0%		12'489	100.0%		13'307	100.0%
1) Private sector is the sum of due from banks, commercial and consumer.

The following table shows the analysis of the loan valuation allowance by economic sector on due from banks, due from customers and mortgages as of:
	31.12.02		31.12.01		31.12.00			31.12.99			31.12.98
		% of loans on		% of loans on		% of loans on			% of loans on			% of loans on
		each category		each category		each category			each category			each category
	in CHF m	to total loans	in CHF m	to total loans	in CHF m	to total loans		in CHF m	to total loans		in CHF m	to total loans
Due from banks	88	15.6%	36	15.5%	93	15.3%		330	18.5%		507	29.0%
Commercial	6'570	44.5%	8'119	48.1%	9'081	47.6%		10'371	49.3%		10'320	45.3%
Consumers	972	36.6%	1'035	33.3%	1'433	34.2%		1'575	29.4%		2'378	23.3%
Public authorities	32	2.0%	27	1.9%	133	1.9%		163	1.7%		77	1.7%
Lease financings	41	1.3%	47	1.2%	46	1.0%	50	1.1%		25	0.7%
Total loan valuation allowance	7'703	100.0%	9'264	100.0%	10'786	100.0%		12'489	100.0%		13'307	100.0%

The following table shows an analysis of the loan valuation allowance on due from banks, due from customers and mortgages as of:
	31.12.02		31.12.01		31.12.00		31.12.99		31.12.98
		% of related		% of related		% of related		% of related		% of related
	in CHF m	asset	in CHF m	asset	in CHF m	asset	in CHF m	asset	in CHF m	asset
On principal	88	0.2%	36	0.1%	91	0.2%	312	0.9%	505	0.8%
On interest	0	-	0	-	2	0.0%	18	0.1%	2	0.0%
Allowance - due from banks	88	0.2%	36	0.1%	93	0 .2%	330	1.0%	507	0.8%
On principal	6'530	3.1%	7'517	3.4%	8'650	4.0%	9'751	6.0%	10'137	6.6%
On interest	1'085	0.5%	1'711	0.8%	2'043	0.9%	2'408	1.5%	2'663	1.7%
Allowance - due from customers and mortgages	7'615	3.6%	9'228	4.2%	10'693	4.9%	12'159	7.5%	12'800	8.3%
On principal	6'618	2.6%	7'553	2.9%	8'741	3.4%	10'063	5.1%	10'642	4.9%
On interest	1'085	0.4%	1'711	0.7%	2'045	0.8%	2'426	1.2%	2'665	1.2%
Total loan valuation allowance	7'703	3.0%	9'264	3.6%	10'786	4 .2%	12'489	6.3%	13'307	6.1%

Cross-border outstandings
				Commercial		Net local
				(includes		country
	Due from	Public		lease		assets over	Commit-
in CHF m	banks	authorities	Consumers	financings)	Subtotal	liabilities	ments	Total
December 31, 2002
United States	3'616	1'598	655	13'098	18'967	52'776	86'755	158'498
Germany	41'066	9'829	707	10'108	61'710	0	4'259	65'969
United Kingdom	11'961	332	788	11'673	24'754	0	9'297	34'051
Italy	12'520	3'283	132	2'805	18'740	0	572	19'312
France	4'762	1'072	268	4'554	10'656	871	5'256	16'783
Cayman Islands	386	27	246	9'802	10'461	0	2'308	12'769
The Netherlands	4'468	384	1'344	2'887	9'083	18	1'058	10'159
Spain	3'398	3'109	50	1'516	8'073	0	280	8'353
Luxembourg	1'698	46	989	3'693	6'426	403	989	7'818
Japan	2'921	701	95	2'804	6'521	0	348	6'869
December 31, 2001
United States	7'225	1'863	169	11'601	20'858	21'233	141'222	183'323
Germany	38'244	12'974	948	7'949	60'115	0	935	61'050
United Kingdom	8'813	1'024	415	13'555	23'807	0	10'638	34'445
Italy	18'088	5'111	421	2'623	26'243	0	160	26'403
France	9'119	928	207	5'428	15'682	100	2'318	18'100
The Netherlands	4'221	847	491	4'632	10'191	0	821	11'012
Spain	1'905	4'719	535	1'259	8'418	0	39	8'457
Belgium	5'727	1'495	71	470	7'763	0	62	7'825
Japan	2'100	534	322	3'882	6'838	0	330	7'168
Canada	793	1'677	167	1'337	3'974	79	3'100	7'153
December 31, 2000
United States	9'778	1'606	124	18'566	30'074	55'029	117'417	202'520
Germany	36'438	4'296	331	4'570	45'635	1'251	1'055	47'941
United Kingdom	11'186	430	137	13'752	25'505	0	11'722	37'227
The Netherlands	12'053	33	9	3'591	15'686	386	1'450	17'522
Italy	8'201	3'849	183	4'177	16'410	0	72	16'482
France	7'558	1'830	109	3'448	12'945	672	2'215	15'832
Brazil	2'931	1'501	9	1'896	6'337	231	124	6'692
Japan	1'746	4'548	19	2'599	8'912	0	335	9'247
Canada	639	1'676	29	1'771	4'115	1'402	2'223	7'740

Insurance Risk

Introduction
Protecting Insurance and Life & Pensions from unplanned risk accumulations, such as natural catastrophe exposure, is a core risk management activity performed within the insurance business. To understand the risk universe of an insurance company, the flow of business and the accompanying flow of risks are analyzed. Premiums earned by selling insurance policies are invested to cover claims occurring at a future date, sometimes many years later. Therefore, Insurance and Life & Pensions strive to:

• manage and limit unplanned insurance risk, e.g., by using reinsurance contracts;

• manage the financial market risks associated with the assets and liabilities (reserves); and

• manage and control the risks associated with their respective assets and reinsurance contracts.

Asset accumulation by insurance companies results predominantly from premiums being paid earlier than claims are settled. The resulting time differences, which may exceed 50 years, have implications for risk management. First, funds have to be invested in assets in such a way that they generate cash flows in line with the anticipated cash outflows embedded in the liability structure. Second, product specific characteristics, such as maturity, profit participating bonuses and inflation dependent insurance claims, have to be treated appropriately.


Risk structure in the insurance business
The two Winterthur segments follow stringent guidelines for assuming insurance risk, the selection of risks and the sums insured. The insurance businesses face several risk types stemming from their underwriting activities.


Non-life
In non-life business, insurance risk relates to claims which may be more frequent or larger than forecast, and/or which may have to be paid earlier than expected. Premium levels are developed considering the expected frequency and amounts of claims resulting from insured risks. Because better diversified insurance portfolios tend to imply smaller differences between expected and actual claims, Insurance holds a diversified insurance portfolio in terms of both geographic and industry structure.

A well-diversified insurance portfolio with many business lines spread over many policyholders might, nevertheless, be vulnerable to natural hazards. In such circumstances, the portfolios, although well diversified, can be exposed to a large accumulation of risk. If adequate reinsurance protection were not in place, substantial losses could be triggered by a single natural catastrophe. Insurance therefore uses reinsurance to limit the loss triggered by a single event to a worst-case amount of CHF 50 million per event.


Life
In life insurance the basic insurance risk characteristics are similar to those in the non-life business. The insurance risk in the life business includes deviations from expected mortality, disability and longevity and expected surrender rates. The life insurance risk management consists of product profit testing and monitoring, product portfolio diversification and reinsurance.


Reinsurance
The two Winterthur segments require specific levels of reinsurance to protect their businesses and capital. The reinsurance protection is at all levels of the organization, the local businesses, the market units and the segment units, based on a global reinsurance program to protect the Winterthur segments against catastrophe events and limit the potential for losses arising from large risks. This reinsurance includes a set of internal and external reinsurance contracts to absorb all risks that exceed a prudent risk retention level. Reinsurance protection follows the Winterthur organizational structure based on the principle that each organizational entity runs insurance risk in accordance with its portfolio and its capital base.


Business risk
Business risk is the risk that the businesses are not able to cover their ongoing expenses with ongoing income. Business risk is the potential inability to cover the expense base subsequent to a loss event like major market contractions. Business risk is defined as the difference between the estimated revenues and the estimated expenses in a crisis – excluding all the revenue and expense elements captured by the other risk categories.

The ability to cover the expense base after an adverse event is critically important in order to allow for an orderly continuation of the Group's activities – possibly on a reduced level – and needs to be considered when assessing the Group's capital needs.

Business risk is primarily driven by the price and activity levels on financial markets. The price level on financial markets is particularly relevant for the fee and commission income derived from the management of clients' investment portfolios. The activity level on financial markets is the key driver for brokerage commissions, underwriting commissions and advisory fees. The relative relevance of business risk varies across the business segments, depending on the cost/income ratio, the crisis-resilience of the revenue stream and the ability to reduce expenses in a crisis.


Liquidity and funding risk
Liquidity and funding risk is the risk that we will not be able to fund assets or meet obligations at a reasonable or, in case of extreme market disruptions, at any price. This risk is managed at the business unit level – in line with our general governance principles – which allows us to specifically tailor the approach to the individual cash flow structure within the business units. At Group level, we monitor the identification and measurement of this risk and work in partnership with all business units to foster sound liquidity management practices worldwide.

Credit Suisse Group manages its funding requirements based on business needs, regulatory requirements, rating agency criteria, tax, capital, liquidity and other considerations. Although Credit Suisse Group operates through separate business units, liquidity needs must be satisfied on a Credit Suisse Group consolidated basis and, in the case of banking units, on both a consolidated and legal entity basis. Winterthur legal entities must satisfy liquidity requirements under insurance laws. Accordingly, Credit Suisse Group - as obligor or guarantor for a range of finance subsidiaries in various jurisdictions - Credit Suisse First Boston, Credit Suisse and Winterthur, at the legal entity level, have independent sources of funding. The primary responsibility for measuring and managing funding requirements lies with these legal entities and the respective business units.

Structures and processes are in place at the legal entity and business unit levels to manage the relevant liquidity risks and to ensure appropriate liquidity profiles under various stress scenarios. Liquidity management at the business unit level is reinforced by coordination at the Group level. Practices regarding market access, such as diversification of liabilities and investor relations, are reviewed at the Group level. In addition, the Group sets the framework for contingency planning, including procedures to ensure that information flow remains timely and uninterrupted and division of responsibility remains clear.


Operational risk
Operational risk is the risk of loss resulting from inadequate or failed internal processes, people and systems or from external events. We use five major operational risk categories, which are distinguished for systematic approach reasons: organizational, policy/process, technology, human and external. Our policy and emphasis have not changed from previous years. Our primary aim is the early identification, prevention and mitigation of operational risks, as well as timely and meaningful management reporting. Periodic, Group-wide meetings take place to promote a common understanding of priorities and to foster a dialogue between the Corporate Center and the segments. Knowledge and experience is shared throughout the Group with the goal of maintaining a coordinated approach. All segments take responsibility for their own operational risks. We have initiated the development of specific operational risk management tools beginning with the de finition of risk indicators at all segments to serve as early warning signals. In addition we started to collate loss data and are initiating risk self-assessments in different divisions. The state of operations and their inherent risks are regularly reviewed based on extensive audits and follow-up reviews. Audit data have become an important risk indicator and the analysis of this data serves as an early-warning signal for potential trouble spots.


How we measure market risk

Introduction
Each of our segments uses market risk measurement and management methodologies designed to meet industry standards. These include both general tools capable of calculating exposures comparable across the Group's many activities as well as focused tools that can specifically model unique characteristics of certain units' functions. The tools are used for internal market risk management, internal market risk reporting and disclosure purposes. The two principal measurement methodologies, VaR and scenario analysis, are used to manage risk relative to typical market shifts. These methodologies are described in the following paragraphs.


Value-at-Risk
VaR measures the potential loss in terms of fair value changes over a given time interval under normal market conditions at a given confidence level. VaR as a concept is applicable for all financial risk types with valid regular price histories. Positions are aggregated by risk type rather than by product. For example, interest rate risk includes risk arising from money market and swap transactions, bonds, and interest rate, foreign exchange, equity and commodity options. The use of VaR allows the comparison of risk in different businesses, such as fixed income and equities, and also provides a means of aggregating and netting a variety of positions within a portfolio to reflect actual correlations and offsets between different assets.

The history of financial market rates and prices serves as a basis for the statistical VaR model underlying the potential loss estimation. All of the Group's segments that model their trading portfolios with VaR use a 10-day holding period and a confidence level of 99% calculated using, in general, a rolling two-year history of market data. These assumptions are in agreement with the "Amendment to the Capital Accord to Incorporate Market Risks" published by the Basle Committee on Banking Supervision in 1996 and other related international standards for market risk management.

The CSFB VaR model was originally approved by the Swiss Federal Banking Commission (FBC) for use in the calculation of CSFB trading book market risk capital in 1998. This approval followed extensive reviews in 1997 by CSFB and by the Group's external auditors of the previous variance covariance model and the related processes and controls. With the introduction of the historical simulation model the FBC and the Group's external auditors re-examined and re-approved the VaR model and related processes and controls for this purpose during the first half of 2000. CSFB continues to receive regulatory approval for ongoing enhancements to the methodology.

Assumptions

The Group's segments with trading portfolios use a historical simulation model for the majority of risk types and businesses. Where insufficient data is available for such an approach, an extreme move methodology is used. The model is based on the profit and loss distribution resulting from the historical changes of market rates applied to evaluate the portfolio using, in general, a rolling two year history. The documented fat tail effect of financial time series, which means that large moves are more frequent than expected under a normal distribution assumption, is therefore taken into account. This methodology also avoids any assumptions on correlation between risk factors.


Limitations
VaR as a risk measure quantifies the potential loss on a portfolio under normal market conditions only. It is not intended to cover losses associated with unusually severe market movements (these are covered by scenario analysis). VaR also assumes that past data can be used to predict future events.


Scenario analysis
Scenario analysis examines the potential effects of changes in market conditions due to the occurrence of exceptional but plausible events on our financial position. The results of the analysis are used to manage exposures on a Group-wide basis, as well as at the portfolio level. Scenario analysis involves the revaluation of major portfolios to arrive at a measure of the loss we may suffer under a particular scenario. Scenarios are applied to all major markets in which we participate. Reports based on a range of scenarios are produced at least monthly for review by senior management and traders. Global scenarios aim to capture the risk of severe disruption to all major markets and are related to historic events such as those involving the bond markets in 1994, the credit markets in 1998, the equity markets in 1987 and the US real estate market in 1990. Business level scenarios aim to capture portfolio specific risks by employing scenarios based on non-parallel yield curve shifts, changes in correlation and other pricing assumptions.


Assumptions
The market data is changed according to a predefined set of scenarios that are designed to:

• Consider extreme events to provide realistic "worst case" information;

• Reflect economic reality;

• Be relevant to the portfolio being modeled;

• Be responsive to changing market conditions; and

• Meet regulatory requirements.

Limitations
Scenario analysis provides an approximation of the impact on profits and losses if specific events in the financial markets occur. Seldom do past events repeat themselves in the exact same way. Therefore, it is necessary to use business experience to choose a set of meaningful scenarios and appropriately to assess the scenario results.



FINANCIAL INFORMATION





FINANCIAL INFORMATION

Page
	Consolidated financial statements
	Consolidated income statement
	Consolidated balance sheet
	Consolidated statement of cash flows
	Consolidated off-balance sheet and fiduciary business
	Notes to the consolidated financial statements
1	Summary of significant accounting policies
2	Changes to accounting policies
3	Acquisitions and divestitures
4	Segment reporting
4.1	Segment reporting by operating segments
4.2	Segment reporting by geographic segments
5	Subsequent events
	Income statement
6	Income statement of the banking and insurance business
7	Income statement by origin
8	Net interest income
9	Net trading income
10	Depreciation and amortization
11	Valuation adjustments, provisions and losses from the banking business
12	Extraordinary income
13	Extraordinary expenses
14	Taxes
15	Income statement of the insurance business
16	Insurance premiums, claims and related reinsurance
17	Net investment income from the insurance business
	Balance sheet: Assets
18	Money market papers
19	Loans
19.1	Due from banks
19.2	Due from customers and mortgages
19.3	Collateral of due from customers and mortgages
19.4	Loan valuation allowance
19.5	Impaired loans
20	Securities and precious metals trading portfolios
21	Own shares included in securities trading portfolios
22	Financial investments from the banking business
23	Investments from the insurance business

24	Own shares included in financial investments from the banking and insurance business
25	Non-consolidated participations
26	Tangible fixed assets
27	Operating leases
28	Intangible assets
29	Other assets
30	Assets pledged or assigned and assets subject to ownership reservation
	Balance sheet: Liabilities and shareholders' equity
31	Medium-term notes and bonds
32	Other liabilities
33	Valuation allowances and provisions
34	Technical provisions for the insurance business
35	Statement of shareholders' equity
	Other information
36	Liabilities due to own pension funds
37	Related parties
38	Maturity structure of current assets and borrowed funds
39	Securities lending and borrowing and repurchase agreements
40	Balance sheet by origin
41	Balance sheet by currencies
42	Share-based compensation
43	Compensation
44	Capital adequacy
45	Foreign currency translation rates
46	Principal participations
47	Bonds issued
	Report of the Group auditors
	Parent company financial statements

CONSOLIDATED FINANCIAL STATEMENTS

Consolidated income statement
in CHF m		Notes	2002	2001	2000
Interest and discount income		8	17'630	28'687	30'181
Interest and dividend income from trading portfolios		8	9'957	13'078	8'021
Interest and dividend income from financial investments		8	733	514	706
Interest expenses		8	(20'284)	(35'528)	(33'595)
Net interest income		6, 7	8'036	6'751	5'313
Commission income from lending activities			872	780	717
Commission income from securities and investment transactions			13'658	16'879	16'039
Commission income from other services			1'649	1'421	669
Commission expenses			(845)	(965)	(829)
Net commission and service fee income		6, 7	15'334	18'115	16'596
Net trading income		6, 7, 9	2'254	8'913	8'791
Premiums earned, net		15	34'811	32'195	28'690
Claims incurred and actuarial provisions		16	(28'791)	(29'731)	(28'900)
Commission expenses, net			(2'276)	(2'040)	(2'113)
Investment income from the insurance business			(432)	5'876	8'489
Net income from the insurance business		6, 7	3'312	6'300	6'166
Income from the sale of financial investments			1'385	1'146	1'023
Income from investments in associates			65	166	199
Income from other non-consolidated participations			27	24	18
Real estate income			194	171	140
Sundry ordinary income			816	1'091	1'243
Sundry ordinary expenses			(3'385)	(3'523)	(2'258)
Other ordinary income/(expenses), net		6, 7	(898)	(925)	365
Operating income			28'038	39'154	37'231
Personnel expenses		6, 7	16'910	21'890	18'503
Other operating expenses		6, 7	6'619	8'394	6'645
Operating expenses			23'529	30'284	25'148
Gross operating profit			4'509	8'870	12'083
Depreciation of non-current assets	1)	10	2'173	2'186	1'353
Amortization of acquired intangible assets		10	693	793	157
Amortization of goodwill		10	806	770	246
Valuation adjustments, provisions and losses from the banking business		11	4'430	2'592	1'265
Depreciation, valuation adjustments and losses		6, 7	8'102	6'341	3'021
Profit/(loss) before extraordinary items, cumulative effect of change in accounting principle, taxes and minority interests			(3'593)	2'529	9'062
Extraordinary income		6, 7, 12	746	52	105
Extraordinary expenses		6, 7, 13	(403)	(281)	(1'796)
Cumulative effect of change in accounting principle		2	520	–	–
Taxes		6, 7, 14	(596)	(486)	(1'349)
Net profit/(loss) before minority interests			(3'326)	1'814	6'022
Minority interests		6, 7	17	(227)	(237)
Net profit/(loss)			(3'309)	1'587	5'785
Certain reclassifications have been made to conform to the current presentation.
1) Includes amortization of Present Value of Future Profits (PVFP) from the insurance business.

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

Consolidated balance sheet
in CHF m	Notes	31.12.02	31.12.01
Assets
Cash and other liquid assets	38	2'551	3'092
Money market papers	18, 38	25'125	32'027
Due from banks	19, 38	195'778	203'785
Receivables from the insurance business	38	12'290	11'823
Due from customers	19, 38	182'143	186'151
Mortgages	19, 38	94'896	92'655
Securities and precious metals trading portfolios	20, 21, 38	173'133	208'374
Financial investments from the banking business	22, 24, 38	33'394	37'306
Investments from the insurance business	23, 24	128'450	131'291
Non-consolidated participations	25	1'792	1'846
Tangible fixed assets	4, 26	8'152	9'422
Intangible assets	28	18'359	22'850
Accrued income and prepaid expenses		13'882	18'095
Other assets	29	65'711	63'796
Total assets	4, 40, 41	955'656	1'022'513
Subordinated assets		2'678	1'578
Receivables from non-consolidated participations		728	276
Liabilities and shareholders' equity
Money market papers issued	38	22'178	19'252
Due to banks	38	287'884	335'932
Payables from the insurance business	38	10'218	11'864
Due to customers in savings and investment deposits	38	39'739	38'547
Due to customers, other	38	258'244	261'752
Medium-term notes (cash bonds)	31, 38	2'599	3'019
Bonds and mortgage-backed bonds	31, 38	81'839	81'505
Accrued expenses and deferred income		17'463	25'512
Other liabilities	32	56'070	56'493
Valuation adjustments and provisions	33	11'557	11'362
Technical provisions for the insurance business	34	136'471	138'354
Total liabilities		924'262	983'592
Reserve for general banking risks	35	1'739	2'319
Share capital	35	1'190	3'590
Capital reserve	35	20'710	19'446
Revaluation reserves for the insurance business	35	1'504	749
Reserve for own shares	35	1'950	2'469
Retained earnings	35	4'732	5'640
Minority interests	35	2'878	3'121
Net profit/(loss)	35	(3'309)	1'587
Total shareholders' equity		31'394	38'921
Total liabilities and shareholders' equity	40, 41	955'656	1'022'513
Subordinated liabilities		19'704	20'892
Liabilities due to non-consolidated participations		1'164	1'098

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

Consolidated statement of cash flows
in CHF m	2002	2001	2000
Cash flows from operating activities
Net profit/(loss)	(3'309)	1'587	5'785
Adjustments to reconcile net profit/(loss) to net cash from operating activities:
Depreciation and amortization	3'672	3'749	1'756
Provision for losses	2'799	2'014	1'218
Provision for deferred taxes	30	993	(279)
Other provisions	270	(398)	632
Change in reserve for general banking risks	(580)	0	182
Change in technical provisions for the insurance business	3'916	7'543	6'359
(Gain)/loss from investing activities, net	3'974	(880)	(4'302)
Equity in earnings of non-consolidated participations	(138)	(25)	(196)
(Gain)/loss from disposal of subsidiaries and non-consolidated participations, net	177	(2)	(2)
Change in minority interests	65	981	1'372
Receivables from the insurance business	(823)	(3'906)	(2'427)
Payables from the insurance business	446	2'902	1'305
Securities and precious metals trading positions	54'264	33'045	(52'462)
Deferred policy acquisition costs	(1'028)	(1'156)	(150)
(Increase)/decrease in accrued income and other assets	(9'438)	(8'196)	(1'193)
Increase/(decrease) in accrued expenses and other liabilities	3'451	(4'758)	(3'803)
Amortization of premiums/accretion of discounts, net	(255)	(77)	(592)
Total adjustments	60'802	31'829	(52'582)
Net cash provided by/(used in) operating activities	57'493	33'416	(46'797)
Cash flows from investing activities
(Increase)/decrease in money market papers	2'532	(1'579)	994
(Increase)/decrease in due from banks	(30'198)	7'435	(74'286)
(Increase)/decrease in due from customers/mortgages	(76'291)	(56'780)	(58'674)
Investments in subsidiaries and participations	(963)	(1'546)	(14'841)
Disposal of subsidiaries and participations	526	1'548	379
Purchase of investments	(133'808)	(113'431)	(62'303)
Maturities of investments	6'990	10'099	7'812
Disposal of investments	122'387	86'573	47'328
Capital expenditures on tangible and intangible assets	(1'676)	(2'631)	(2'383)
Disposal of tangible and intangible assets	242	790	178
Other, net	(23)	0	0
Net cash provided by/(used in) investing activities	(110'282)	(69'522)	(155'796)
Certain reclassifications have been made to conform to the current presentation.

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

Consolidated statement of cash flows (continued)
in CHF m	2002	2001	2000
Cash flows from financing activities
Increase/(decrease) in money market papers issued	7'096	(4'123)	(2'120)
Increase/(decrease) in due to banks	2'906	(27'529)	167'162
Increase/(decrease) in due to customers	29'218	43'110	25'918
Issuance of medium-term notes and bonds	41'848	43'441	14'015
Repayments of medium-term notes and bonds	(26'803)	(16'714)	(10'197)
Deposits to policyowner account balances	2'857	2'790	1'966
Withdrawals from policyowner account balances	(3'056)	(1'739)	(1'169)
Increase/(decrease) from issuance/retirement of common shares	726	(394)	8'716
Dividends paid (including minority interests)	(2'548)	(2'568)	(1'986)
Other, net	96	(18)	86
Net cash provided by/(used in) financing activities	52'340	36'256	202'391
Effect of exchange rate changes on cash and other liquid assets	(92)	14	(11)
Net increase/(decrease) in cash and other liquid assets	(541)	164	(213)
Cash and other liquid assets at beginning of financial year	3'092	2'928	3'141
Cash and other liquid assets at end of the period	2'551	3'092	2'928
Supplemental disclosures of cash flow information
Cash paid during the year for income taxes	1'409	1'603	1'542
Cash paid during the year for interest	20'922	35'767	33'203
Non-cash investing and financing activities
Transfer of loans to real estate held for sale	191	118	171
Assets acquired and liabilities assumed in business acquisitions
Fair value of assets acquired	767	9'109	100'688
Liabilities assumed	(204)	(7'861)	(86'223)
Cash paid related to business acquisitions	563	1'248	14'465
Assets and liabilities sold in business divestitures
Fair value of assets sold	(1'310)	(10'476)	(41)
Liabilities sold	1'137	9'248	0
Cash received related to business divestitures	(173)	(1'228)	(41)
Certain reclassifications have been made to conform to the current presentation.

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

Consolidated off-balance sheet and fiduciary business
	Maturity	Maturity	Maturity	Maturity	Total	Total		& nbsp;
	less than	between	between	greater	gross	gross		B ook		Book
	1 year	1 to 3 years	3 to 5 years	than 5 years	amount	amount		value	1)	value	1)
in CHF m	31.12.02	31.12.02	31.12.02	31.12.02	31.12.02	31.12.01		31.12.02		31.12.01
Credit guarantees in form of bills of exchange and other guarantees	25'202	2'697	623	1'573	30'095	31'530		27'745	2)	29'789
Bid bonds, delivery and performance bonds, letters of indemnity and other performance-related guarantees	3'938	790	148	288	5'164	5'456		4'680		5'056
Irrevocable commitments in respect of documentary credits	3'504	13	4	7	3'528	4'381		3'242		3'257
Other contingent liabilities	2'998	219	75	145	3'437	5'484		3'437		5'484
Total contingent liabilities	35'642	3'719	850	2'013	42'224	46'851		39'104		43'586
Irrevocable commitments	54'111	16'005	13'443	6'489	90'048	130'498	3)	90 '048		130'498	3)
Liabilities for calls on shares and other equity instruments	23	0	0	20	43	160	3)	43		160	3)
Confirmed credits	32	0	0	0	32	76		32		76
Total off-balance sheet	89'808	19'724	14'293	8'522	132'347	177'585		129'227		174'320
Fiduciary transactions								37'703		41'448
At 31.12.02 the Group has recorded liabilities of CHF 208.4 m for off-balance sheet risks. At 31.12.02 market value guarantees reported as derivatives totaled CHF 170.4 bn (nominal value). The associated replacement value reported on-balance sheet totaled CHF 10.3 bn.
1) Book value for off-balance sheet positions represents the amount at risk, meaning gross amount less any subparticipations. < /font>
2) Including credit guarantees of securities lent as arranger of CHF 20.7 bn as of 31.12.02 and CHF 21.1 bn as of 31.12.01.
3) 31.12.01 restated.
Off-balance sheet collateral
The following table sets forth the approximate liquidation values of any collateral related to the above off-balance sheet commitments.
					Mortgage	Other		Without		Total
in CHF m					collateral	collateral		colla teral		31.12.02
Credit guarantees in form of bills of exchange and other guarantees					208	23'702		3'835		27'745
Bid bonds, delivery and performance bonds, letters of indemnity and other performance-related guarantees					154	2'105		2'421		4'680
Irrevocable commitments in respect of documentary credits					6	656		2'580		3'242
Other contingent liabilities					88	1'144		2'205		3'437
Contingent liabilities					456	27'607		11'041		39'104
Irrevocable commitments					60	36'207		53'781		90'048
Liabilities for calls on shares and other equity instruments					0	0		43		43
Confirmed credits					0	1		31		32
Total off-balance sheet					516	63'815		64'896		129'227
As of 31.12.01					1'069	99'961		73'290		174'320
Other information
in CHF m								31.12.02		31.12.01
Outstanding commitments
to fund loans at fixed rates								9'496< /b>		7'677
to fund loans at variable rates								62' 383		104'976
to sell loans								0		0
Unused lines of credit granted to customers								14'073		12'598
Exposure with respect to the debts of other guaranteed								17'391		21'122

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

Description of financial instruments with off-balance sheet risk

The Group is a party to financial instruments with off-balance sheet risk in the normal course of business to meet the financing needs of its customers, to reduce its own exposure to fluctuations in interest rates, and to conduct lending activities. These financial instruments include commitments to extend credit, credit and performance-related guarantees, irrevocable commitments in respect of documentary credits, interest rate caps and floors written, interest rate swaps, and forward and futures contracts. Commitments to extend credit are agreements to lend to a customer as long as there is no violation of any condition established in the contract. Guarantees represent irrevocable assurances, subject to satisfaction of certain conditions, that the Group will make payment in the event that the customer fails to fulfil its obligations to third parties. These instruments involve, to varying degrees, elements of credit and interest rate risk in excess of the amount reflected in the consolidated balance sheet. The Group also executes derivative contracts such as written put options and credit default swaps on financial or non-financial assets which are considered market value guarantees when the counterparty owns the asset.

In connection with the sale of certain assets or businesses, the Group provides the acquirer with customary indemnification provisions (based on changes in an underlying asset or liability of the indemnified party). These indemnification provisions vary by counterparty in scope and duration and are dependent upon the type of assets or businesses sold. These indemnification provisions generally shift the potential risk of certain unquantifiable and unknowable loss contingencies (e.g., relating to litigation, tax and intellectual property matters) from the acquirer to the seller, as known or quantifiable loss contingencies generally are reflected in the value of the assets or businesses being sold. The Group is unable to estimate the maximum amount that it could be obligated to pay under these indemnification provisions. To date, the Group’s actual payments arising from these indemnification provisions have been in connection with li tigation matters and not been material.

As a normal part of the Group’s securities underwriting business, the Group typically agrees to reimburse the security issuer in cases that changes in applicable tax laws cause additional tax withholding charges or assessments to be levied. Securities that include these agreements generally also include a related redemption or call provision for such changes in law where the issuer is unable to take reasonable steps to avoid the payment of additional amounts. Since such potential obligations are dependent on future changes in tax laws, any related liabilities that the Group may incur cannot be reasonably estimated at this time. However, considering the presence of the call provisions typically included in securities issuance agreements, the Group does not consider that any such potential liabilities would be material.

For certain private equity funds sponsored by the Group, the Group provides guarantees to third party investors regarding potential obligations of the Group’s employees to return carried interest disbursements. The potential liability under such agreements is dependent on the amounts disbursed to employees as carried interest as a result of the sale of investments, and cannot be reasonably estimated. However, the Group considers its exposure with respect to such guarantees to be immaterial. To limit this exposure, the Group withholds between 20% and 50% of all distributions to employees to cover the repayment obligations.

The Group issues liquidity facilities and asset purchase agreements to commercial paper conduits. Based on the nature of these transactions, they are reported as either credit guarantees or irrevocable credit facilities.

Risks involved and management of off-balance sheet risks

Exposure to credit loss in the event of non-performance by the other party to the financial instrument for commitments to extend credit, letters of credit and financial guarantees is represented by the notional amount of those instruments. The Group uses the same credit policies in making commitments and conditional obligations as it does for on-balance-sheet items.

In the event the Group is required to perform under a third-party guarantee, the Group is generally entitled to recourse against the party on whose behalf the Group has issued the guarantee.

Commitments generally have fixed expiration dates or other termination clauses and may require payment of a fee. Since a portion of the commitments is expected to expire without being drawn upon, the total commitment amounts do not necessarily represent future cash requirements. The Group evaluates each customer’s creditworthiness on a case-by-case basis.

A provision for contingent liabilities is maintained for the banking operations, which is considered adequate to absorb losses arising from the existing balance of contingent liabilities. The provision for such losses is in accordance with the overall supervisory direction of the Swiss banking laws. Each subsidiary sets up provisions for contingent obligations and claims, using Group guidelines. The provisions are reviewed on a quarterly basis by senior management.

Derivative instruments
			Positive	Negative		Positive	Negative
		Nominal	replacement	replacement	Nominal	replacement	replacement
		value	value	value	value	value	value
in CHF bn		31.12.02	31.12.02	31.12.02	31.12.01	31.12.01	31.12.01
Forwards	1)	517.5	0.8	0.8	318.0	2.5	2.5
Swaps		7'021.5	163.9	157.6	5'469.0	80.1	79.8
Options bought and sold (OTC)		1'840.9	20.6	22.5	1'647.7	14.1	16.2
Futures		467.5	–	–	581.1	0.1	0.1
Options bought and sold (traded)		799.8	0.1	0.1	1'105.0	0.2	0.1
Interest rate products		10'647.2	185.4	181.0	9'120.8	97.0	98.7
Forwards	2)	626.2	13.5	13.0	1'125.3	19.1	16.6
Swaps	3)	411.5	17.1	19.0	389.2	14.6	17.9
Options bought and sold (OTC)		336.7	4.2	4.1	419.9	5.8	5.7
Futures		2.0	–	–	1.3	–	–
Options bought and sold (traded)		0.3	–	–	0.6	0.1	–
Foreign exchange products		1'376.7	34.8	36.1	1'936.3	39.6	40.2
Forwards	2)	15.5	0.6	0.9	19.5	0.6	0.7
Swaps	4)	2.8	0.2	0.1	–	–	–
Options bought and sold (OTC)		1.4	0.1	1.4	10.0	0.7	1.1
Futures		–	–	–	–	–	–
Options bought and sold (traded)		0.1	–	0.1	–	–	–
Precious metals products		19.8	0.9	2.5	29.5	1.3	1.8
Forwards		14.6	–	–	38.3	3.5	1.5
Swaps	4)	24.6	1.9	0.7	–	–	–
Options bought and sold (OTC)		161.3	9.2	11.4	185.5	9.3	11.9
Futures		23.3	0.3	–	39.2	0.6	–
Options bought and sold (traded)		123.7	1.2	0.9	130.9	0.7	0.2
Equity/index-related products		347.5	12.6	13.0	393.9	14.1	13.6
Forwards		1.0	–	0.1	110.3	2.8	3.1
Swaps	4)	174.6	4.2	4.9	–	–	–
Options bought and sold (OTC)		3.2	0.1	–	6.6	0.6	0.2
Futures		0.2	–	–	1.7	–	–
Options bought and sold (traded)		0.4	–	–	2.1	0.1	0.2
Other products		179.4	4.3	5.0	120.7	3.5	3.5
Total derivative instruments		12'570.6	238.0	237.6	11'601.2	155.5	157.8
Netting agreements			(182.2)	(182.2)		(104.3)	(104.3)
Replacement values from the insurance business	5)		(1.0)	(0.2)		(0.2)	(0.3)
Total replacement values according to the balance sheet (other assets/liabilities)			54.8	55.2		51.0	53.2
1) Forward rate agreements have been included under forward positions.
2) Including outstanding spot transactions.
3) Cross-currency interest rate swaps.
4) In previous years swaps have been shown under forward positions.
5) Included in the investments from the insurance business.

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



NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

1 Summary of significant accounting policies

Basis for accounting

The Credit Suisse Group (the Group) consolidated financial statements are prepared in accordance with the accounting rules of the Swiss Federal Law on Banks and Savings Banks and the respective Implementing Ordinance, the Swiss Federal Banking Commission guidelines and Swiss GAAP FER Financial Reporting Standards for the insurance business of the Group, which collectively are the generally accepted accounting principles for banks and insurance companies, respectively, in Switzerland, or Swiss GAAP. The consolidation and valuation policies of the Group are in compliance with the Swiss stock exchange listing regulations. The financial year for the Group ends on December 31. In preparing the consolidated financial statements, management is required to make estimates and assumptions that affect the reported amounts of assets and liabilities, and disclosure of contingent assets and liabilities at the date of the consolidated financial statemen ts and the reported amounts of revenues and expenses during the reporting period. Actual results could differ from those estimates. Certain reclassifications have been made to prior-period amounts to conform to the current presentation.

Consolidation

The consolidated financial statements include the accounts of the Group and its subsidiaries. The Group consolidates subsidiaries in which it holds, directly or indirectly, more than 50% of the voting rights of an entity or where it has the ability to exercise control over an entity. The effects of intercompany transactions are eliminated in preparing the consolidated financial statements. Minority interests in shareholders’ equity and net profit are disclosed separately.

The Group accounts for participations in which it holds 20% to 50% of the voting rights and/or has the ability to exercise a significant influence using the equity method of accounting. The Group’s profit or loss share is included in Other ordinary income. Certain majority-owned participations, which operate outside of the Group’s core business are accounted for according to the equity method.

Participations in which the Group holds less than 20% of the voting rights and/or does not have the ability to exercise significant influence are held at cost, less provisions for other than temporary impairment. These items are included in Non-consolidated participations.

Foreign currency translation

For the purpose of consolidation, the assets and liabilities of foreign Group companies are translated into Swiss francs using the year-end exchange rate, and their income statements are translated using the average exchange rate prevailing throughout the year. Translation adjustments arising on consolidation are recorded directly in shareholders’ equity.

In the financial statements of the individual Group companies, assets, liabilities and off-balance sheet items denominated in foreign currencies are translated into the relevant reporting currency using the year-end exchange rate. Income and expense items denominated in foreign currencies are translated into the reporting currency using the exchange rate as of the transaction date. Resulting exchange differences are included in the consolidated income statement, except for differences relating to debt and equity securities held as available-for-sale by the insurance businesses, which are recorded directly in shareholders’ equity.

Offsetting

With the following exceptions, assets and liabilities are in principle not offset. In the banking business, receivables and payables are offset when all of the following conditions are met: receivables and payables arise from similar transactions, with the same counterparty, with the same or earlier maturity of the receivable, in the same currency and which cannot lead to a counterparty risk. Positive and negative replacement values with the same counterparty are offset when bilateral agreements exist that are recognized and legally enforceable. In the insurance business, receivables and payables are offset when the Group has a legal right to offset amounts with the same counterparty and transactions are expected to be settled on a net basis.

Trade date/settlement date accounting

Proprietary and customer securities spot transactions are recorded on a trade date basis. Foreign exchange, money market and precious metals transactions are recorded on settlement (value) date. Prior to the settlement (value) date, foreign exchange and precious metals transactions are reported with their replacement values in Other assets and Other liabilities, respectively.

Cash, due from banks and money market papers

Cash and due from banks are accounted for at nominal value. Money market instruments held for trading are carried at fair value. Money market instruments not held for trading or for sale are recorded net of unamortized premiums/discounts. The necessary provisions for recognizable risks and potential losses are normally deducted from the appropriate asset items in the balance sheet.

Loans (due from customers and mortgages)

Loans are initially recorded at cost, which is generally equal to the principal amount for originated loans. Loans held-to-maturity are recorded net of unamortized premiums/discounts. Loans held-for-sale are valued at lower of cost or market value. Interest income is accrued as earned.

Loans are carried net of any provisions for losses. The allowances for loan losses are intended to cover probable credit losses inherent in the portfolio and those losses specifically identified. During the year the Group adjusted its method of estimating inherent losses related to its lending activities. This adjustment resulted from continued deterioration in the credit markets and was made to better reflect the Group’s estimate of the probable losses in the portfolio. Many factors can affect the Group’s estimates of probable credit losses, including volatility of default probabilities, rating migrations and loss severity. The inherent loss allowance is for all loans not specifically identified as impaired, which on a portfolio basis, are considered to contain probable inherent loss. Inherent losses in the consumer portfolio are determined by applying a historical loss experience, adjusted to reflect current market condition s, to unimpaired homogenous pools based on risk rating and product type. For commercial loans, the Group segregates loans by risk, industry or country rating in order to estimate the inherent losses. Inherent losses on lending-related commitments are estimated based on historical loss and recovery experience and recorded in valuation adjustments, provisions and losses.

The Group continues to provide for specific credit losses on impaired loans based on regular and detailed analysis on each loan in the portfolio considering collateral and counterparty risk. If uncertainty exists as to the repayment of either principal or interest, a specific provision is either established or adjusted accordingly. The Group considers a loan impaired when, based on current information and events, it is probable that it will be unable to collect all amounts due according to the contractual terms of the loan agreement. In the banking business, a loan is classified as non-performing no later than when the contractual payments of principal and/or interest are more than 90 days past due. The Group continues to accrue interest for collection purposes; however, a corresponding provision is set up against interest income. In addition, for any accrued but unpaid interest at the date the loan is placed on non-performing status, a c orresponding provision is recorded against the accrual through the income statement. At that time and on a periodic basis going forward, the remaining principal is evaluated for collectibility and a provision is established for the shortfall between the net recoverable amount and the remaining principal balance.

A loan can be further downgraded to non-interest earning when the collection of interest is in such a doubtful state that further accrual of interest is deemed not necessary and is ceased. At that time and on a periodic basis going forward, any unreserved remaining principal balance is evaluated for collectibility and an additional provision is established as required. Write-off of a loan occurs when the Group is certain that there is no possibility to recover the principal.

Interest collected on non-performing loans is accounted for using the cash basis, cost recovery method or a combination of both, as appropriate. Interest collected on non-interest earning loans is accounted for using the cost recovery method only. Generally, an impaired loan may be restored to performing status when all delinquent principal and interest are brought up to date in accordance with the terms of the loan agreement and when certain creditworthiness-performance criteria are met.

Loan origination fee income is deferred but direct loan origination costs are expensed.

Financial leasing

All leased items (capital goods, real estate and vehicles) are valued using the annuity method and are disclosed under lendings. The portion of the lease payments representing interest is recognized in the income statement as interest. The remaining portion of the payment represents the amortization and reduces the receivable.

Securities and precious metals trading portfolios

Debt and equity securities and precious metals held in the trading portfolio are carried at fair value.

Fair value is determined using quoted market prices, where a price-efficient and liquid market exists. In the absence of such a market, the fair value is established on the basis of a valuation model. Unrealized and realized gains and losses on these positions are recognized in Net trading income. Interest and dividend income from the trading portfolio is recorded in Net interest income.

Financial investments from the banking business

This position includes securities, private equity investments, real estate held-for-sale as well as debt securities held-to-maturity. Participations acquired and held for subsequent disposal are also included in Financial Investments.

Debt and equity securities and real estate held-for-sale are valued at lower of cost or market. Unrealized losses are recorded in the income statement when the market value is lower than the cost. When the market value increases, unrealized gains are recorded only to the extent losses were previously recognized. Losses on debt securities due to deterioration in creditworthiness are recorded in Valuation adjustments, provisions and losses.

Debt securities held-to-maturity are carried net of unamortized premiums/discounts. Premiums and discounts are recognized over the term of the instrument until final maturity. Realized profits or losses, which are interest related and which arise from the early disposal or redemption of the instrument are recognized over the remaining term of the instrument sold. Losses due to deterioration in creditworthiness are recorded in Valuation adjustments, provisions and losses.

Derivative instruments – banking business

Positive and negative replacement values of all derivative instruments are reported at fair value within Other assets and Other liabilities, respectively. The replacement values are presented net by counterparty for transactions in those products where the Group has a legal right to set off; otherwise the replacement values are presented gross by contract. Realized and unrealized gains and losses from trading are included in Net trading income.

The Group uses derivatives to manage interest rate, foreign currency, equity market, and credit risks. When applying hedge accounting, gains and losses on the derivative instruments are recognized in income on the same basis as the underlying exposure. Derivatives in the banking book not used for hedging purposes are typically valued at lower of cost or market in the income statement, except for certain derivative instruments held-to-maturity which are valued according to the accrual method. The interest component is accrued or deferred over the term of the instrument.

Gains and losses related to qualifying hedges of firm commitments and probable anticipated transactions are deferred and recognized in income or as adjustments to carrying amounts when the hedged transactions occur.

Investments from the insurance business

Debt and equity securities held as trading are carried at fair value. Debt securities held-to-maturity are carried at amortized cost. Non-marketable securities are valued at fair value, which normally equals cost. Gains and losses from the valuation of the trading portfolios and realized gains and losses on these positions are recorded in Investment income from the insurance business.

Debt and equity securities held as available-for-sale are carried at fair value. Unrealized gains and losses including foreign exchange gains and losses are recorded within Revaluation reserves for the insurance business in shareholders’ equity, net of deferred taxes. Realized gains and losses on securities are determined using the specific identification method. Realized gains and losses and the amortization of premiums and discounts relating to debt securities are included in Investment income from the insurance business.

A decline that is deemed to be other than temporary, results in an impairment being charged to Investment income from the insurance business. Subsequent increases in fair values up to the original cost are recorded through Investment income from the insurance business.

Recognition of an impairment loss on debt securities is recorded if a decline in fair value below amortized cost is considered other than temporary, i.e., that all amounts due according to the contractual terms of the security are not considered collectable, typically due to a deterioration of creditworthiness of the issuer. Generally, no impairment is recognized in connection with declines resulting from general market interest rate movements to the extent the Group has the intent and ability to hold the debt security until maturity or recovery.

Recognition of an impairment loss on equity securities is recorded if a decline in fair value below the cost basis of an investment is considered other than temporary. Declines in fair value below cost for more than 6 months continuously or which exceed 20% are considered strong indicators of an other than temporary impairment which lead to an impairment loss recognition.

Notwithstanding the considerations above, unrealized losses are recognized as an impairment loss when a decision has been taken to sell a security. Such impairment losses are recognized at the time of the decision to sell, irrespective of the cause of the decline in fair value.

Real estate held for investment, including capital improvements, is carried at cost less accumulated depreciation over its estimated useful life, generally 40 to 67 years. In some operating regions, the economic useful lives are substantially longer than in other regions, based on the materials used and varying construction codes. Land is carried at cost. It is the Group’s policy to evaluate for impairment, whenever events or circumstances indicate, that the carrying value of an asset may not be recoverable. An impairment is deemed to have occurred if the carrying value of a property exceeds recoverable amount. The recoverable amount is the higher of net selling price and value in use. The net selling price is defined as the price realizable in a transaction between independent third parties less related expenses in connection with the sale. The value in use is defined as the sum of the discounted cash inflows and cash outflows from the further use of the property including any cash flow at the end of the useful life. If the factors to determine the recoverable amount materially improve in subsequent periods, this would lead to a value increase, resulting in an adjustment to Investment income from the insurance business. Depreciation and impairments are included in Investment income from the insurance business.

Investments for the benefit of life insurance policyholders who bear the investment risk are carried at fair value.

Loans (including mortgages) are initially recorded at outstanding principal balance net of any provisions for credit losses. Interest income is accrued as earned. The allowances for loan losses are intended to cover probable credit losses inherent in the portfolio and those losses specifically identified. During the year the Group adjusted its method of estimating inherent losses. This adjustment resulted from continued deterioration in the credit markets and was made to better reflect the Group’s estimate of the probable losses in the portfolio. Many factors can affect the Group’s estimates of probable credit losses, including volatility of default probabilities, rating migrations and loss severity. The inherent loss allowance is for all loans not specifically identified as impaired which, on a portfolio basis, are considered to contain probable inherent loss. Inherent losses in the portfolio are determined by applying a hist orical loss experience, adjusted to reflect current market conditions.

The Group continues to provide for specific credit losses on impaired loans based on regular and detailed analysis on each loan in the portfolio, considering collateral. If uncertainty exists as to the repayment of either principal or interest, a specific provision is either established or adjusted accordingly. Short-term investments are accounted for at nominal value, net of any provisions for impairment.

Derivatives are used to manage interest rate, foreign currency, and equity market risks. Gains and losses on hedging derivative instruments are recognized in income on the same basis as the underlying exposure. All derivatives are recognized on the balance sheet at their fair value. The effective portion of derivative instruments used to hedge a position is recorded in the income statement with an offsetting entry related to the hedged item.

Own shares and own bonds

The Group buys and sells own shares, own bonds and derivatives on own shares within its normal trading and market-making activities. In addition, the Group holds own shares to hedge commitments arising from employee compensation schemes. Own shares are included in the trading portfolio and are carried at fair value, or are held in Financial investments from the banking business and are carried at lower of cost or market, or are held in Investments from the insurance business and are carried at fair value. Own shares repurchased for cancellation are carried at cost. Changes in fair value and realized gains and losses on own shares and own bonds included in the trading portfolio are reported in Net trading income. Changes in the fair value of own shares and bonds held in Investments from the insurance business are reported in shareholders’ equity, net of tax, and the realized gains and losses from such investments are reported in Inve stment income from the insurance business. Interest earned and dividends received are reported as Interest Income. Derivatives on own shares are carried at fair value and reported as positive and negative replacements values in Other assets and Other liabilities, respectively. Realized and unrealized gains and losses on derivatives on own shares are recognized in Net trading income.

Tangible fixed assets

Real estate held for own use and investment purposes in the banking business, including capital improvements, is carried at cost less accumulated depreciation over its estimated useful life, generally 40 to 67 years. In some of our operating regions the economic useful lives are substantially longer than in other regions, based on the materials used and varying construction codes. Land is not depreciated. Other tangible fixed assets such as computers, machinery, furnishings, vehicles and other equipment, as well as alterations and improvements to rented premises, are depreciated using the straight-line method over their estimated useful life, generally three to five years.

Real estate held for own use, which has been designated as held for disposal, is carried at lower of cost less accumulated depreciation or market. Until a contract for sale is executed, depreciation continues on these properties.

It is the Group’s policy to evaluate for impairment, whenever events or circumstances indicate, that the carrying value of an asset may not be recoverable. An impairment is deemed to have occurred if the carrying value of a tangible fixed asset exceeds its recoverable amount. Methods for measuring impairment include market appraisals (net selling price) and cash flow analyses. Recognizing an impairment loss results in a new cost basis. If the factors to determine the recoverable amount materially improve in subsequent periods a value increase up to the original depreciated cost value would be recorded in the insurance business.

Intangible assets

The Group capitalizes internal and external costs relating to the acquisition, installation and development of software having a measurable economic benefit. In addition, internally developed software is only capitalized if such costs are identifiable and can be reliably measured. The Group depreciates capitalized software costs on a straight-line basis over the estimated useful life of the software, normally not exceeding three years.

Identifiable intangible assets are generally acquired through business combinations and other transfers of assets. Acquired intangible assets are initially recorded at fair value and depreciated over their estimated useful life, not to exceed 20 years. The useful life of intangible assets relating to individuals does not exceed five years.

Goodwill represents the excess of purchase price over the estimated fair value of net assets acquired at the acquisition date. The goodwill included in this balance sheet position arises from acquisitions after January 1, 1997. Prior to January 1, 1997, goodwill was charged to equity. Goodwill is amortized using the straight-line method over its estimated useful life, not to exceed 20 years.

It is the Group’s policy to evaluate for impairment whenever events or circumstances indicate that the carrying value of an asset may not be recoverable. An impairment is deemed to have occurred if the carrying value of an intangible asset exceeds its recoverable amount. Methods for measuring impairment include, where appropriate, market appraisals (net selling price) and cash flow analyses for finite intangible assets and fair value calculation on a reporting unit level for goodwill. Recognizing impairment loss results in a new cost basis. If the factors to determine the recoverable amount of finite intangible assets materially improve in subsequent periods a value increase up to the original depreciated cost value would be recorded in the insurance business.

The Present Value of Future Profits (PVFP) is the present value of anticipated profits embedded in each life and health insurance portfolio purchased. Interest accrues on the unamortized PVFP based upon the policy liability rate or contract rate. The PVFP asset is amortized over the years that such profits are anticipated to be received in proportion to the estimated gross margins or estimated gross profits for participating traditional life products and non-traditional life products, respectively, and over the premium paying period in proportion to premiums for other traditional life products.

Expected future profits used in determining the PVFP are based on actuarial determinations of future premium collection, mortality, morbidity, surrenders, operating expenses, and yields on assets supporting policy liabilities as well as other factors.

The discount rate used to determine the PVFP is the rate of return required to invest in the business being acquired. Additionally, the PVFP asset is adjusted for the impact on estimated gross margins and profits of net unrealized gains and losses on securities.

Periodically, the PVFP asset is evaluated for recoverability. If the present value of future net cash flows from the blocks of business acquired is insufficient to recover the PVFP, the difference is charged to expense as an additional write-off of the PVFP.

Deferred policy acquisition costs

Policy acquisition costs consist primarily of commissions, underwriting expense and policy issuance costs and are included in Accrued income and prepaid expenses. Acquisition costs, which vary with and are directly related to the acquisition of insurance contracts, are deferred to the extent they are deemed recoverable. Future investment income attributable to related premiums is taken into account in measuring the recoverability of the carrying value of this asset.

Deferred policy acquisition costs on participating traditional life products are amortized over the expected life of the contracts in proportion to the estimated gross margins. Deferred policy acquisition costs on other traditional life products are amortized over the premium paying period of the related policies in proportion to net premiums using assumptions consistent with those used in computing the provision for future policy benefits. Deferred policy acquisition costs on non-traditional life products are amortized over the expected life of the contracts as a constant percentage of the estimated gross profit.

The effect on the amortization of deferred policy acquisition costs of revisions to estimated gross margins or profits for all contracts is reflected in the current period income statement. The deferred policy acquisition costs asset related to participating traditional life products and non-traditional life products is adjusted for the impact on estimated gross margins or profits of net unrealized gains and losses on securities.

Deferred policy acquisition costs for non-life products are amortized over the periods in which the premiums are earned.

Share-based compensation

No expenses are recognized for share options plans if the options granted have no intrinsic value at grant date. For share awards, the market value of shares in consideration for service rendered in the reporting period is accrued in that period. For shares granted in respect of future service the market value granted is deferred and expensed over the required future service period. At each balance sheet date the accrued cost is adjusted for the fair value change in the share price and for associated hedges during the reporting period. The accrual is recognized as a liability.

Taxes

Income tax expense is calculated on the basis of the annual results of the individual financial statements of the Group companies. Deferred tax assets and liabilities are recognized for the expected future tax consequences of temporary differences between the financial statement carrying amounts and the tax bases of assets and liabilities. Deferred tax assets and liabilities are calculated based on expected tax rates and are recorded in Other Assets and Valuation adjustments and provisions, respectively. Deferred income tax expense represents the net change in the deferred tax asset or liability balance during the year and is charged to tax expense, except to the extent the change relates to transactions recognized directly in shareholders’ equity. This amount, together with income taxes payable or receivable in the current year, represents the total income tax expense for the year. Deferred tax assets for net operating loss carry f orwards are recognized when it is more likely than not that future taxable profits will be available against which those losses can be utilized. Other deferred tax assets are recognized subject to management’s judgment that realization is more likely than not. No provision is made for non-recoverable withholding taxes on undistributed profits of Group companies.

Reserve for general banking risks

In accordance with Swiss banking regulations, the reserve for general banking risks is recorded as a separate component of shareholders’ equity. Changes to this equity component are disclosed as an extraordinary item in the income statement.

Repurchase and reverse repurchase agreements (Repos)

The Group enters into purchases of securities under agreements to resell as well as sales of securities under agreements to repurchase substantially identical securities. Such agreements normally do not constitute economic sales and are therefore treated as financing transactions. Securities sold subject to such agreements continue to be recognized in the balance sheet. The proceeds from the sale of these securities are treated as liabilities. Securities purchased under agreements to resell are recognized as loans collateralized by securities. Receivables and liabilities are valued using the accrual method. Those held in the trading book (matched book repo trading) are carried at fair value. Transactions in which economic control over the securities transferred has been relinquished are reported as either purchases or sales together with a related forward commitment to resell or repurchase.

Securities lending and borrowing (SLB)

SLB transactions with cash collateral and daily margining are reported as repurchase and reverse repurchase transactions. All other SLB transactions that are collateralized by cash are included in the balance sheet at amounts equal to the cash advanced or received. Securities lent or securities provided as collateral for securities borrowed continue to be recognized in the balance sheet at their carrying value if control over the securities transferred is not relinquished. Securities borrowed and securities received as collateral for securities lent are only recognized in the balance sheet if control over the securities transferred is relinquished. Lending fees earned or incurred are recognized as interest income and interest expense for the banking business and as Investment income from the insurance business for the insurance business.

Pension plans

The Group sponsors various retirement benefit plans for its employees worldwide. These plans include both defined benefit and defined contribution plans, as well as other retirement benefits such as post-retirement life insurance and post-employment medical benefits. Pension expense is recorded in Personnel expenses and is based on either actual contributions or actuarial valuation methods and projected plan liabilities for accrued service.

Premium income and related expenses

Premiums from traditional life products, both participating and non-participating, are recognized as revenue when due from the policyholder. Profit for contracts with a limited number of premium payments is deferred and recognized over the period that coverage is provided for.

Premiums from non-traditional life products are recognized as revenue when due from the policyholder. For contracts with front-end fees, any excess front-end fees are deferred and recognized in proportion to the estimated gross profits. These deferred fees are adjusted for the impact on estimated gross profits of net unrealized gains and losses on securities.

Premiums from non-life products are recorded at inception of the contract and are earned primarily on a pro-rata basis over the term of the related policy coverage with the unearned portion being deferred in the balance sheet as unearned premiums.

Reinsurance

Contracts providing for indemnification against loss or liability relating to insurance risk are accounted for as reinsurance. Reinsurance contracts that do not transfer significant insurance risk are accounted for as deposits.

Gains on retroactive reinsurance ceded are deferred and amortized over the estimated remaining settlement period.

Technical provisions for the insurance business

Provision for future policyholder benefits

The provision for future policyholder benefits for participating traditional life products is computed using the net level premium method, which represents the present value of future policy benefits less the present value of future net premiums. The method uses assumptions for mortality and interest rates that are guaranteed in the contracts or used in determining dividends.

The provision for future policyholder benefits for other traditional life products is computed using the net level premium method. The assumptions are based on the Group’s experience and industry standards, including provision for adverse deviations that were in effect as of the issue date of the contract.

The provision for future policyholder benefits for non-traditional life products is equal to the account value, which represents premiums received and allocated investment return credited to the policy less deductions for mortality costs and expense charges.

When the provision for future policyholder benefits plus the present value of expected future gross premiums for a product are insufficient to provide for expected future benefits and expenses for the line of business, deferred policy acquisition costs are written-off to income and, if required, a premium deficiency reserve is established by a charge to income. A premium deficiency reserve is adjusted for the impact of net unrealized gains and losses.

Provision for death and other benefits

Claim reserves represent amounts due on life and accident and health claims that have been incurred as of the balance sheet date, but have not yet been paid. This includes incurred but not reported claims (IBNR) and claims handling expense. The interest rate used to discount future payments is impacted by the net unrealized gains and losses on securities, resulting in an adjustment to claim reserves.

Provision for future dividends to policyholders

Dividends on participating traditional life products are accrued when earned and calculated in accordance with local statutory or contractual regulations. The provision for policyholder dividends also includes a deferred bonus reserve (DBR), which represents amounts that result from differences between these presented financial statements and the local statutory financial statements and that will reverse and enter into future policyholder dividends calculations. The calculation of the DBR reflects only the contractual or regulatory defined minimum distribution to policyholders.

The provision for policyholder dividends is adjusted for the impact of net unrealized gains and losses on securities to the extent that the policyholder will participate in such gains and losses on the basis of contractual or regulatory requirements when they are realized.

Life products, where the investment risk is borne by the policyholders

Assets and liabilities are maintained separately for non-traditional life products designed to meet specific investment objectives of policyholders. The policyholder bears the investment risk associated with the products, and investment income and investment gains and losses accrue directly to the policyholders. Assets and liabilities associated with these products are carried at fair value. Changes in the fair value of assets and liabilities are recognized in Investment income from the insurance business and Claims incurred and actuarial provisions.

Provision for unpaid claims and claim adjustment expenses

Claim and claim adjustment expenses are recorded as incurred. Claim provisions comprise estimates of the unpaid portion of the reported losses and estimates of the amount of losses incurred but not yet reported to the insurer. Management periodically reviews the estimates, which may change in light of new information. Any subsequent adjustments are recorded in the period in which they are determined.

Certain claim reserves for which the payment pattern and ultimate cost are fixed and reliably determinable on an individual claim basis are discounted at a maximum of the risk-free rate.

Insurance technical provisions are presented net of reinsurance.

Fee recognition

Fees and commissions earned for investment and portfolio management, customer trading and custody services are recognized over the period that the related service is provided. Revenues from underwriting and fees from mergers and acquisitions and other corporate finance advisory services are recorded at the time when the underlying transactions are substantially completed under the terms of the engagements. Transactions-related expenses are deferred until the related revenue is recognized.

2 Changes to accounting policies

Beginning January 1, 2002, certain internal costs related to the acquisition and development of internal use computer software for the banking business are capitalized and depreciated over the estimated useful life of the software. Before such costs were expensed as incurred. The impact on the 2002 financial statements was a capitalization of CHF 200 million.

Prior to 2002, impairments for properties and fixed assets in the insurance business were deemed to have occurred if the carrying value exceeded its expected future cash flows, computed undiscounted and without interest charges. In accordance with the adoption of Swiss GAAP FER 20, the Group has revised its impairment policy per January 1, 2002. Properties and fixed assets are now deemed to be impaired if their carrying values exceed their recoverable amounts. The recoverable amount is deemed to be the higher of net selling price and value in use. The net selling price is defined as the price realizable in a transaction between independent third parties less related expenses in connection with the sale. The value in use is defined as the sum of the discounted cash inflows and cash outflows from the further use of the respective property or fixed asset including any cash flow at the end of its useful life. For the 2001 financial statements this change in accounting policy would not have triggered any additional impairment charges.

In 2002, the accounting policy was changed to recognize deferred tax assets related to net operating loss carry-forwards when it is considered more likely than not that future taxable profit will be available against which such losses can be utilized. Prior to 2002, deferred tax assets on net operating losses were only recorded in the event of a sale of a business at a taxable gain where the realization of the deferred tax asset was certain. The impact on the 2002 financial statements was the recording of a deferred tax asset on net operating losses in the amount of CHF 1.8 billion, of which CHF 520 million relates to net operating losses incurred prior to 2002.

The following table sets forth the unaudited pro forma information for 2001 and 2000 and assumes that the adoption of this change occurred retroactively:
Consolidated balance sheet
	Pro Forma		Disclosed
in CHF m	31.12.01	31.12.00	31.12.01	31.12.00
Other assets	64'316	54'952	63'796	54'668
Total shareholders' equity	39'441	43'806	38'921	43'522
Consolidated income statement
in CHF m	2001	2000	2001	2000
Taxes	(250)	(1'270)	(486)	(1'349)
Net profit	1'823	5'864	1'587	5'785

3 Acquisitions and divestitures

The scope of consolidation has undergone the following material changes in the current year:

Acquisitions

Premier Life Ltd., Luxembourg, Premier Life Ltd., Bermuda

Effective September 17, 2002, Winterthur acquired Premier Life Ltd., Luxembourg and the portfolio of Premier Life Ltd., Bermuda for a purchase price of CHF 44 million (CHF 30 million and CHF 14 million, respectively). The Group acquired 100 % of the shares of Premier Life Ltd., Luxembourg. The Luxembourg acquisition has been accounted for under the purchase method of accounting, and accordingly, the results of operations were included in the consolidated financial statements for the first time in the fourth quarter 2002. The total goodwill was CHF 9 million and will be amortized over 20 years under Swiss GAAP. The portfolio in Bermuda was first included in the results of operations in the third quarter of 2002.

Divestitures

Winterthur Versicherungs AG, Winterthur Pensionskassen AG und Wintisa Management and Consulting AG.

Effective January 1, 2002 Winterthur sold its insurance and pension fund business in Austria to Zürich Kosmos Versicherungs AG, a subsidiary of Zurich Financial Services Group.

Winterthur Assurances, Paris, Winterthur Vie, Paris

Effective January 1, 2002, Winterthur transferred the operations of its Paris-based operations in France, Winterthur Assurances (non-life) and Winterthur Vie (life), to Mutuelles du Mans Assurances.

Previous years business combinations

Vojensky Otevreny Penzijni Fond (VOPF)

On April 4, 2001, Winterthur Life & Pensions acquired the largest Czech pension fund, Vojensky Otevreny Penzijni Fond (VOPF) for a purchase price of CHF 125 million. The Group acquired 93.28% of total capital on January 18, 2001 and 6.66% of total capital on May 9, 2001. This acquisition has been accounted for under the purchase method of accounting, and accordingly, the results of operations of VOPF beginning April 1, 2001 have been included in the accompanying consolidated financial statements. Total goodwill was approximately CHF 104 million, which will be amortized over 20 years under Swiss GAAP.

JO Hambro Investment Management Limited

On February 7, 2001, Credit Suisse Group acquired JO Hambro Investment Management Ltd., an investment company targeting high-net-worth individuals, for GBP 94.5 million (CHF 229 million) payable in a combination of cash and securities. This acquisition has been accounted for under the purchase method of accounting, and accordingly, the results of operations of JO Hambro Investment Management Limited beginning February 7, 2001 have been included in the accompanying consolidated financial statements. Under Swiss GAAP, the goodwill amount of GBP 86 million (CHF 208 million) will be amortized over 20 years. JO Hambro will for the time being retain its name and operate as a separately branded entity.

Commercial General Union

On September 30, 2001, Winterthur acquired the non-life insurance activities of Commercial General Union in Belgium. The purchase price was BEF 4,764 million (CHF 175 million) and the goodwill amount of CHF 241 million will be amortized over 20 years under Swiss GAAP. This acquisition has been accounted for under the purchase method of accounting, and accordingly, the results of operations of Commercial General Union in Belgium beginning September 30, 2001 have been included in the accompanying consolidated financial statements.

SLC Asset Management

On December 7, 2001, the Group acquired SLC Asset Management Limited, SLC Pooled Pensions Limited and Sun Life of Canada Unit Managers Limited, the principal UK asset management subsidiaries of global insurer Sun Life Financial Services of Canada Inc., for the purchase price of GBP 122 million (CHF 287 million). The companies are asset management companies with contracts for management of the insurance assets (including property) of their former affiliate Sun Life Assurance Company of Canada (UK) Limited and third-party institutional and retail funds. This acquisition has been accounted for under the purchase method of accounting, and accordingly, the results of operations beginning December 7, 2001 have been included in the accompanying consolidated financial statements. Under Swiss GAAP, the goodwill of GBP 106 million (CHF 250 million) will be amortized over 20 years.

Donaldson, Lufkin & Jenrette, Inc.

On November 3, 2000, the Group completed the acquisition of Donaldson, Lufkin & Jenrette, Inc. (DLJ). The Group acquired all of the outstanding shares of common stock of the series designated Donaldson, Lufkin & Jenrette, Inc.- DLJ Common Stock, for USD 90 per share in cash pursuant to a tender offer for consideration of USD 5,026 million (CHF 8,930 million). The Group also acquired from AXA, SA and certain of its affiliates, their combined interest in DLJ for a combination of USD 2,377 million (CHF 4,223 million) in cash and 102,908,668 newly issued common shares. Total consideration for the acquisition of DLJ, including costs associated with the transaction amounted to USD 12,361 million (CHF 21,962 million).

In accordance with a Merger Agreement dated August 30, 2000, DLJ, now named Credit Suisse First Boston (USA), Inc., became an indirect wholly owned subsidiary of the Group. This acquisition has been accounted for under the purchase method of accounting, and accordingly the results of operations of DLJ beginning from November 3, 2000 have been included in the accompanying consolidated financial statements. The purchase price has been allocated to assets acquired and liabilities assumed based on their estimated fair value at the acquisition date. Goodwill is being amortized on a straight-line basis over 20 years.

The following unaudited pro forma consolidated results of operations are presented in accordance with US GAAP as if the acquisition of DLJ had occurred at the beginning of the years presented.

The pro forma consolidated results of operations include adjustments to give effect to amortization of goodwill, interest expense on acquisition debt, retention benefits and certain other adjustments, together with related income tax effects. The unaudited pro forma information is not necessarily indicative of the results of operations that would have occurred had the purchase been made at the beginning of the periods presented or the future results of the combined operations.

Pro forma information (unaudited)
in CHF m	2000	1999
Revenue, net of interest expense	73'922	60'717
Profit before extraordinary items	2'328	1'524
Net profit	2'345	1'524
Basic earnings per share (in CHF)	8.24	5.33

Colonial UK, Nicos Life, and National Insurance and Guarantee Corporation Plc

In 2000, “Winterthur” acquired the following entities in cash transactions: Colonial UK; Nicos Life; and National Insurance and Guarantee Corporation Plc (NIG). Colonial UK was purchased for GBP 290 million (CHF 731 million), Nicos Life was purchased for JPY 17,400 million (CHF 285 million) and NIG was purchased for GBP 130 million (CHF 347 million). All three acquisitions were accounted for as purchases and the resulting goodwill for each acquisition will be amortized over 20 years. The results of operations for each entity have been included in the accompanying consolidated financial statements beginning from the respective acquisition dates.


4 Segment reporting

4.1 Segment reporting by operating segments

Our consolidated results comprise the results of our six segments and the Corporate Center. In addition, we have two business units which comprise the sum of the respective segments constituting such business units and include certain acquisition-related costs, exceptional items and cumulative effect of change in accounting principle not allocated to the segments. The business unit results are part of our segment results. Corporate Center costs and revenues attributable to operating businesses have been allocated to the respective segments. The Corporate Center also records expenses related to projects sponsored by the Group, restructuring costs, as well as certain adjustments and reclassifications described below.

Inter-segment revenue sharing and cost allocation

Responsibility for each of our products is allocated to one of the segments. In cases where one segment contributes to the performance of another, revenue sharing agreements are in place to compensate for such efforts. These agreements are negotiated periodically by the relevant segments on a product-by-product basis. Allocated revenues are added to, or deducted from, the revenue line item of the respective segments.

Certain administrative, processing and information technology services may be based in one segment but shared by other segments. The segment supplying the service receives compensation from the recipient segment on the basis of service level agreements and transfer payments. Service level agreements are negotiated periodically by the relevant segments with regard to each individual product or service. The costs of shared services and their related allocations are added to, or deducted from, Other operating expenses for the respective segments.

The aim of the revenue sharing and cost allocation agreements is to reflect the pricing structure of an unrelated third-party transaction, although this is not achieved in all cases.

Own use real estate

Own use real estate in Switzerland, which consists primarily of bank premises, is managed centrally. Real estate costs reflect market rent plus an additional charge if actual costs exceed market rent. These costs are included in Other operating expenses for the respective segments.

Valuation adjustments, provisions and losses

Provisions for credit risk at the banking segments within CSFS are generally based on expected credit losses, which are determined according to a statistical model derived from historical losses. Management believes that the statistical model provides a long-term view of credit loss experience. In any year, statistically determined provisions may be higher or lower than the actual credit experience relating to the credit risks covered by this model, depending on the economic environment, interest rates and other factors. The banking segments within CSFS record an expense item for statistically determined expected credit provisions. On a consolidated basis, Valuation adjustments, provisions and losses in the income statement reflects actual credit provisions for the year. To reflect the difference between the expected credit provisions recorded and the actual credit provisions for the year, an adjustment is recorded at the Corporate Center . Non-credit related losses and counterparty defaults other than those relating to lending business are not covered by the statistical model. Provisions for these losses and defaults are based on actual experience and are recorded at the relevant segment. Effective January 1, 2002, while the banking segments within CSFS continue to record an expense item for statistically determined expected credit provisions with an adjustment for the actual credit provisions recorded at the Corporate Center, the segments within CSFB record credit provisions based on actual experience with no adjustment made at the Corporate Center.

In 2002, we made an adjustment in the method of estimating inherent losses related to lending activities. This adjustment was considered necessary to better reflect in the loan valuation allowances and provisions the continued deterioration of the credit markets.

Taxes

Taxes are calculated individually for each segment on the basis of average tax rates across its various geographic markets, as if the segment operated on a stand-alone basis. The difference between these average tax rates and our actual consolidated tax expense results in an adjustment to taxes at the Corporate Center. Since certain acquisition-related costs and exceptional items are not allocated to the segments, the tax impact associated with such items is reflected at the business unit level.

In 2002, we changed our accounting principles to allow for the recognition of deferred tax assets on net operating losses in anticipation of our change to US GAAP as our primary basis of accounting in 2004. As a result of this change, a positive cumulative effect of CHF 520 million was recognized from prior years and CHF 1.3 billion was recognized for 2002.

4.1 Segment reporting by operating segments (continued)
Segment income statement for the year ended December 31, 2002
								< /td>
		Credit Suisse Financial Services					Credit Suisse First Boston
			Corporate &			Total		CSFB	Total
		Private	Retail	Life &		operating	Institutional	Financial	operating
in CHF m		Banking	Banking	Pensions	Insurance	basis	Securities	Services	basis
Operating income	2)	6'461	2'435	1'349	1'585	11'830	15'125	3'235	18'360
Personnel expenses		2'393	939	931	1'502	5'765	8'086	1'572	9'658
Other operating expenses		1'469	646	563	787	3'465	3'810	1' 005	4'815
Operating expenses		3'862	1'585	1'494	2'289	9'230	11'896	2'577	14'473
Gross operating profit		2'599	850	(145)	(704)	2'600	3'229	658	3'887
Depreciation of non-current assets	3)	253	89	469	189	1'000	612	145< /td>	757
Valuation adjustments, provisions and losses		97	293	–	–	390	2'595	23	2'618
Net operating profit/(loss) before extraordinary and exceptional items, acquisition-related costs, cumulative effect of change in accounting principle and taxes		2'249	468	(614)	(893)	1'210	22	490	512
Extraordinary income/(expenses), net		44	4	0	0	48	408	0	408
Taxes	4)	(531)	(109)	(786)	(99)	(1'525)	185	(137)	48
Net operating profit/(loss) before exceptional items, acquisition-related costs, cumulative effect of change in accounting principle and minority interests		1'762	363	(1'400)	(992)	(267)	615	353	968
Acquisition interest						–			(504)
Amortization of retention payments						–			(649)
Amortization of acquired intangible assets and goodwill						(139)			(1'303)
Exceptional items						(192)		< /td>	(1'389)
Tax impact						16			761
Cumulative effect of change in accounting principle						266			254
Net profit/(loss) before minority interests						(316)			(1'862)
Minority interests						151			0
Net profit/(loss)						(165)		< /font>	(1'862)
1) The business unit results reflect the results of the separate segments comprising the business unit. Certain acquisition-related costs, including acquisition interest, amortization of retention payments and amortization of acquired intangible assets and goodwill, exceptional items and cumulative effect of change in accounting principle not allocated to the segments are included in the business unit results. For Credit Suisse First Boston certain other items, including brokerage, execution and clearing expenses, contractor costs and expenses related to certain redeemable preferred securities classified as minority interests, have been reclassified in the segment and business unit results and are adjusted at the Corporate Center in accordance with Swiss GAAP and reflected in the Group’s consolidated results.
2) Operating income for the insurance business is defined as net premiums earned, less claims incurred and change in technical provisions and expenses for processing claims, less commissions, plus net investment income from the insurance business.
3) Including amortization of Present Value of Future Profits (PVFP) from the insurance businesses.
4) Excluding tax impact on acquisition-related costs as well as exceptional items.

4.1 Segment reporting by operating segments (continued)

< font style="font-family: arial, helvetica, sans-serif; font-size: 7pt; font-weight: bold; ">

Reconciliation of operating to consolidated results for the year ended December 31, 2002

< font style="font-family:arial,helvetica,sans-serif;font-size:6.5pt">

Credit Suisse Financial Services

Credit Suisse First Boston

Re-

Re-

Re-

Re-

Adjust. incl.

Credit

Operating

classifi-

classified

Operating

classifi-

classified

Corporate

Suisse

in CHF m

basis

cations

basis

basis

cations

basis

Center

1)

Group

Operating income

11'830

11'830

18'360

(504)

2)

17'856

(1'648)

28'038

Personnel expenses

5'765

50

3)

5'815

9'658

891

2) 4)

10'549

546

16'910

Other operating expenses

3'465

38

3)

3'503

4'815

4'815

(1'699)

6'619

Operating expenses

9'230

9'318

14'473

15'364

(1'153)

23'529

Gross operating profit

2'600

2'512

3'887

2'492

(495)

4'509

Depreciation of non-current assets

1'000

45

3)

1'045

757

757

371

2'173

Amortization of acquired intangible assets and goodwill

–

198

3) 5)

198

–

1'303

2)

1'303

(2)

1'499

Valuation adjustments, provisions and losses

390

390

2'618

984

4)

3'602

438

4'430

Profit/(loss) before extraordinary items, cumulative effect of change in accounting principle and taxes

1'210

879

512

(3'170)

(1'302)

(3'593)

Extraordinary income/(expenses), net

48

48

408

(163)

4)

245

50

343

Cumulative effect of change in accounting principle

–

266

6)

266

–

254

6)

254

0

520

Taxes

(1'525)

16

(1'509)

48

761

809

104

(596)

Net profit/(loss) before minority interests

(267)

(316)

968

(1'862)

(1'148)

(3'326)

Minority interests

151

151

0

(134)

17

Net profit/(loss)

(165)

(1'862)

(1'282)

(3'309)

Other data:

Total assets as of December 31, 2002

7)

405'970

621'757

(72'071)

955'656

1) For a discussion of these items, please refer to “Operating and financial review - Corporate Center”.

2) Reflects acquisition interest of CHF 504 m allocated to operating income, amortization of retention payments of CHF 649 m allocated to personnel expenses and amortization of acquired intangible assets and goodwill of CHF 1,303 m.

3) Reflects exceptional items totaling CHF 192 m (CHF 179 m net of tax) in respect of focusing the European initiative on private banking clients allocated as follows: CHF 50 m to personnel expenses, CHF 38 m to operating expenses, CHF 45 m to depreciation of non-current assets and CHF 59 m to amortization of acquired intangible assets and goodwill.

4) Reflects exceptional items of CHF 1,389 m (CHF 1,269 m net of tax) allocated as follows: CHF 242 m to personnel expenses, CHF 984 m to valuation adjustments, provisions and losses and CHF 163 m to extraordinary expenses.

5) Reflects acquisition-related costs of CHF 139 m allocated to amortization of acquired intangible assets and goodwill.

6) Reflects the cumulative effect of a change in accounting principle related to the recognition of deferred tax assets on net operating losses for Credit Suisse Financial Services of CHF 266 m and Credit Suisse First Boston of CHF 254 m.

7) Intersegment consolidation items have been eliminated within “Adjust. incl. Corporate Center”.

13'731 (15)

4.1 Segment reporting by operating segments (continued)
Segment income statement for the year ended December 31, 2001
								< /td>
		Credit Suisse Financial Services					Credit Suisse First Boston
			Corporate &			Total		CSFB	Total
		Private	Retail	Life &		operating	Institutional	Financial	operating
in CHF m		Banking	Banking	Pensions	Insurance	basis	Securities	Services	basis
Operating income	2)	7'245	2'398	2'503	3'236	15'382	21'217	4'045	25'262
Personnel expenses		2'502	1'000	749	1'388	5'639	11'764	1'967
Other operating expenses		1'522	620	671	873	3'686	5'176	1' 336	6'512
Operating expenses		4'024	1'620	1'420	2'261	9'325	16'940	3'303	20'243
Gross operating profit		3'221	778	1'083	975	6'057	4'277	742	5'019
Depreciation of non-current assets	3)	215	84	350	169	818	772	179	951
Valuation adjustments, provisions and losses		75	308	–	–	383	1'514	27	1'541
Net operating profit before extraordinary and exceptional items, acquisition- related costs and taxes		2'931	386	733	806	4'856	1'991	536	2'527
Extraordinary income/(expenses), net		12	13	0	0	25	(1)	(14)
Taxes	4)	(642)	(94)	(153)	(224)	(1'113)	(439)	(85)< /td>	(524)
Net operating profit before acquisition-related costs, exceptional items and minority interests		2'301	305	580	582	3'768	1'551	437	1'988
Acquisition interest						–			(828)
Amortization of retention payments						–			(812)
Amortization of acquired intangible assets and goodwill						(116)			(1'455)
Exceptional items						0			(1'428)
Tax impact						2			1'148
Net profit/(loss) before minority interests						3'654			(1'387)
Minority interests						(69)			(1)
Net profit/(loss)						3'585		;	(1'388)
1) The business unit results reflect the results of the separate segments comprising the business unit. Certain acquisition-related costs, including acquisition interest, amortization of retention payments, amortization of acquired intangible assets and goodwill and exceptional items not allocated to the segments are included in the business unit results. For Credit Suisse First Boston certain other items, including brokerage, execution and clearing expenses, contractor costs and expenses related to certain redeemable preferred securities classified as minority interests, have been reclassified in the segment and business unit results and are adjusted at the Corporate Center in accordance with Swiss GAAP and reflected in the Group’s consolidated results.
2) Operating income for the insurance business is defined as net premiums earned, less claims incurred and change in technical provisions and expenses for processing claims, less commissions, plus net investment income from the insurance business.
3) Including amortization of Present Value of Future Profits (PVFP) from the insurance businesses.
4) Excluding tax impact on acquisition-related costs as well as exceptional items.

4.1 Segment reporting by operating segments (continued)

< font style="font-family: arial, helvetica, sans-serif; font-size: 7pt; font-weight: bold; ">

Reconciliation of operating to consolidated results for the year ended December 31, 2001

< font style="font-family:arial,helvetica,sans-serif;font-size:6.5pt">

Credit Suisse Financial Services

Credit Suisse First Boston

Re-

Re-

Re-

Re-

Adjust. incl.

Credit

Operating

classifi-

classified

Operating

classifi-

classified

Corporate

Suisse

in CHF m

basis

cations

basis

basis

cations

basis

Center

1)

Group

Operating income

15'382

15'382

25'262

(862)

2) 3)

24'400

(628)

39'154

Personnel expenses

5'639

5'639

13'731

1'797

2) 3)

15'528

723

21'890

Other operating expenses

3'686

3'686

6'512

6'512

(1'804)

8'394

Operating expenses

9'325

9'325

20'243

22'040

(1'081)

30'284

Gross operating profit

6'057

6'057

5'019

2'360

453

8'870

Depreciation of non-current assets

818

818

951

12

2)

963

405

2'186

Amortization of acquired intangible assets and goodwill

–

116

4)

116

–

1'455

< sup>3)

1'455

(8)

1'563

Valuation adjustments, provisions and losses

383

383

1'541

397

2)

1'938

271

2'592

Profit/(loss) before extraordinary items and taxes

4'856

4'740

2'527

(1'996)

(215)

2'529

Extraordinary income/(expenses), net

25

25

(15)

(15)

(239)

(229)

Taxes

(1'113)

2

(1'111)

(524)

1'148

624

1

(486)

Net profit/(loss) before minority interests

3'768

3'654

1'988

(1'387)

(453)

1'814

Minority interests

(69)

(69)

(1)

(1)

(157)

(227)

Net profit/(loss)

3'585

(1'388)

(610)

1'587

Other data:

Total assets as of December 31, 2001

5)

395'164

698'518

(71'169)

1'022'513

1) For a discussion of these items, please refer to “Operating and financial review - Corporate Center”.

2) Reflects exceptional items in respect of cost reduction initiatives and a settlement with the US Securities and Exchange Commission and the NASDR of CHF 1,428 m (CHF 1,092 m net of tax) allocated as follows: CHF -34 m to operating income, CHF 985 m to personnel expenses, CHF 12 m to depreciation of non-current assets and CHF 397 m to valuation adjustments, provisions and losses.

3) Reflects acquisition interest of CHF 828 m allocated to operating income, amortization of retention payments of CHF 812 m allocated to personnel expenses and amortization of acquired intangible assets and goodwill of CHF 1,455 m.

4) Reflects acquisition-related costs of CHF 116 m allocated to amortization of acquired intangible assets and goodwill.

5) Intersegment consolidation items have been eliminated within “Adjust. incl. Corporate Center”.

4.1 Segment reporting by operating segments (continued)
Segment income statement for the year ended December 31, 2000
								< /td>
		Credit Suisse Financial Services					Credit Suisse First Boston
			Corporate &			Total		CSFB	Total
		Private	Retail	Life &		operating	Institutional	Financial	operating
in CHF m		Banking	Banking	Pensions	Insurance	basis	Securities	Services	basis
Operating income	2)	7'913	2'324	2'075	3'459	15'771	20'092	2'059	22'151
Personnel expenses		2'420	940	664	1'337	5'361	11'224	791	12'015
Other operating expenses		1'350	673	544	823	3'390	3'905	68 1	4'586
Operating expenses		3'770	1'613	1'208	2'160	8'751	15'129	1'472	16'601
Gross operating profit		4'143	711	867	1'299	7'020	4'963	587	5'550
Depreciation of non-current assets	3)	101	37	101	159	398	596	77	673
Valuation adjustments, provisions and losses		213	510	–	–	723	536	1	537
Net operating profit before extraordinary items, acquisition-related costs and taxes		3'829	164	766	1'140	5'899	3'831	509	4'340
Extraordinary income/(expenses), net		1	20	0	0	21	0	(1)	(1)
Taxes	4)	(865)	(42)	(101)	(305)	(1'313)	(1'033)	(74)	(1'107)
Net operating profit before acquisition-related costs and minority interests		2'965	142	665	835	4'607	2'798	434	3'232
Acquisition interest						–			(225)
Amortization of retention payments						–			(181)
Amortization of acquired intangible assets and goodwill						(55)			(349)
Tax impact						0			167
Net profit before minority interests						4'552			2'644
Minority interests						(176)			(3)
Net profit						4'376			2'641
1) The business unit results reflect the results of the separate segments comprising the business unit. Certain acquisition-related costs, including acquisition interest, amortization of retention payments and amortization of acquired intangible assets and goodwill not allocated to the segments are included in the business unit results. For Credit Suisse First Boston certain other items, including brokerage, execution and clearing expenses, contractor costs and expenses related to certain redeemable preferred securities classified as minority interests, have been reclassified in the segment and business unit results and are adjusted at the Corporate Center in accordance with Swiss GAAP and reflected in the Group’s consolidated results.
2) Operating income for the insurance business is defined as net premiums earned, less claims incurred and change in technical provisions and expenses for processing claims, less commissions, plus net investment income from the insurance business.
3) Including amortization of Present Value of Future Profits (PVFP) from the insurance businesses.
4) Excluding tax impact on acquisition-related costs.

4.1 Segment reporting by operating segments (continued)

< font style="font-family: arial, helvetica, sans-serif; font-size: 7pt; font-weight: bold; ">

Reconciliation of operating to consolidated results for the year ended December 31, 2000

< font style="font-family:arial,helvetica,sans-serif;font-size:6.5pt">

Credit Suisse Financial Services

Credit Suisse First Boston

Re-

Re-

Re-

Re-

Adjust. incl.

Credit

Operating

classifi-

classified

Operating

classifi-

classified

Corporate

Suisse

in CHF m

basis

cations

basis

basis

cations

basis

Center

1)

Group

Operating income

15'771

15'771

22'151

(225)

2)

21'926

(466)

37'231

Personnel expenses

5'361

5'361

12'015

181

2)

12'196

946

18'503

Other operating expenses

3'390

3'390

4'586

4'586

(1'331)

6'645

Operating expenses

8'751

8'751

16'601

16'782

(385)

25'148

Gross operating profit

7'020

7'020

5'550

5'144

(81)

12'083

Depreciation of non-current assets

398

398

673

673

282

1'353

Amortization of acquired intangible assets and goodwill

–

55

3)

55

–

349

2)

349

(1)

403

Valuation adjustments, provisions and losses

723

723

537

< /sup>

537

5

1'265

Profit/(loss) before extraordinary items and taxes

5'899

5'844

4'340

3'585

(367)

9'062

Extraordinary income/(expenses), net

21

21

(1)

(1)

(1'711)

(1'691)

Taxes

(1'313)

(1'313)

(1'107)

167

(940)

904

(1'349)

Net profit/(loss) before minority interests

4'607

4'552

3'232

2'644

(1'174)

6'022

Minority interests

(176)

(176)

(3)

(3)

(58)

(237)

Net profit/(loss)

4'376

2'641

(1'232)

5'785

Other data:

Total assets as of December 31, 2000

4)

365'176

684'713

(62'456)

987'433

1) For a discussion of these items, please refer to “Operating and financial review - Corporate Center”.

2) Reflects acquisition interest of CHF 225 m allocated to operating income, amortization of retention payments of CHF 181 m allocated to personnel expenses and amortization of acquired intangible assets and goodwill of CHF 349 m.

3) Reflects acquisition-related costs of CHF 55 m allocated to amortization of acquired intangible assets and goodwill.

4) Intersegment consolidation items have been eliminated within “Adjust. incl. Corporate Center”.

4.2 Segment reporting by geographic segments
The geographic analysis of income and assets is provided in order to disclose information similar to other financial services companies that comply with internationally recognized standards and does not reflect the way the Group is managed. Management believes note 4.1 "Segment reporting by operating segments" is a more meaningful representation of the way in which the Group is managed.
Gross operating income 2002
			Other		Asia/
			European		Pacific/
in CHF m		Switzerland	countries	Americas	Africa	Total
Interest income		5'981	8'295	12'935	1'109	28'320
Commission and service fee income		4'384	2'901	8'222	672	16'179
Net trading income		982	2'273	(1'288)	287	2'254
Insurance premiums earned, net		12'380	18'114	3'456	861	34'811
Investment income from the insurance business		1'375	(1'702)	(19)	(86)	(432)
Other ordinary income		2'140	(190)	82	455	2'487
Gross operating income		27'242	29'691	23'388	3'298	83'619
Expenses	2)	–	–	–	–	(55'581)
Operating income		–	–	–	–	28'038
Gross operating income 2001
			Other		Asia/
			European		Pacific/
in CHF m		Switzerland	countries	Americas	Africa	Total
Interest income		7'188	10'999	22'324	1'768	42'279
Commission and service fee income		5'099	3'263	9'904	814	19'080
Net trading income		1'386	3'541	3'312	674	8'913
Insurance premiums earned, net		11'505	17'122	2'777	791	32'195
Investment income from the insurance business		3'373	2'266	276	(39)	5'876
Other ordinary income		1'030	822	155	591	2'598
Gross operating income		29'581	38'013	38'748	4'599	110'941
Expenses	2)	–	–	–	–	(71'787)
Operating income		–	–	–	–	39'154

Gross operating income 2000
			Other		Asia/
			European		Pacific/
in CHF m		Switzerland	countries	Americas	Africa	Total
Interest income		7'474	10'508	19'444	1'482	38'908
Commission and service fee income		5'492	3'445	7'627	861	17'425
Net trading income		1'790	3'477	2'311	1'213	8'791
Insurance premiums earned, net		10'975	14'543	2'458	714	28'690
Investment income from the insurance business		3'962	4'358	338	(169)	8'489
Other ordinary income		1'379	645	336	263	2'623
Gross operating income		31'072	36'976	32'514	4'364	104'926
Expenses	2)	–	–	–	–	(67'695)
Operating income		–	–	–	–	37'231
Certain reclassifications have been made to conform to the current presentation.
1) The geographic analysis is based on the location of the office recording the transactions.
2) Includes interest expenses, commission expenses, claims incurred and technical provisions for the insurance business, commission expenses from the insurance business and sundry ordinary expenses.

4.2 Segment reporting by geographic segments (continued)
Assets by countries/regions
	Tangible fixed assets		Total assets
in CHF m	31.12.02	31.12.01	31.12.02	31.12.01
Switzerland	4'587	4'692	198'045	208'427
United Kingdom	1'323	1'270	143'627	146'415
Germany	508	591	62'681	74'553
Other European countries	392	474	99'539	107'411
North America	1'138	1'663	346'947	380'009
Central and South America	36	513	35'700	33'161
Asia/Pacific	167	214	62'384	66'388
Middle Eastern countries	–	4	3'905	3'820
Africa	1	1	2'828	2'329
Total	8'152	9'422	955'656	1'022'513
1) The geographic analysis of tangible fixed assets is based on the location of the reporting entities, whereas the analysis of total assets is driven by the customers' domicile.

5 Subsequent events

On January 7, 2003, Credit Suisse First Boston entered into a definitive agreement to sell Pershing, a leading provider of financial services outsourcing solutions for broker-dealers and independent investment managers, to The Bank of New York Company, Inc. for USD 2 billion in cash, the repayment of a USD 480 million subordinated loan and a contingent payment of up to USD 50 million based on future performance. The transaction is expected to close in the first half of 2003, subject to certain regulatory approvals and other conditions.

On November 27, 2002, Winterthur announced the sale of its insurance subsidiaries Companhia Europeia de Seguros, S.A., Winterthur Pensiones, S.A. in Portugal to Liberty International, a subsidiary of the Liberty Mutual Group. The transaction is subject to regulatory approval which is expected during the first half of 2003.

6 Income statement of the banking and insurance business < b>
		Banking business			Insurance business			2)		Credit Suisse Group
in CHF m		2002	2001	2000	2002	2001	2000		2002	2001	2000
Net interest income		7'984	6'680	5'239	–	–	–		8'036	6'751	5'313
Net commission and service fee income		15'350	18'136	16'629	–	–	–		15'334	18'115	16'596
Net trading income		1'946	8'913	8'791	–	–	–		2'254	8'913	8'791
Net income from the insurance business	3)	–	–	–	3'641	6'352	6'197		3'312	6'300	6'166
Other ordinary income/(expenses), net		(296)	(538)	1'046	(602)	(380)	(666)		(898)	(925)	365
Operating income		24'984	33'191	31'705	3'039	5'972	5'531		28'038	39'154	37'231
Salaries and other compensation		12'495	17'414	14'616	1'687	1'675	1'523		14'183	19'089	16'139
Employee benefits		1'335	1'452	1'159	486	358	359		1'820	1'810	1'518
Other personnel expenses		797	886	724	110	105	122		907	991	846
Personnel expenses	3)	14'627	19'752	16'499	2'283	2'138	2'004		16'910	21'890	18'503
Premises and real estate expenses		1'062	1'155	811	248	238	248		1'310	1'394	1'059
Expenses for IT, machinery, furnishings, vehicles and other equipment		1'526	1'536	985	320	325	250		1'837	1'853	1'212
Sundry operating expenses		2'530	4'162	3'483	931	984	868		3'472	5'147	4'374
Other operating expenses	3)	5'118	6'853	5'279	1'499	1'547	1'366		6'619	8'394	6'645
Operating expenses		19'745	26'605	21'778	3'782	3'685	3'370	< sup>	23'529	30'284	25'148
Gross operating profit/(loss)		5'239	6'586	9'927	(743)	2'287	2'161		4'509	8'870	12'083
Depreciation of non-current assets		1'515	1'667	1'092	657	519	261		2'173	2'186	1'353
Amortization of acquired intangible assets		693	793	157	–	–	–	< sup>	693	793	157
Amortization of goodwill		740	697	215	66	73	31		806	770	246
Valuation adjustments, provisions and losses from the banking business		4'430	2'592	1'265	–	–	–		4'430	2'592	1'265
Depreciation, valuation adjustments and losses		7'378	5'749	2'729	723	592	292		8'102	6'341	3'021
Profit/(loss) before extraordinary items, cumulative effect of change in accounting principle, taxes and minority interests		(2'139)	837	7'198	(1'466)	1'695	1'869		(3'593)	2'529	9'062
Extraordinary income		681	52	105	65	–	–		746	52	105
Extraordinary expenses		(206)	(50)	(1'796)	(197)	(231)	–		(403)	(281)	(1'796)
Cumulative effect of change in accounting principle		320	–	–	200	–	–		520	–	–
Taxes		289	(108)	(943)	(885)	(378)	(406)		(596)	(486)	(1'349)
Net profit/(loss) before minority interests		(1'055)	731	4'564	(2'283)	1'086	1'463		(3'326)	1'814	6'022
Minority interests		(151)	(179)	(91)	168	(48)	(146)		17	(227)	(237)
Net profit/(loss)		(1'206)	552	4'473	(2'115)	1'038	1'317		(3'309)	1'587	5'785
Certain reclassifications have been made to conform to the current presentation.
1) Income statements for the banking and insurance business are presented on a stand-alone basis.
2) Represents "Winterthur" Swiss insurance company, excluding capital contribution of CHF 1.7 bn to Winterthur Life, Winterthur, by Credit Suisse Group.
3) Insurance business: expenses due to the handling of both claims and investments are allocated to the income from the insurance business, of which CHF 615 m (2001: CHF 599 m, 2000: CHF 525 m) are related to personnel expenses and CHF 469 m (2001: CHF 371 m, 2000: CHF 355 m) to other operating expenses.

7 Income statement by origin
	Switzerland	Foreign	Switzerland	Foreign	Switzerland	Foreign
in CHF m	2002	2002	2001	2001	2000	2000
Net interest income	3'371	4'665	2'921	3'830	3'357	1'956
Net commission and service fee income	4'125	11'209	4'699	13'416	5'344	11'252
Net trading income	982	1'272	1'386	7'527	1'790	7'001
Net income from the insurance business	26	3'286	2'426	3'874	2'574	3'592
Other ordinary income/(expenses), net	488	(1'386)	114	(1'039)	261	104
Operating income	8'992	19'046	11'546	27'608	13'326	23'905
Personnel expenses	4'503	12'407	4'370	17'520	4'386	14'117
Other operating expenses	1'903	4'716	2'325	6'069	2'315	4'330
Operating expenses	6'406	17'123	6'695	23'589	6'701	18'447
Gross operating profit	2'586	1'923	4'851	4'019	6'625	5'458
% of total	57%	43%	55%	45%	55%	45%
Depreciation of non-current assets	850	1'323	995	1'191	696	657
Amortization of acquired intangible assets	9	684	0	793	0	157
Amortization of goodwill	105	701	85	685	47	199
Valuation adjustments, provisions and losses from the banking business	1'043	3'387	616	1'976	706	559
Depreciation, valuation adjustments and losses	2'007	6'095	1'696	4'645	1'449	1'572
Profit/(loss) before extraordinary items, cumulative effect of change in accounting principle, taxes and minority interests	579	(4'172)	3'155	(626)	5'176	3'886
Extraordinary income/(expenses)	523	(180)	(225)	(4)	(152)	(1'539)
Cumulative effect of change in accounting principle	3	517	–	–	–	–
Taxes	(219)	(377)	(799)	313	(983)	(366)
% of total	37%	63%	164%	(64%)	73%	27%
Net profit/(loss) before minority interests	886	(4'212)	2'131	(317)	4'041	1'981
Minority interests	39	(22)	126	(353)	27	(264)
Net profit/(loss)	925	(4'234)	2'257	(670)	4'068	1'717
% of total	(28%)	128%	142%	(42%)	70%	30%
Certain reclassifications have been made to conform to the current presentation.
1) The analysis is based on the location of the office recording the transactions.

8 Net interest income
in CHF m	2002	2001	2000
Interest income on loans due from customers	9'832	13'438	13'853
Interest income on loans due from banks	6'849	13'179	14'225
Interest income from money market papers	536	1'590	1'725
Credit commissions treated as interest earnings	263	329	252
Interest income from leasing operations	150	151	126
Interest and discount income	17'630	28'687	30'181
Interest income	8'953	11'351	7'136
Dividend income	1'004	1'727	885
Interest and dividend income from trading portfolios	9'957	13'078	8'021
Interest income	617	352	345
Dividend income	116	162	361
Interest and dividend income from financial investments	733	514	706
Interest income	28'320	42'279	38'908
Interest expenses for liabilities due to customers	(10'031)	(15'786)	(15'475)
Interest expenses for liabilities due to banks	(10'253)	(19'742)	(18'120)
Interest expenses	(20'284)	(35'528)	(33'595)
of which interest expenses for subordinated liabilities	(1'006)	(916)	(879)
Total net interest income	8'036	6'751	5'313

9 Net trading income
in CHF m	2002	2001	2000
Debt instruments	726	1'708	2'694
Equity instruments	334	4'851	4'512
Foreign exchange and banknote trading	1'228	1'648	1'075
Precious metals	21	3	123
Other	(55)	703	387
Total net trading income	2'254	8'913	8'791
Certain reclassifications have been made to conform to the current presentation.

10 Depreciation and amortization
in CHF m		2002	2001	2000
Real estate		189	207	239
Other tangible fixed assets		1'107	1'269	933
Present value of future profits (PVFP)	1)	267	237	14
Other intangible assets		526	387	151
Non-consolidated participations		84	86	16
Depreciation of non-current assets		2'173	2'186	1'353
Amortization of acquired intangible assets		693	793	157
Amortization of goodwill		806	770	246
Total depreciation and amortization		3'672	3'749	1'756
1) Interests accrued of CHF 98 m (2001: CHF 157 m, 2000: CHF 156 m) on the unamortized PVFP balance is presented net against amortization.

11 Valuation adjustments, provisions and losses from the banking business
in CHF m		2002	2001	2000
Valuation allowances		2'822	1'634	973
Balance sheet risks		63	4	(83)
Off-balance sheet risks		202	80	(11)
Other provisions		1'311	828	304
Losses on financial investments		32	46	82
Total valuation adjustments, provisions and losses from the banking business		4'430	2'592	1'265
Non-technical provisions for the insurance business	1)	15	136	95
1) Included in other expenses from the insurance business.

12 Extraordinary income
in CHF m	2002	2001	2000
Gains from the disposal of participations	120	4	2
Release of reserve for general banking risks	580	0	8
Other extraordinary income	46	48	95
Total extraordinary income	746	52	105

13 Extraordinary expenses
in CHF m		2002	2001	2000
Losses from the disposal of participations		360	238	0
Allocation to reserve for general banking risks		0	0	190
Restructuring charges		17	19	1'501
Other extraordinary expenses		26	24	105
Total extraordinary expenses		403	281	1'796
Restructuring charges 1)
in CHF m		2002	2001	2000
Personnel		441	43	932
Premises	2)	27	7	268
Other	3)	66	13	342
Total restructuring charges		534	63	1'542
of which included in extraordinary expenses		17	19	1'501
of which included in ordinary expenses		517	44	41
1) See note 33 "Valuation allowances and provisions" for further details.
2) Premises charges include lease termination costs, moving expenses and losses related to the closure and sale of property.
3) Other charges include technology write-offs, rebranding and advertising costs and consultancy fees.

In 2002, restructuring charges of CHF 37 million related to the insurance business and CHF 497 million related to the banking business of which CHF 133 million related to the efforts of focusing CSFS’ European initiative on private banking clients, and CHF 347 million represented accruals made for severance payments at CSFB.

In 2001, restructuring charges of CHF 44 million related to the insurance business and CHF 19 million related to e-business activities.

During 2000, the Group recorded restructuring charges of CHF 1,499 million related to the acquisition of Donaldson, Lufkin & Jenrette, Inc. Personnel charges of CHF 900 million included CHF 664 million for announced and anticipated termination benefits and CHF 236 million for other personnel-related expenses including retention awards. Substantially all of the remaining CHF 43 million in 2000 restructuring costs related to Winterthur Life & Pension’s acquisition of Colonial UK.

14 Taxes
in CHF m	2002	2001	2000
Switzerland	498	659	953
Foreign	(230)	755	1'981
Current taxes	268	1'414	2'934
Switzerland	(279)	140	30
Foreign	607	(1'068)	(1'615)
Deferred taxes	328	(928)	(1'585)
Total taxes	596	486	1'349

15 Income statement of the insurance business
in CHF m	2002	2001	2000
Non-life
Net premiums written	17'241	16'840	14'632
Change in provision for unearned premiums and in provision for future policy benefits (health)	(1'538)	(1'833)	(1'113)
Net premiums earned	15'703	15'007	13'519
Claims and annuities paid	(10'164)	(10'311)	(10'108)
Change in provision for unpaid claims and annuities	(1'585)	(1'198)	(324)
Claims and annuities incurred	(11'749)	(11'509)	(10'432)
Dividends paid to policyholders	(241)	(290)	(309)
Change in provision for future dividends to policyholders	347	(21)	(66)
Dividends to policyholders incurred	106	(311)	(375)
Operating expenses	(4'486)	(4'336)	(3'971)
Underwriting result	(426)	(1'149)	(1'259)
Net investment income	(16)	2'217	2'385
Interest received on deposits and bank accounts	41	29	96
Interest paid	(93)	(97)	(114)
Other income/(expenses), including foreign currency translation impact	(350)	(165)	53
Profit/(loss) before taxes and minority interests	(844)	835	1'161
Life
Net premiums written	18'979	17'203	15'172
Change in provision for unearned premiums	(4)	(15)	(1)
Net premiums earned	18'975	17'188	15'171
Death and other benefits paid	(13'961)	(11'922)	(9'417)
Change in provisions for death and other benefits	(731)	(245)	(317)
Death and other benefits incurred	(14'692)	(12'167)	(9'734)
Change in provision for future policyholder benefits	(4'020)	(5'457)	(6'377)
Dividends paid to policyholders	(1'193)	(1'449)	(1'439)
Change in provision for future dividends to policyholders	2'951	1'162	(543)
Dividends to policyholders incurred	1'758	(287)	(1'982)
Operating expenses	(2'181)	(1'870)	(1'685)
Net investment income	(308)	3'651	6'051
Interest received on deposits and bank accounts	83	86	88
Interest on bonuses credited to policyholders	(146)	(135)	(116)
Interest paid	(122)	(193)	(215)
Other income/(expenses), including foreign currency translation impact	72	(53)	(416)
Profit/(loss) before taxes and minority interests	(581)	763	785
Combined
Profit/(loss) before taxes and minority interests	(1'425)	1'598	1'946
Interest on debt	(107)	(61)	(46)
Amortization of goodwill	(66)	(73)	(31)
Cumulative effect of change in accounting principle	200	–	–
Taxes	(885)	(378)	(406)
Profit/(loss) before minority interests	(2'283)	1'086	1'463
Minority interests	168	(48)	(146)
Net profit/(loss)	(2'115)	1'038	1'317
1) Represents “Winterthur” Swiss Insurance Company, excluding capital contribution of CHF 1.7 bn to Winterthur Life, Winterthur, by Credit Suisse Group.

16 Insurance premiums, claims and related reinsurance
in CHF m	2002	2001	2000
Non-life
Switzerland	2'982	3'138	3'133
Germany	2'523	2'659	2'615
United Kingdom	5'001	4'009	2'608
Italy	1'892	1'840	1'855
Spain	1'361	1'242	1'130
North America	3'375	3'598	3'281
Other	1'257	1'926	1'886
Total gross premiums written	18'391	18'412	16'508
of which direct written premiums	17'452	17'606	16'125
of which assumed	939	806	383
Ceded	(1'150)	(1'572)	(1'876)
Net premiums written	17'241	16'840	14'632
Direct	15'839	16'162	14'711
Assumed	1'008	524	340
Ceded	(1'144)	(1'679)	(1'532)
Net premiums earned	15'703	15'007	13'519
Direct	(11'939)	(12'489)	(11'644)
Assumed	(816)	(451)	141
Ceded	1'006	1'431	1'071
Claims and annuities incurred, net	(11'749)	(11'509)	(10'432)
Life
Switzerland	8'966	8'340	7'815
Germany	2'861	2'815	2'746
United Kingdom	2'338	2'088	1'445
Other	4'854	4'170	3'446
Total gross premiums written	19'019	17'413	15'452
of which direct written premiums	18'778	17'193	15'437
of which assumed	241	220	15
Ceded	(40)	(210)	(280)
Net premiums written	18'979	17'203	15'172
Direct	18'774	17'190	15'438
Assumed	242	208	14
Ceded	(41)	(210)	(281)
Net premiums earned	18'975	17'188	15'171
Direct	(14'697)	(12'189)	(9'788)
Assumed	(78)	(52)	(48)
Ceded	83	74	102
Death and other benefits incurred, net	(14'692)	(12'167)	(9'734)
Combined
Direct written premiums	36'230	34'799	31'562
Assumed	1'180	1'026	398
Ceded	(1'190)	(1'782)	(2'156)
Net premiums written	36'220	34'043	29'804
1) Represents «Winterthur» Swiss Insurance Company.

17 Net investment income from the insurance business1)
in CHF m	2002	2001	2000
Non-life
Debt securities and loans	815	974	1'029
Equity securities	91	161	160
Real estate	100	127	120
Mortgages	54	60	59
Short-term investments	151	95	109
Non-consolidated participations	7	15	48
Investment income	1'218	1'432	1'525
Realized gains/(losses) on real estate	(4)	170	38
Realized gains/(losses) on other investments	(1'069)	750	1'022
(Depreciation)/appreciation on investments	(26)	(31)	(28)
Gains/(losses) on investments	(1'099)	889	1'032
Investment expenses	(135)	(104)	(172)
Net investment income	(16)	2'217	2'385
Life
Debt securities and loans	2'568	2'798	2'793
Equity securities	355	462	404
Real estate	419	395	372
Mortgages	411	421	398
Short-term investments	114	85	67
Non-consolidated participations	11	14	9
Investment income	3'878	4'175	4'043
Realised gains/(losses) on real estate	65	31	40
Realised gains/(losses) on other investments	(2'197)	926	2'670
(Depreciation)/appreciation on investments	(127)	(123)	(105)
Gains/(losses) on investments	(2'259)	834	2'605
Investment income	319	224	214
Gains/(losses)	(2'049)	(1'338)	(544)
Net investment income where the investment risk is borne by policyholders	(1'730)	(1'114)	(330)
Investment expenses	(197)	(244)	(267)
Net investment income	(308)	3'651	6'051
Combined
Debt securities and loans	3'383	3'772	3'822
Equity securities	446	623	564
Real estate	519	522	492
Mortgages	465	481	457
Short-term investments	265	180	176
Non-consolidated participations	18	29	57
Investment income	5'096	5'607	5'568
Gains/(losses) on investments	(3'358)	1'723	3'637
Net investment income where the investment risk is borne by policyholders	(1'730)	(1'114)	(330)
Investment expenses	(332)	(348)	(439)
Net investment income from the insurance business	(324)	5'868	8'436
1) Represents "Winterthur" Swiss insurance company.

18 Money market papers
in CHF m		31.12.02	31.12.01
Government treasury notes and bills	1)	10'142	5'219
Money market placements	1)	13'803	20'988
Other bills of exchange and money market papers	1)	1'180	5'820
Total money market papers		25'125	32'027
of which rediscountable or pledgeable with central banks	1)	11'545	7'305
1) 31.12.01 restated.

19 Loans
19.1 Due from banks
in CHF m	31.12.02	31.12.01
Due from banks, gross	195'866	203'821
Valuation allowance	(88)	(36)
Total due from banks, net	195'778	203'785
19.2 Due from customers and mortgages
in CHF m	31.12.02	31.12.01
Due from customers, gross	187'617	192'349
Valuation allowance	(5'474)	(6'198)
Due from customers, net	182'143	186'151
Mortgages, gross	97'037	95'685
Valuation allowance	(2'141)	(3'030)
Mortgages, net	94'896	92'655
Total due from customers and mortgages, net	277'039	278'806
Due from customers and mortgages by sector
in CHF m	31.12.02	31.12.01
Financial services	38'279	39'213
Real estate companies	16'472	17'627
Other services including technology companies	15'316	22'860
Manufacturing	13'273	12'791
Wholesale and retail trade	11'165	10'970
Construction	4'314	3'676
Transportation and communication	6'482	10'904
Health and social services	2'340	1'854
Hotels and restaurants	2'390	2'866
Agriculture and mining	2'317	1'600
Non-profit and international organizations	191	27
Commercial	112'539	124'388
Consumers	92'419	86'358
Public authorities	5'023	5'000
Lease financings	3'158	3'135
Professional securities transactions and securitized loans	71'515	69'153
Due from customers and mortgages, gross	284'654	288'034
Valuation allowance	(7'615)	(9'228)
Total due from customers and mortgages, net	277'039	278'806

19.3 Collateral of due from customers and mortgages
		Mortgage	Other	Without	Total
in CHF m		collateral	collateral	collateral	31.12.02
Due from customers		5'106	129'300	47'737	182'143
Residential properties		68'055
Business and office properties		11'857
Commercial and industrial properties		10'970
Other properties		4'014
Mortgages		94'896			94'896
Total collateral		100'002	129'300	47'737	277'039
As of 31.12.01		98'557	121'338	58'911	278'806
19.4 Loan valuation allowance
in CHF m				31.12.02	31.12.01
Due from banks				88	36
Due from customers				5'474	6'198
Mortgages				2'141	3'030
Total loan valuation allowance	1)			7'703	9'264
of which on principal				6'617	7'553
of which on interest				1'086	1'711
1) Of which for 31.12.02 CHF 6,778 m and for 31.12.01 CHF 8,974 m are specific allowances for impaired loans.
Roll forward of loan valuation allowance
in CHF m			2002	2001	2000
At beginning of financial year			9'264	10'786	12'489
Net additions charged to income statement			2'616	1'613	973
Net write-offs			(3'803)	(3'805)	(3'509)
Balances acquired/(sold)			0	(3)	352
Provisions for interest			187	400	248
Foreign currency translation impact and other			(561)	273	233
At end of financial year			7'703	9'264	10'786

19.5 Impaired loans
in CHF m		31.12.02	31.12.01
With a specific allowance		11'714	14'654
Without a specific allowance		655	911
Total impaired loans, gross		12'369	15'565
Non-performing loans		6'355	7'960
Non-interest earning loans		2'325	2'808
Restructured loans		281	114
Potential problem loans	2)	3'408	4'683
Total impaired loans, gross		12'369	15'565
1) 31.12.01 restated.
2) Potential problem loans consist of loans where interest payments are being made but where, in the credit officer's assessment, some doubt exists as to the timing and/or certainty of the repayment of contractual principal.
Impaired loans include non-performing loans, non-interest earning loans, troubled debt restructuring and potential problem loans. Troubled debt restructuring consists of loans that are accruing at interest rates different from the original terms of such loans; restructurings involving the forgiveness of principal and/or accrued interest; or restructurings involving the receipt of an equity interest from the counterparty. On receipt of cash, suspended interest is recovered first, except when amounts are outstanding for costs and other late payment charges, in which case cash received is first applied to these costs and other late payment charges.
Potential problem loans consist of loans where interest payments are being made. However, there exists some doubt in the credit officer’s assessment as to the timing and/or certainty of the repayment of contractual principal. At December 31, 2002, the Group did not have any commitments to lend additional funds to debtors whose terms have been modified in troubled debt restructuring.
Other information
in CHF m		2002	2001
Average balance of impaired loans	1)	13'293	16'164
Interest income which was recognized		107	184
Interest income recognized on a cash basis		158	169
Recognized in connection with the sales of loans were CHF 181 million and CHF 162 million net losses during 2002 and 2001, respectively.
1) 2001 restated.

Concentrations of credit risk

Credit risk concentrations arise and exist when any particular exposure type becomes material relative to the size and capital of the Group. Within the Group, monitoring by counterparty, country, industry, product and business division is carried out in an effort to ensure that such concentrations are identified. Possible material exposures of any counterparty or counterparties are regularly identified as part of regulatory reporting of large exposures. The approval of country and regional limits aims to avoid any undue geographical risk concentration. From an industry exposure point of view, the combined credit exposure of the Group is quite diversified. Within Corporate & Retail Banking a large portion of exposure is from individual clients, particularly in residential mortgages in Switzerland. At Credit Suisse First Boston, a large portion of the exposure relates to transactions with financial institutions. However, in both cases, the customer base is extensive and the number and variety of transactions are broad. For Credit Suisse First Boston the business is also geographically diverse with operations focused in the Americas, Europe and, to a lesser extent, Asia.

20 Securities and precious metals trading portfolios
in CHF m		31.12.02	31.12.01
Listed on stock exchange		58'661	66'308
Unlisted		76'083	91'434
Debt instruments		134'744	157'742
of which own bonds and medium-term notes		1'520	1'037
Listed on stock exchange		33'208	44'202
Unlisted		3'935	5'123
Equity instruments		37'143	49'325
of which own shares		2'254	4'410
Precious metals		1'246	1'307
Total securities and precious metals trading portfolios		173'133	208'374
of which rediscountable or pledgeable with central banks	1)	27'426	40'782
Substantial assets and liabilities included in other balance sheet positions	2)
Lent trading positions (due from banks and customers)		64	76
Borrowed trading positions (due to banks and customers)		582	2'996
Derivative instruments from trading activities
Positive replacement values (other assets)		53'188	49'651
Negative replacement values (other liabilities)		54'534	52'386
1) 31.12.01 restated.
2) These are valued at fair value and any related profit/loss on them is shown in net trading income.

21 Own shares included in securities trading portfolios
	2002	2002	2001	2001
	No. of shares	in CHF m	No. of shares	in CHF m
In registered share equivalents, including derivatives
At beginning of financial year	(92'891)	(7)	6'035'628	465
At end of financial year	191'133	6	(92'891)	(7)
The number of shares has been adjusted for the 4-for-1 share split effective as of August 15, 2001.

22 Financial investments from the banking business
	Cost		Market value		Book value
in CHF m	31.12.02	31.12.01	31.12.02	31.12.01	31.12.02	31.12.01
Listed on stock exchange	–	–	–	–	16'588	14'055
Unlisted	–	–	–	–	3'493	2'242
Debt instruments	–	–	–	–	20'081	16'297
of which valued according to the accrual method	–	–	–	–	16'949	15'219
of which valued at lower of cost or market	3'795	1'176	3'244	1'098	3'132	1'078
of which own bonds and medium-term notes	–	–	–	–	19	31
						< /font>
Listed on stock exchange	2'034	3'849	598	5'706	596	3 '537
Unlisted	–	–	–	–	11'947	15'387
Equity instruments	–	–	–	–	12'543	18'924
of which own shares	–	–	–	–	58	773
of which qualifying participations	–	–	–	–	2'114	2'713
						< /font>
Repossessed commodities	0	16	0	6	0	6
Precious metals	10	9	10	9	10	9
Real estate	874	2'291	759	2'080	760	2'070
Total financial investments from the banking business	–	–	–	–	33'394	37'306
of which valued at lower of cost or market	6'713	7'341	4'611	8'899	4'498	6'700
of which securities rediscountable or pledgeable with central banks	–	–	–	–	14'746< /td>	13'275

23 Investments from the insurance business
			Gross	Gross
		Amortized	unrealized	unrealized
As of 31.12.02, in CHF m	Book value	cost	gains	losses	Fair value
Debt securities issued by Swiss Federal Government, cantonal or local governmental entities	10'974	10'269	715	10	10'974
Debt securities issued by foreign governments	27'094	26'303	879	88	27'094
Corporate debt securities	22'517	21'210	1'399	92	22'517
Other	16'066	15'141	1'010	85	16'066
Debt securities	76'651	72'923	4'003	275	76'651
Equity securities	9'052	9'171	336	455	9'052
Total securities – available-for-sale	85'703	82'094	4'339	730	85'703
Debt securities	246	–	–	–	–
Equity securities	31	–	–	–	–
Total securities – trading	277	–	–	–	–
Own shares	44	–	–	–	–
Mortgage loans	10'175	–	–	–	–
Other loans	4'305	–	–	–	–
Real estate	7'431	–	–	–	10'057
Short-term investments and other	7'120	–	–	–	–
Investments from the insurance business	115'055	–	–	–	–
Equity securities	9'288	–	–	–	–
Debt securities	2'841	–	–	–	–
Short-term investments	1'069	–	–	–	–
Real estate	197	–	–	–	–
Investments where the investment risk is borne by the policyholder	13'395	–	–	–	–
Investments from the insurance business	128'450	–	–	–	–

			Gross	Gross
		Amortized	unrealized	unrealized
As of 31.12.01, in CHF m	Book value	cost	gains	losses	Fair value
Debt securities issued by Swiss Federal Government, cantonal or local governmental entities	8'287	8'205	152	70	8'287
Debt securities issued by foreign governments	19'503	19'252	474	223	19'503
Corporate debt securities	22'947	22'542	672	267	22'947
Other	15'823	15'409	543	129	15'823
Debt securities	66'560	65'408	1'841	689	66'560
Equity securities	22'332	22'145	2'406	2'219	22'332
Total securities – available-for-sale	88'892	87'553	4'247	2'908	88'892
Debt securities	1'858	–	–	–	–
Equity securities	37	–	–	–	–
Total securities – trading	1'895	–	–	–	–
Own shares	184	–	–	–	–
Mortgage loans	9'811	–	–	–	–
Other loans	4'648	–	–	–	–
Real estate	7'549	–	–	–	10'376
Short-term investments and other	3'793	–	–	–	–
Investments from the insurance business	116'772	–	–	–	–
Equity securities	10'934	–	–	–	–
Debt securities	2'495	–	–	–	–
Short-term investments	794	–	–	–	–
Real estate	296	–	–	–	–
Investments where the investment risk is borne by the policyholder	14'519	–	–	–	–
Investments from the insurance business	131'291	–	–	–	–

24 Own shares included in financial investments from the banking and insurance business
	2002	2002	2001	2001
	No. of shares	in CHF m	No. of shares	in CHF m
In registered share equivalents, including derivatives
At beginning of financial year	11'048'553	777	471'484	36
At end of financial year	1'451'653	44	11'048'553	777
The number of shares has been adjusted for the 4-for-1 share split effective as of August 15, 2001.

25 Non-consolidated participations
			Net					Foreign	Net
			book				Balances	curr ency	book
		Accumulated	value				acquired/	translation	value
in CHF m	Cost	write-offs	31.12.01	Additions	Disposals	Write-offs	(sold)	and transfers	31.12.02
Investments in associates	1'568	(89)	1'479	464	(327)	(5)	(20)	(118)	1'473
Other non-consolidated participations	500	(133)	367	10	(43)	(79)	6	58	319
Total non-consolidated participations	2'068	(222)	1'846	474	(370)	(84)	(14)	(60)	1'792
Listed on stock exchange			178					< /font>	231
Unlisted			1'668					&nb sp;	1'561

26 Tangible fixed assets
		Own use	Real estate	Leasehold	Other	Total
in CHF m		premises	investment	improvements	physical assets	2002
Historical cost
At beginning of financial year		6'778	462	2'044	5'846	15'130
Additions		147	17	170	797	1'131
Disposals and write-offs		(27)	(30)	(110)	(570)	(737)
Balances acquired/(sold)		(13)	29	0	(3)	13
Reclassifications	1)	(134)	(82)	(160)	(230)	(606)
Foreign currency translation impact		(168)	(10)	(262)	(555)	(995)
At end of financial year		6'583	386	1'682	5'285	13'936
Accumulated depreciation
At beginning of financial year		1'211	67	638	3'792	5'708
Depreciation		172	17	204	903	1'296
Disposals and write-offs		(4)	(2)	(18)	(422)	(446)
Balances acquired/(sold)		(8)	3	(4)	2	(7)
Reclassifications	1)	(31)	(5)	(134)	(100)	(270)
Foreign currency translation impact		(30)	(1)	(72)	(394)	(497)
At end of financial year		1'310	79	614	3'781	5'784
Net book value at end of financial year		5'273	307	1'068	1'504	8'152
Net book value at beginning of financial year		5'567	395	1'406	2'054	9'422
1) Including CHF 109 m transfer to real estate held-for-investments from the insurance business, CHF 77 m to real estate held-for-sale and CHF 154 m to intangible assets.
Fire insurance values
in CHF m					31.12.02	31.12.01
Real estate (including investments from the insurance business)					17'560	18'462
Other tangible fixed assets					3'347	3'911

27 Operating leases
The following is a schedule of future minimum rental payments required under operating leases-lessee transactions that have initial or remaining non-cancelable lease terms in excess of one year, as of December 31, 2002.
in CHF m			31.12.02
2003			809
2004			722
2005			650
2006			1'125
2007			566
Thereafter			4'645
Future operating lease commitments			8'517
Minimum non-cancelable sublease rentals			(726)
Total net future minimum lease commitments			7'791
The following shows the composition of total rent expense for all operating leases except those with a term of one month or less that were not renewed for the years ended December 31:
Rental expenses
in CHF m	2002	2001	2000
Minimum rentals	1'052	860	585
Contingent rentals	0	0	3
Gross rental expenses	1'052	860	588
Sublease rental income	(29)	(43)	(17)
Total net rental expenses	1'023	817	571

28 Intangible assets
		Acquired		Present			Other
		intangible		value of			intangible	Total
in CHF m		assets	Goodwill	future profits	1)	Software	assets	2002
Historical cost
At beginning of financial year		6'790	14'720	2'630		1'536	91	25'767
Additions		75	478	0		529	6	1'088
Disposals and write-offs		(9)	(54)	0		(70)	(16)	(149)
Unrealized gains/(losses)				(25)				(25)
Balances acquired/(sold)		0	13	17		(5)	0	25
Reclassifications	2)	101	(434)	0		155	0	(178)
Foreign currency translation impact		(1'156)	(1'852)	(119)		(142)	(2)	(3'271)
At end of financial year		5'801	12'871	2'503		2'003	79	23'257
Accumulated depreciation
At beginning of financial year		892	1'056	295		615	59	2'917
Depreciation and amortization		693	806	267	3)	523	3	2'292
Disposals and write-offs		0	(4)	0		(37)	(5)	(46)
Balances acquired/(sold)		0	0	0		(1)	0	(1)
Reclassifications	2)	77	149	0		(1)	(1)	224
Foreign currency translation impact		(226)	(171)	(25)		(67)	1	(488)
At end of financial year		1'436	1'836	537		1'032	57	4'898
Net book value at end of financial year		4'365	11'035	1'966		971	22	18'359
Net book value at beginning of financial year		5'898	13'664	2'335		921	32	22'850
1) PVFP: Present value of future profits embedded in each life and health insurance portfolio purchased, see Note 1 “Summary of significant accounting policies”.
2) Including CHF 154 m transfer from tangible assets and CHF 554 m to provisions.
3) Interests accrued of CHF 98 m on the unamortized PVFP balance is presented net against amortization.

29 Other assets
in CHF m	31.12.02	31.12.01
Trading derivative instruments	53'188	49'651
Other derivative instruments	1'569	1'378
Positive replacement value of derivative instruments	54'757	51'029
Deferred tax asset	7'975	6'910
Other	2'979	5'857
Total other assets	65'711	63'796

30 Assets pledged or assigned and assets subject to ownership reservation
in CHF m	31.12.02	31.12.01	2)
Assets pledged and assigned as collateral	92'053	122'653
of which assets provided with the right to sell or repledge with respect to securities lending	78'237	105'934
Actual commitments secured	86'354	109'606
1) None of the Group's assets were under reservation of ownership either in the current or in the previous year.
2) 31.12.01 restated.
Other information
in CHF m	31.12.02	31.12.01
Cash restricted under Swiss and foreign banking regulations	12'884	13'529

31 Medium-term notes and bonds
in CHF m		31.12.02	31.12.01
Medium-term notes (cash bonds)		2'599	3'019
Bonds issued by Credit Suisse Group and subsidiaries		80'103	80'015
Mortgage bonds issued by the Swiss Mortgage Bond Bank		1'736	1'490
Bonds and mortgage-backed bonds		81'839	81'505
Total medium-term notes and bonds		84'438	84'524
of which subordinated bonds		19'389	20'746
Maturity structure
	Medium-term		Total
in CHF m	notes	Bonds	31.12.02
2003	986	14'511	15'497
2004	902	7'941	8'843
2005	344	12'879	13'223
2006	207	7'427	7'634
2007	94	9'733	9'827
Thereafter	66	29'348	29'414
Total	2'599	81'839	84'438
For further details, see note 47 “Bonds issued”.
Credit Suisse Group and Credit Suisse First Boston (USA), Inc. maintain committed, unsecured 364-day credit facilities totaling CHF 5.56 billion with syndicates of international banks.

32 Other liabilities
in CHF m	31.12.02	31.12.01
Trading derivative instruments	54'534	52'386
Other derivative instruments	630	808
Negative replacement value of derivative instruments	55'164	53'194
Compensation account	111	462
Other	795	2'837
Total other liabilites	56'070	56'493

33 Valuation allowances and provisions
													Total
			Provision		Provision	Provision				Provision			excluding
	Valuation		for credit		for other bu-	for re-		Other	< font style="font-family:arial,helvetica,sans-serif;font-size:7pt">	for		Total	allowances
in CHF m	allowances	1)	risks	2)	siness risks	structuring	3)	provisions		taxes		2002	2002
At beginning of financial year	9'319		291		583	289		1'539		8'660		20'681	11'362
Net additions charged to income statement	2'822		265		(2)	187	6)	1'277	< font style="font-family:arial,helvetica,sans-serif;font-size:7pt">	322	4)	4'871	2'049
Net additions charged to equity										898	5)	898	898
Net write-offs	(3'804)		(64)		(54)	(296)		(651)		(1'383)		(6'252)	(2'448)
Balances acquired/(sold)	0		0		0	12		0		183		195	195
Provisions for interest	197		1		0	0		0		–		198	1
Change in definition of purpose (reclassifications)	(1)		(218)		(184)	7		134		658		396	397
Foreign currency translation impact	(600)		(36)		(44)	(14)		(263)		(540)		(1'497)	(897)
At end of financial year	7'933		239		299	185		2'0 36		8'798		19'490	11'557
1) Including valuation allowances for money market papers and debt instruments included in financial investments from the banking business.
2) Including off-balance sheet risks.
3) In 2002, the restructuring provision for Donaldson, Lufkin & Jenrette, Inc. declined by CHF 178 m from CHF 178 m to CHF 0.
4) The increase in deferred tax assets of CHF 274 m is not included in provisions for taxes and deferred taxes.
5) Change due to deferred taxes on unrealized gains/(losses) on investments from the insurance business.
6) Of which CHF 82 m set up under personnel and other operating expenses.

Restructuring charges and merger-related costs

For information related to restructuring charges, please refer to note 13.
The following is an analysis of the change in the provision for restructuring of the Group for the year ended December 31, 2002
		Net additions
		charged to		Transfers,
	Balance at	income	Net	foreign	Balance at
in CHF m	31.12.01	statement	write-offs	exchange	31.12.02
Personnel	110	94	(167)	40	77
Premises and equipment	58	27	(63)	(8)	14
Other	121	66	(66)	(27)	94
Total	289	187	(296)	5	185

The following is an analysis of the change in accruals for restructuring of the Group included in other liabilities for the year ended December 31, 2002
		Net additions
		charged to		Transfers,
	Balance at	income	Net	foreign	Balance at
in CHF m	31.12.01	statement	write-offs	exchange	31.12.02
Personnel	0	347	(107)	(26)	214
Total	0	347	(107)	(26)	214

Merger-related costs represent retention awards related to the acquisition of DLJ, which are being expensed over the vesting period. The vesting period is generally three years. Retention awards of CHF 649 million are included in the consolidated income statement for the year ended December 31, 2002. The remaining retention awards of CHF 266 million as of December 31, 2002, are expected to be charged against earnings in the following periods with CHF 248 million in 2003 and CHF 18 million in 2004.

34 Technical provisions for the insurance business
	Gross	Net	Gross	Net
in CHF m	31.12.02	31.12.02	31.12.01	31.12.01
Non-life
Provision for unearned premiums	6'834	6'451	6'415	5'987
Provision for future policyholder benefits (health)	3'800	3'800	3'414	3'413
Provision for unpaid claims and claim adjustment expenses	18'284	15'670	18'656	15'486
Actuarial provision for annuities	1'565	1'555	1'507	1'409
Provision for future dividends to policyholders	1'269	1'269	1'454	1'443
Technical provisions	31'752	28'745	31'446	27'738
Life
Provision for unearned premiums	16	15	15	13
Provision for future policyholder benefits	84'993	84'640	84'829	84'085
Provision for death and other benefits	4'183	4'125	3'712	3'635
Provision for future dividends to policyholders	1'808	1'807	4'328	4'327
Bonuses held on deposit	3'618	3'618	3'458	3'458
Technical provisions	94'618	94'205	96'342	95'518
Provisions for insurance policies, where the investment risk is borne by the policyholders	13'521	13'521	15'098	15'098
Total technical provisions for the insurance business	139'891	136'471	142'886	138'354

< td align="right">< td align="right">6'022< td align="right">1'814

35 Statement of shareholders' equity
		Reserve				Retained
		for general				earnings
		banking	Share	Capital	Revaluation	including	Minority
in CHF m		risks	capital	reserves	reserves	net profit	interests	1)	Total
As of 31.12.99		2'131	5'444	11'700	5'515	4'739	1'154		< font style="font-family:arial,helvetica,sans-serif;font-size:8pt">30'683
Dividends paid						(1'931)	(55)		(1'986)
Capital increases, par value and capital surplus			565	8'151			911		9'627
Transfer of reserves				31		(31)			0
Balances acquired/(sold)							190		190
Acquisition of minority interests							(1)		(1)
Change in revaluation reserves, net					(726)		228		(498)
Foreign currency translation impact						(610)	(93)	< /td>	(703)
Reclassifications from provisions		6							6
Allocation to reserve for general banking risks		190							190
Release of reserve for general banking risks		(8)							(8)
Net profit/(loss)						5'785	237
As of 31.12.00		2'319	6'009	19'882	4'789	7'952	2'571		43'522
of which reserve for own shares				600		0			600
Dividends paid						(14)	(161)		(175)
Repayment out of share capital			(2'392)						(2'392)
Capital increases, par value and capital surplus			11	164			985		1'160
Cancellation of repurchased shares			(38)	(531)					(569)
Balances acquired/(sold)							(241)		(241)
Acquisition of minority interests							(12)		(12)
Change in revaluation reserves, net					(4'040)		(258)		(4'298)
Foreign currency translation impact						102	10		112
Net profit/(loss)						1'587	227
As of 31.12.01		2'319	3'590	19'515	749	9'627	3'121		38'921
of which reserve for own shares				69		2'400			2'469
Dividends paid							(169)		(169)
Repayment out of share capital			(2'379)						(2'379)
Capital increases, par value and capital surplus	2)		2	1'264			182		1'448
Cancellation of repurchased shares			(23)	(69)		(450)			(542)
Balances acquired/(sold)							(24)		(24)
Acquisition of minority interests							(143)	< /td>	(143)
Change in revaluation reserves, net					755		59		814
Foreign currency translation impact						(2'495)	(131)		(2'626)
Release of reserve for general banking risks		(580)							(580)
Net profit/(loss)						(3'309)	(17)		(3'326)
As of 31.12.02		1'739	1'190	20'710	1'504	3'373	2'878		31'394
of which reserve for own shares				0		1'950			1'950
1) For information relating to redeemable preferred securities, see next page.
2) Includes CHF 1.25 bn proceeds received from the issuance of Mandatory Convertible Securities by Credit Suisse Group Finance (Guernsey) Ltd. For more information relating to Mandatory Convertible Securities see next page.

Significant shareholders:

As of December 31, 2002 Credit Suisse Group had no significant shareholders. With respect to own shares refer to note 10 of the Parent Company financial statements.

35 Statement of shareholders’ equity (continued)

Mandatory Convertible Securities

On December 23, 2002, Credit Suisse Group Finance (Guernsey) Ltd. - a wholly owned subsidiary of Credit Suisse Group, Zurich - issued subordinated Mandatory Convertible Securities ("securities") in the aggregate amount of CHF 1.25 billion. The securities were issued in the form of notes with a denomination of CHF 1,000 per note and a final maturity on December 23, 2005. On a subordinated basis Credit Suisse Group, Zurich guaranteed the securities.

A fixed coupon amount of 6% per annum is payable at the discretion of the issuer - subject to certain coupon limitations - on December 23 of each year, beginning in 2003 and up to and including the maturity date. On each date Credit Suisse Group pays a cash dividend or any other cash distribution to its shareholders or, subject to certain exceptions, redeems any Credit Suisse Group shares ("shares") or other junior or preferred obligations an equivalent floating coupon amount per note is payable in respect of such number of shares corresponding to 32.33107 shares per note. Any coupon payment not due and payable will not remain owing or entitle holders to a claim in respect thereof upon a winding-up of the guarantor, or at any other time (i.e. coupons are non-cumulative).

Mandatory conversion at maturity (redemption)

Notes not converted before the 20th trading day prior to the maturity date will be redeemed through conversion into shares on the maturity date. Upon such conversion, each note holder shall receive between 26.93966 and 32.33107 shares per note converted based on the closing prices of the shares over a period prior to the maturity date.

Voluntary conversion at the option of the note holders

Notes may be converted into shares any time after February 3, 2003 and before the 20th trading day prior to the maturity date at the election of each note holder. Upon such conversion, each note holder making such election shall receive 26.93966 shares per note converted.

Early conversion at the option of the issuer

Notes may be converted into shares at any time after February 3, 2003 and before the 20th trading day prior to the maturity date at the option of the issuer. Upon such early conversion, holders shall receive 32.33107 shares per note plus all remaining fixed coupon amounts scheduled for payment up to and including the maturity date. This option can only be exercised if certain coupon limitations do not apply and if the shares to be delivered thereupon shall have the same entitlements (including dividends) as the other outstanding shares.

Redeemable preferred securities

List of redeemable preferred securities issued as of December 31, 2002
							Related notes
							issued by CSG
				Liquidation			solely redeemable
	Issue	Notional amount		value			by issuer
Issuer	date	Currency	in m	in CHF m	Coupon rate		on and after
Credit Suisse First Boston Capital (Guernsey) I Ltd.	June 1999	USD	125	174	3.100%	1)	29.06.04
Credit Suisse Group Capital (Guernsey) II Ltd.	June 2000	EUR	250	364	7.974%		21.06.10
Credit Suisse Group Capital (Guernsey) III Ltd.	June 2000	GBP	150	335	8.514%		15.06.15
Credit Suisse Group Capital (Guernsey) IV Ltd.	June 2000	CHF	150	150	6.500%		30.06.10
Credit Suisse Group Capital (Guernsey) V Ltd.	November 2001	EUR	400	582	6.905%		07.11.11
Credit Suisse Group Capital (Guernsey) VI Ltd.	December 2001	JPY	30'500	358	3.570%		18.12.06
Credit Suisse Group Capital (Guernsey) VII Ltd.	July 2002	JPY	17'000	199	3.500%		31.07.07
Total as of 31.12.02, gross				2'162
Held by Credit Suisse Group and Group companies				(29)
Total as of 31.12.02, net				2'133
1) Based on six-month LIBOR as of 23.12.02, 2002 plus 1.70%.

The Group has non-cumulative guaranteed perpetual preferred securities outstanding as listed below. They are issued through fully owned special purpose subsidiaries in Guernsey, Channel Islands, that are established for the exclusive purpose of issuing such preferred securities and investing the gross proceeds in notes receivable of the Group. The preferred securities are classified as minority interests. The group has made unsecured, subordinated guarantees for the benefit of the holders of the preferred securities.

36 Liabilities due to own pension funds
in CHF m	31.12.02	31.12.01
Liabilities due to own pension funds	1'124	1'650

37 Related parties
Loans to non-executive members of the Board of Directors of Credit Suisse Group 1)
in CHF m		31.12.02	31.12.01	31.12.00
At beginning of financial year		21	24	34
Additions		9	0	1
Reductions		0	3	11
At end of financial year		30	21	24
Loans to companies controlled by non-executive members of the Board of Directors.	2)	0	0	112
Contingent liabilities towards companies controlled by non-executive members of the Board of Directors.	2)	0	0	105
1) Number of individuals with outstanding loans at the beginning of the year and at the end of the year were 7 and 9, respectively.
2) Includes companies in which a non-executive member of the Board of Directors controls more than 50% ownership or voting rights.
Loans to executive members of the Board of Directors of Credit Suisse Group and members of the Group Executive Board 1)
in CHF m		31.12.02	31.12.01	31.12.00
At beginning of financial year		33	64	41
Additions		3	2	23
Reductions		14	33	0
At end of financial year		22	33	64
Loans (including contingent liabilities) to companies controlled by executive members of the Board of Directors and members of the Group Executive Board	2)	0	0	0
1) Number of individuals with outstanding loans at the beginning of the year and at the end of the year was 5.
2) Includes companies, in which an executive member of the Board of Directors or a member of the Group Executive Board controls more than 50% ownership or voting rights.
The following table presents total loans outstanding made by us or any of our subsidiaries to principal participations for the years ended December 31:
in CHF m		2002	2001	2000
Loans at the beginning of the year		276	771	928
Repayments/additions, net		452	(495)	(157)
Loans at end of the year		728	276	771

38 Maturity structure of current assets and borrowed funds &nb sp;
				Due	Due within
		Redeemable	Due within	within 3 to	12 months	Due after		Total
in CHF m	At sight	by notice	3 months	12 months	to 5 years	5 years	No maturity	31.12.02
Current assets
Cash and other liquid assets	2'551							2'551
Money market papers	7'192	4	14'966	2'814	142	7		25'125
Due from banks	23'669	42'766	115'930	10'297	2'755	361		195'7 78
Receivables from the insurance business	0	12'290	0	0	0	0		12 '290
Due from customers	24'143	27'013	89'562	17'372	17'326	6'727		182'143
Mortgages	26	12'249	9'751	17'804	41'042	14'024		94'896
Securities and precious metals trading portfolios	173'133	0	0	0	0	0		173'133
Financial investments from the banking business	13'959	1'591	2'353	5'202	7'888	1'641	760	33'394
Total current assets	244'673	95'913	232'562	53'489	69'153	22'760	760	719'310
As of 31.12.01	295'859	141'645	196'119	54'682	60'419	24'419	2'070	775'213
Borrowed funds
Money market papers issued	574	1	9'574	9'235	2'786	8		22'178
Due to banks	108'914	26'041	141'342	10'262	569	756		287'884< /b>
Payables from the insurance business	9'033	0	0	0	1'185	0		10 '218
Due to customers in savings and investment deposits	0	39'739	0	0	0	0		39'739
Due to customers, other	86'646	18'967	125'076	4'679	17'093	5'783		258'244
Medium-term notes (cash bonds)	0	0	352	634	1'547	66		2'599
Bonds and mortgage-backed bonds	0	0	3'652	10'859	37'980	29'348		81'839
Total borrowed funds	205'167	84'748	279'996	35'669	61'160	35'961		702'701
As of 31.12.01	226'501	99'070	292'330	49'636	59'478	24'856		751'871

39 Securities lending and borrowing and repurchase agreements
in CHF m	31.12.02	31.12.01
Due from banks	0	71
Due from customers	64	5
Securities lending	64	76
Due from banks	156'397	163'666
Due from customers	71'384	66'921
Reverse repurchase agreements	227'781	230'587
Due to banks	570	2'823
Due to customers	12	173
Securities borrowing	582	2'996
Due to banks	123'546	138'450
Due to customers	80'077	67'688
Repurchase agreements	203'623	206'138
Other information
in CHF m	31.12.02	31.12.01
Collateral received at fair value with the right to sell or repledge	321'244	368'020
of which sold or repledged at fair value	308'025	362'962

40 Balance sheet by origin
	Switzerland	Foreign	Switzerland	Foreign
in CHF m	31.12.02	31.12.02	31.12.01	31.12.01
Assets
Cash and other liquid assets	2'301	250	2'725	367
Money market papers	2'455	22'670	3'758	28'269
Due from banks	4'860	190'918	3'829	199'956
Receivables from the insurance business	5'484	6'806	5'734	6'089
Due from customers	29'035	153'108	35'473	150'678
Mortgages	77'859	17'037	74'740	17'915
Securities and precious metals trading portfolios	8'314	164'819	8'962	199'412
Financial investments from the banking business	2'038	31'356	5'100	32'206
Investments from the insurance business	50'392	78'058	50'800	80'491
Non-consolidated participations	912	880	986	860
Tangible fixed assets	4'575	3'577	4'666	4'756
Intangible assets	853	17'506	904	21'946
Accrued income and prepaid expenses	3'871	10'011	3'879	14'216
Other assets	5'096	60'615	6'871	56'925
Total assets	198'045	757'611	208'427	814'086
Liabilities and shareholders' equity
Money market papers issued	689	21'489	361	18'891
Due to banks	23'172	264'712	34'032	301'900
Payables from the insurance business	5'561	4'657	6'999	4'865
Due to customers in savings and investment deposits	36'049	3'690	35'152	3'395
Due to customers, other	54'555	203'689	76'070	185'682
Medium-term notes (cash bonds)	2'599	0	3'019	0
Bonds and mortgage-backed bonds	8'754	73'085	10'248	71'257
Accrued expenses and deferred income	3'344	14'119	3'845	21'667
Other liabilities	6'215	49'855	4'555	51'938
Valuation adjustments and provisions	2'574	8'983	2'673	8'689
Technical provisions for the insurance business	58'953	77'518	57'984	80'370
Shareholders' equity (excluding minority interests)	11'624	16'892	12'217	23'583
Minority interests	272	2'606	306	2'815
Total liabilities and shareholders' equity	214'361	741'295	247'461	775'052
1) The analysis is based on customers' domicile.

41 Balance sheet by currencies
					Other		Total
in m	Swiss francs	US dollars	Euro		currencies		31.12.02
Assets
Cash and other liquid assets	2'056	24	340		131		2'551
Money market papers	2'529	12'899	7'517		2'180		25'125
Due from banks	8'069	130'381	27'035		30'293		195'778
Receivables from the insurance business	5'484	785	3'361		2'660		12'290
Due from customers	29'457	119'579	20'937		12'170		182'143
Mortgages	79'162	14'468	952		314		94'896
Securities and precious metals trading portfolios	7'891	98'686	26'330		40'226		173'133
Financial investments from the banking business	4'458	17'231	7'112		4'593		33'394
Investments from the insurance business	51'096	4'673	51'643		21'038		128'450
Non-consolidated participations	1'069	575	43		105		1'792
Tangible fixed assets	4'646	1'721	837		948		8'152
Intangible assets	1'753	13'259	1'762		1'585		18'359
Accrued income and prepaid expenses	3'722	3'028	3'854		3'278		13'882
Other assets	3'769	52'562	5'334		4'046		65'711
Total assets	205'161	469'871	157'057		123'567		955'656
As of 31.12.01	218'083	479'428	–	1)	325'002	1)	1'022'513
Liabilities and shareholders' equity
Money market papers issued	676	19'208	228		2'066		22'178
Due to banks	21'260	167'988	41'150		57'486		287'884
Payables from the insurance business	5'562	124	3'015		1'517		10'218
Due to customers in savings and investment deposits	39'195	0	544		0		39'739
Due to customers, other	48'799	160'004	36'742		12'699		258'244
Medium-term notes (cash bonds)	2'599	0	0		0		2'599
Bonds and mortgage-backed bonds	12'110	47'639	19'124		2'966		81'839
Accrued expenses and deferred income	3'042	11'696	1'336		1'389		17'463
Other liabilities	5'263	49'635	198		974		56'070
Valuation adjustments and provisions	2'512	3'748	4'523		774		11'557
Technical provisions for the insurance business	58'953	3'343	50'667		23'508		136'471
Shareholders' equity (excluding minority interests)	11'465	9'539	2'909		4'603		28'516
Minority interests	2'113	195	557		13		2'878
Total liabilities and shareholders' equity	213'549	473'119	160'993		107'995		955'656
As of 31.12.01	224'451	488'477	–	1)	309'585	1)	1'022'513
1) In the prior year Euro amounts have been included in “Other currencies”.

42 Share-based compensation

All share-related data have been adjusted for the 4-for-1 share split effective as of August 15, 2001. The Group has adopted several share-based compensation programs, which are a key feature of the overall compensation package to employees and senior executives. These programs generally represent a portion of employee bonuses. They are also awarded as retention incentives or special awards.

Incentive share option plans

The Group has share option plans under which incentive options may be periodically granted to key employees. The options are granted at an exercise price, which is generally equal to the market value of the underlying Credit Suisse Group registered share at the date of grant. In general, the options have a vesting term of up to three years, are restricted from exercise between two and four years and expire ten years after the grant.

In connection with the acquisition of DLJ, the Group replaced certain outstanding options to purchase shares of DLJ previously granted by DLJ. Specifically, in November 2000, the Group granted 24,400,144 vested and unvested options to the holders of the DLJ options.

Share option activities during the periods indicated are as follows:
			Weighted-		Weighted-			Weighted-
			average		average			average
		Number of	exercise	Number of	exercise	Number of		exercise
		options	price	options	price	options		price
in CHF, except no. of options		2002	2002	2001	2001	2000		2000
Outstanding at beginning of financial year		87'576'423	66.81	54'988'916	62.03	18'092'396		49.02
Granted during the year	1)	54'392'144	36.07	39'890'090	68.21	47'977'904	2)	60.04
Exercised during the year		(892'209)	52.88	(5'752'475)	39.53	(9'906'516)		30.46
Forfeited during the year		(1'833'715)	70.49	(1'550'108)	34.42	(1'174'868)		46.11
Outstanding at end of financial year		139'242'643	54.85	87'576'423	66.81	54'988'916		62.03
Exercisable at end of financial year		26'150'828	53.97	15'742'784	45.45	11'547'612		29.18
1) Includes a substantial number of options granted to employees subsequent to the financial year-end as part of the financial year compensation.
2) Includes options, totaling 24,400,144, granted to former holders of DLJ options at a weighted-average exercise price of CHF 36.22.

The table below provides additional information about options outstanding as of December 31, 2002:
	Options outstanding			Options exercisable
		Weighted-	Weighted-		Weighted-
Range of	Number of	average	average	Number of	average
exercise price	options	remaining life	exercise price	options	exercise price
in CHF	outstanding	in years	in CHF	exercisable	in CHF
12.50 – 25.00	4'445'176	3.07	15.37	4'445'176	15.37
25.01 – 37.50	49'825'867	9.83	31.97	1'908'743	34.86
37.51 – 50.00	4'783'826	6.64	44.97	3'235'328	44.63
50.01 – 62.50	8'742'263	7.19	55.04	5'376'915	55.21
62.51 – 75.00	44'092'715	8.40	67.21	6'477'737	67.31
75.01 – 100.00	27'352'796	8.03	84.67	4'706'929	84.82
	139'242'643	8.53	54.85	26'150'828	53.97

42 Share-based compensation (continued)

Share option plans – pro forma information

The group recognized no compensation expense for options that had no intrinsic value on the date of grant. If the group were to recognize compensation expense over the relevant service period, the expense of options would be calculated on a fair value measure of accounting, as presented below in the pro forma disclosure.

in CHF m, except the per share amounts			2002	2001	2000
Net profit/(loss)	As reported		(3'309)	1'587	5'785
	Pro forma	1) 2)	(3'799)	1'026	5'428
Earnings per share	As reported		(2.78)	1.33	5.21
	Pro forma	1) 2)	(3.19)	0.86	4.89
Earnings per share – diluted	As reported		(2.78)	1.32	5.19
	Pro forma	1) 2)	(3.19)	0.85	4.87
1) The above pro forma amounts are not indicative of future reported net profit/(loss) amounts.
2) The pro forma calculation includes options granted subsequent to the financial year-end as part of the financial year compensation.

The following amounts are the weighted-averages of fair values and exercise prices of options at the date of grant relating to options whose exercise price was equal to the market price of the Group's shares at the date of the grant.					1)
in CHF	2002	2001	2000	2)
Weighted-average fair values of options at the date of grant	12.35	19.61	23.11
Weighted-average exercise prices per option granted	36.07	68.21	84.69
1) Weighted-average calculation includes options granted subsequent to the financial year-end as part of the financial year compensation.
2) For certain options, which were granted during 2000, related to the DLJ acquisition, the exercise price was less than the market price of the Group's shares at the date of grant. For these options, the per share weighted-averages of both the fair values at the date of grant and the exercise prices were CHF 57.77 and CHF 36.22, respectively.

The fair values were estimated using the Black-Scholes option pricing model. The weighted-average assumptions for the calculation of the fair values of the options granted were as follows:
	2002	2001	2000
Expected dividend yield	1.83%	2.75%	2.75%
Expected life of share options, in years	5	5	5
Expected volatility	44.54%	37.70%	35.12%
Expected CHF risk free interest rates	1.83%	2.98%	3.19%
1) Weighted-average calculation includes options granted subsequent to the financial year-end as part of the financial year compensation.

42 Share-based compensation (continued)

Share award plans

Shares are generally awarded to employees based on a fixed monetary amount with the actual number of shares granted being determined by the Compensation Committee on the date of the grant. The most significant plans are the Swiss Share Plan and the International Share Plan, which includes the DLJ Retention Plan.

Shares granted under the Swiss Share Plan vest 100% and are owned by the recipient at the date of grant. These shares are restricted for a period of four years following the grant, subject to continued employment. Shares granted under the International Share Plan settle at the end of the four-year period following the grant, subject to continued employment and certain other conditions, such as restrictive covenants, and may settle earlier upon termination of employment. Shares granted as longevity awards under both plans vest on the third anniversary and are restricted for an additional year. Shares granted in November 2000 under the DLJ Retention Plan vest over three years and settle upon vesting.

The expense for share-based compensation net of tax for the years ended December 31, 2002, 2001 and 2000 was CHF 1,082 million, CHF 1,573 million and CHF 1,459 million, respectively. These amounts include charges related to awards earned for the reporting period, but granted in the following years.

The table below shows the details of shares granted under all the share award plans during the periods indicated:
		2002	2001	2000
Shares awarded	1)	16'615'594	23'504'774	50'381'996	2)
Weighted-average fair value at the date of grant, in CHF	1)	49.75	71.73	81.72
1) Includes a substantial amount of shares granted to employees subsequent to the financial year-end as part of the financial year compensation.
2) Specifically, 25,782,568 shares were awarded under the DLJ Retention Plan in November 2000.

43 Compensation

Compensation to and equity holdings of members of the Board of Directors and the Group Executive Board

Compensation to non-executive Board members, including the Chairman, is set annually and paid for the period between two Annual Meetings of Shareholders by the Board of Directors following a recommendation by the Compensation Committee based on the Articles of Association and in accordance with its Charter as well as review of Board compensation levels at comparable companies and self-assessment of Board performance.

Compensation to the members of the Group Executive Board is set by the Compensation Committee in accordance with its Charter, based on extensive review of competitor market data as well as individual and company performance. Severance payments to members of the Group Executive Board may be made by the Compensation Committee according to its Charter.

Cash component of compensation

No cash compensation was paid in 2002 to non-executive members of the Board of Directors for the office term 2002/2003, and no pension benefits were paid to this group.

The aggregate cash compensation (salary and variable cash-based compensation components) paid for 2002 to members of the Group Executive Board (ten individuals), as a group, was CHF 47.6 million. In addition, these individuals received CHF 4.5 million in accrued non-mandatory pension benefits.

Severance payments to certain members of the Group Executive Board (two individuals) who retired from their functions during the financial year 2002 amounted to CHF 17.3 million in the aggregate, of which CHF 13 million were payable in 2002 and CHF 4.3 million in 2003. No severance payments were made to the Chairman and CEO who retired from his functions on December 31, 2002.

Equity component of compensation

Non-executive members of the Board of Directors received all of their compensation for the 2002/2003 office term in the form of Credit Suisse Group registered shares restricted for a period of four years.

For the financial year 2002, members of the Group Executive Board received a part of their compensation in the form of restricted Credit Suisse Group registered shares or restricted equity awards. All awards were made under the applicable share plans.

The number of shares or awards received by an individual is based on a fixed monetary amount approved by the Compensation Committee with the actual number of shares or awards granted being determined by the Compensation Committee on the date of grant. Under the Swiss Share Plan shares are restricted for a period of four years following the grant, subject to continued employment. Upon termination of employment restricted shares generally become free. Under the International Share Plan in general awards settle at the end of the four-year period following the grant, subject to continued employment and certain other conditions, such as restrictive covenants, and may settle earlier upon termination of employment.

In 2002, non-executive members of the Board of Directors (nine individuals) were granted, as a group, 45,900 restricted Credit Suisse Group registered shares of CHF 1.00 nominal value for the 2002/2003 office term.

For the financial year 2002, as part of their compensation indicated above, members of the Group Executive Board (six individuals), were granted, as a group, 333,500 restricted Credit Suisse Group registered shares of CHF 1.00 nominal value or awards on such shares.

On December 31, 2002, non-executive members of the Board of Directors (nine individuals), as a group, held 176,349 Credit Suisse Group registered shares in the aggregate, and members of the Group Executive Board (seven individuals, including the former Chairman and CEO), as a group, held 2,882,778 shares or awards on such shares in the aggregate.

Option component of compensation

The Group has share option plans under which the Compensation Committee may periodically grant incentive options to employees. The options are granted at a price not less than the market value of the underlying Credit Suisse Group registered share at the date of grant. The options awarded for 2002 settle and become exercisable between 2005 and 2007 and expire ten years after the date of grant.

No options were granted to executive and non-executive members of the Board of Directors.

				Exercise
Year of	Number of		Exchange	price
grant	options	Expiry date	ratio	in CHF
2002	496'416	03.12.12	1-for-1	34.10
2003	1'834'741	22.01.13	1-for-1	30.60

For the financial year 2002, the Group granted members of the Group Executive Board (six individuals), as a group, options on shares as part of the compensation process, according to the table below:

The exercise price was equal to the market price of the Credit Suisse Group registered share at the date of grant.

For the financial year 2002, members of the Group Executive Board, outside of Switzerland, received a part of their compensation in the form of a financial instrument linked to Credit Suisse First Boston (CSFB) long-term performance. Each unit entitles a holder to a potential future cash payment linked to CSFB Operating ROE, taking into account Credit Suisse Group’s cost of capital. Units are subject to vesting and forfeiture provisions.

The number of units received by an individual is based upon a fixed monetary amount approved by the Compensation Committee on the date of grant. In 2002, as part of their compensation members of the Group Executive Board (three individuals) were granted, as a group, 2,777 units with an initial face value of approximately CHF 4.0 million.

As of December 31, 2002, members of the Group Executive Board (seven individuals, including the former Chairman and CEO), as a group, held the following options on shares granted as part of their aggregate compensation:

					Exercise
Year of		Number of		Exchange	price
grant		options	Expiry date	ratio	in CHF
1998		424'000	18.02.09	1-for-1	57.75
1999		520'000	01.03.10	1-for-1	74.00
2000		1'579'992	25.01.11	1-for-1	84.75
2001	1)	2'624'132	12.07.11	1-for-1	72.38
2001		900'445	31.01.12	1-for-1	65.75
2002	1)	537'591	02.01.12	1-for-1	71.00
1) New hire incentive options.

Highest total compensation

The highest compensation paid to a member of the Board of Directors for the financial year 2002 was CHF 7.65 million, in aggregate. Compensation will continue to be paid to this individual until the end of March 2003. The aggregate non-mandatory pension benefits paid for this period amounted to CHF 308,225. For the financial year 2002, no shares were granted to this individual as part of his compensation.

On December 31, 2002, this individual held 850,584 of Credit Suisse Group registered shares of CHF 1.00 nominal value, in the aggregate.

No options were granted to this individual as part of his compensation for the financial year 2002.

As of December 31, 2002, this individual held the following options on shares granted as part of his aggregate compensation:

				Exercise
Business	Number of		Exchange	price
year	options	Expiry date	ratio	in CHF
1998	200'000	18.02.09	1-for-1	57.75
1999	120'000	01.03.10	1-for-1	74.00
2000	527'780	25.01.11	1-for-1	84.75
2001	96'944	31.01.12	1-for-1	65.75

Additional fees and remunerations

No additional fees and remuneration were paid to existing members of the Board of Directors or the Group Executive Board or related parties for services rendered during 2002.

Severance and benefits to former members of the Board of Directors and Group Executive Board

No payments were made in 2002 to former members of the Board of Directors and the Group Executive Board who retired from their respective functions during 2001 or earlier.

Certain former members of the Board of Directors and the Group Executive Board (six individuals) received benefits in kind in the form of office use, secretarial support, etc.

44 Capital adequacy
The following table sets forth our consolidated capital and BIS capital ratios as of :
		31.12.02	31.12.01	31.12.00
Tier 1 capital (in CHF m)	1)	19'544	21'155	27'111
Total capital (in CHF m)		33'290	34'888	43'565
BIS Tier 1 ratio (in %)	1) 2)	9.7%	9.5%	11.3%
BIS total capital ratio	3)	16.5%	15.7%	18.2%
1) Tier 1 capital includes non-cumulative perpetual preferred securities of CHF 2.2 bn, CHF 2.1 bn and CHF 1.1 bn in 2002, 2001, and 2000, respectively.
2) Ratio is based on Tier 1 capital divided by BIS risk-weighted assets.
3) Ratio is based on Total capital divided by BIS risk-weighted assets.
In 2002, we issued through our wholly owned subsidiary Credit Suisse Group Finance (Guernsey) Ltd. Mandatoty Convertible Securities in the amount of CHF 1.25 billion. The proceeds which we received from this issue qualify as equity capital and as Tier 1 capital under BIS rules. For further information, see note 35.
In 2002, we issued through our wholly owned subsidiary Credit Suisse Group Capital (Guernsey) VII Ltd. non-cumulative perpetual preferred securities of JPY 17.0 billion, adding to an overall amount of CHF 2.2 billion hybrid Tier 1 included in the Tier 1 capital above. For a list of redeemable preferred securities issued as of 31.12.02, see note 35.

The following table sets forth the various components of our consolidated capital structure as of:
in CHF m		31.12.02	31.12.01	31.12.00
Shareholders' equity
Share capital		1'190	3'590	6'009
Capital reserve		20'710	19'446	19'282
Revaluation reserves for the insurance business		1'504	749	4'789
Reserve for own shares		1'950	2'469	600
Reserve for general banking risks		1'739	2'319	2'319
Retained earnings		1'423	7'227	7'952
Minority interests		2'878	3'121	2'571
Total shareholders' equity		31'394	38'921	43'522
Less: Goodwill, net long position in own shares held by group entities in the banking book, accrued dividend, minority interests in Winterthur		(11'850)	(17'766)	(16'411)
Total Tier 1 capital	1)	19'544	21'155	27'111
Tier 2 capital
Upper Tier 2		4'684	3'895	3'983
Lower Tier 2		9'772	10'577	13'555
Total Tier 2 capital		14'456	14'472	17'538
Total Tier 3 capital		0	0	0
Less: Deductions		(710)	(739)	(1'084)
Total capital		33'290	34'888	43'565
Risk-weighted assets (BIS)	1)	201'466	222'874	239'465
1) Assets adjusted in accordance with the BIS Basle capital accord.

45 Foreign currency translation rates
			Year-end rate used in		Average rate used in
			the balance sheet		the income statement
in CHF			31.12.02	31.12.01	2002	2001	2000
1	US dollar	(USD)	1.3902	1.6754	1.5600	1.6900	1.6700
1	Euro	(EUR)	1.4550	1.4824	1.4700	1.5100	1.5400
1	British pound sterling	(GBP)	2.2357	2.4282	2.3300	2.4300	2.5300
1	Canadian dollar	(CAD)	0.8820	1.0534	1.0000	1.0900	1.1200
1	Singapore dollar	(SGD)	0.8012	0.9056	0.8700	0.9400	0.9700
1	Hong Kong dollar	(HKD)	0.1783	0.2149	0.1995	0.2165	0.2140
100	Japanese yen	(JPY)	1.1722	1.2759	1.2400	1.3900	1.5500

46 Principal participations
Principal fully consolidated participations as of 31.12.02
% of equity capital held			Company name	Domicile	Currency	Capital in m
Credit Suisse Group				Zurich, Switzerland
	100		Credit Suisse	Zurich, Switzerland	CHF	3'114.7
	100		Credit Suisse First Boston	Zurich, Switzerland	CHF	4'399.7
	100		"Winterthur" Swiss Insurance Company	Winterthur, Switzerland	CHF	260.0
	99		Neue Aargauer Bank	Aarau, Switzerland	CHF	136.9
	50		Swisscard AECS AG	Zurich, Switzerland	CHF	0.1
	100		Bank Leu AG	Zurich, Switzerland	CHF	200.0
	100	1)	Bank Hofmann AG	Zurich, Switzerland	CHF	30.0
	88		Clariden Holding AG	Zurich, Switzerland	CHF	8.1
	100		BGP Banca di Gestione Patrimoniale S.A.	Lugano, Switzerland	CHF	50.0
	100		Credit Suisse Fides	Zurich, Switzerland	CHF	5.0
	100		Credit Suisse Trust AG	Zurich, Switzerland	CHF	5.0
	100		Credit Suisse Trust Holdings Ltd.	St. Peter Port, Guernsey	GBP	2.0
	100		Credit Suisse IT Assets AG	Zurich, Switzerland	CHF	2.4
	100		Fides Information Services	Zurich, Switzerland	CHF	1.0
	100		Credit Suisse Group Finance (Guernsey) Ltd.	St. Peter Port, Guernsey	CHF	0.0
	100		Credit Suisse Group Capital (Guernsey) II Ltd.	St. Peter Port, Guernsey	EUR	0.0
	100		Credit Suisse Group Capital (Guernsey) III Ltd.	St. Peter Port, Guernsey	GBP	0.0
	100		Credit Suisse Group Capital (Guernsey) IV Ltd.	St. Peter Port, Guernsey	CHF	0.0
	100		Credit Suisse Group Capital (Guernsey) V Ltd.	St. Peter Port, Guernsey	EUR	0.0
	100		Credit Suisse Group Capital (Guernsey) VI Ltd.	St. Peter Port, Guernsey	JPY	0.0
	100		Credit Suisse Group Capital (Guernsey) VII Ltd.	St. Peter Port, Guernsey	JPY	0.0
	100		Credit Suisse Group Finance (U.S.) Inc.	Wilmington, USA	USD	600.0
	100		Credit Suisse Group Finance (Luxembourg) S.A.	Luxembourg, Luxembourg	EUR	0.1
	100		CSFB LP Holding	Zug, Switzerland	CHF	0.1
	100		Merban Equity	Zug, Switzerland	CHF	0.1
	100		CSFB IGP	Zug, Switzerland	CHF	0.1
	100		PE Portfolio Investment Holding	Zug, Switzerland	CHF	0.1
	100		Credit Suisse Group PE Holding AG	Zug, Switzerland	CHF	12.0
	100	2)	Credit Suisse First Boston International	London, United Kingdom	USD	682.3
	100	3)	Credit Suisse (Luxembourg) S.A.	Luxembourg, Luxembourg	CHF	43.0
	88		Hotel Savoy Baur en Ville	Zurich, Switzerland	CHF	7.5
	100		Wincasa	Winterthur, Switzerland	CHF	1.5
1) 33.33% held by Credit Suisse.
2) 80% held by Credit Suisse First Boston.
3) 58.19% held by Credit Suisse.
	100		Credit Suisse	Zurich, Switzerland	CHF	3'114.7
	94	2)	City Bank	Zurich, Switzerland	CHF	7.5
	100		Schweizerische Schiffshypothekenbank	Basle, Switzerland	CHF	10.0
	100		Credit Suisse Immobilien Leasing AG	Zurich, Switzerland	CHF	3.0
	50	3)	Credit Suisse Fleetmanagement	Zurich, Switzerland	CHF	7.0
	96		Innoventure Capital AG	Zurich, Switzerland	CHF	10.0
	100		WECO Inkasso AG	Zurich, Switzerland	CHF	0.5
	100		Credit Suisse Private Advisors (CSPA) (alt EFFUS AG)	Zurich, Switzerland	CHF	15.0
	100		ABZ Finanz- und Beteiligungsgesellschaft AG	Zug, Switzerland	CHF	4.0
	100		Credit Suisse (UK) Ltd.	London, United Kingdom	GBP	36.5
	100		Credit Suisse (Guernsey) Ltd.	St. Peter Port, Guernsey	GBP	4.0
	100		Credit Suisse (Gibraltar) Ltd.	Marina Bay, Gibraltar	GBP	5.0
	100		Credit Suisse (Bahamas) Ltd.	Nassau, Bahamas	USD	12.0
	100		Credit Suisse Hottinguer S.A.	Paris, France	EUR	52.9
	100		Credit Suisse (Deutschland) Aktiengesellschaft	Frankfurt, Germany	EUR	60.0
	99		Credit Suisse (Italy) S.p.A.	Milan, Italy	EUR	69.7
	100		Credit Suisse Gestion S.G.I.I.C., S.A.	Madrid, Spain	EUR	5.9
	100		Credit Suisse Asesoramiento y Servicios, S.A.	Madrid, Spain	EUR	0.1
	100		Credit Suisse Investment Consulting (Taiwan) Ltd.	Taipei, Taiwan	TWD	30.0
	100		Credit Suisse (Monaco) S.A.M.	Monte Carlo, Monaco	EUR	12.0
	100		Credit Suisse Securities Ltd.	London, United Kingdom	GBP	10.0
	100		Swiss American Corporation	New York, USA	USD	38.9
	100		JOHIM (Holdings) Ltd.	London, United Kingdom	GBP	0.0
	100		General de Valores y Cambios, S.V.B., S.A. (GVC)	Barcelona, Spain	EUR	5.4
	100		Titval Product, S.L.	Barcelona, Spain	EUR	10.4
	100		Frye-Louis Capital Management Holding Co., Inc.	Wilmington, USA	USD	12.1
	60	1)	Swiss Egyptian Portfolio Management	Cairo, Egypt	EGP	6.0
	100		Credit Suisse International Services Ltd.	St. Peter Port, Guernsey	USD	0.0
	100		CSPB Non-Traditional Investments Ltd.	Nassau, Bahamas	USD	0.1
	100		Pearl Investment Management Ltd.	Nassau, Bahamas	USD	0.1
1) 75 % voting rights.
2) 96.8 % voting rights.
3) 66.7 % voting rights.
	100		Credit Suisse First Boston	Zurich, Switzerland	CHF	4'399.7
	100		AJP Cayman Ltd.	George Town, Cayman Islands	USD	101.2
	100		Banco de Investimentos Credit Suisse First Boston SA	São Paulo, Brazil	BRL	164.8
	99		Bank Credit Suisse First Boston AO	Moscow, Russia	USD	37.8
	100		Credit Suisse First Boston Australia Equities Ltd.	Melbourne, Australia	AUD	13.0
	100		Credit Suisse First Boston (Bahamas) Ltd.	Nassau, Bahamas	USD	16.9
	100		Credit Suisse First Boston (Cayman) Ltd.	George Town, Cayman Islands	USD	0.0
	100		Credit Suisse First Boston (Cyprus) Ltd.	Limassol, Cyprus	USD	725.0
	100		Credit Suisse First Boston (Europe) Ltd.	London, United Kingdom	USD	27.3
	100		Credit Suisse First Boston (Hong Kong) Ltd.	Hong Kong, China	HKD	381.1
	75		Credit Suisse First Boston (India) Securities Private Ltd.	Mumbai, India	INR	979.8
	100		Credit Suisse First Boston (Singapore) Ltd.	Singapore, Singapore	SGD	163.7
	100		Credit Suisse First Boston (USA), Inc.	New York, USA	USD	19.6
	100		Credit Suisse First Boston Aktiengesellschaft	Frankfurt, Germany	EUR	109.9
	100		Credit Suisse First Boston Australia Ltd.	Sydney, Australia	AUD	34.1
	100		Credit Suisse First Boston Australia Securities Ltd.	Sydney, Australia	AUD	38.4
	100		Credit Suisse First Boston Canada Inc.	Toronto, Canada	CAD	157.3
	100		Credit Suisse First Boston Capital LLC	New York, USA	USD	42.9
	100		Credit Suisse First Boston Capital (Guernsey) I Ltd.	St. Peter Port, Guernsey	USD	0.0
	100		Credit Suisse First Boston Capital (Guernsey) II Ltd.	St. Peter Port, Guernsey	EUR	0.0
	100		Credit Suisse First Boston Capital (Guernsey) III Ltd.	St. Peter Port, Guernsey	GBP	0.0
	100		Credit Suisse First Boston Capital (Guernsey) IV Ltd.	St. Peter Port, Guernsey	CHF	0.0
	100	1)	Credit Suisse First Boston Corporation	New York, USA	USD	0.0
	100		Credit Suisse First Boston Equities Ltd.	London, United Kingdom	GBP	15.0
	100		Credit Suisse First Boston Investments (Guernsey) Ltd.	St. Peter Port, Guernsey	USD	0.0
	100		Credit Suisse First Boston Management Corporation	New York, USA	USD	34.6
	100		Credit Suisse First Boston NZ Restructuring No. 1 Ltd.	Wellington, New Zealand	NZD	16.0
	100		Credit Suisse First Boston Pacific Capital Markets Ltd.	Sydney, Australia	AUD	130.0
	100		Credit Suisse First Boston Securities (Japan) Ltd.	Tokyo, Japan	USD	675.0
	100		Credit Suisse First Boston Singapore Futures Pte Ltd.	Singapore, Singapore	USD	11.1
	100	2)	Donaldson, Lufkin & Jenrette Securities Corporation	New York, USA	USD	0.0
	100		Credit Suisse Asset Management (Australia) Limited	Sydney, Australia	AUD	0.3
	100		Credit Suisse Asset Management (Deutschland) GmbH	Frankfurt, Germany	EUR	2.6
	100		Credit Suisse Asset Management (France) SA	Paris, France	EUR	28.6
	100		Credit Suisse Asset Management (UK) Holding Limited	London, United Kingdom	GBP	16.0
	100		Credit Suisse Asset Management Holding, Corp	New York, USA	USD	0.0
	100		Credit Suisse Asset Management LLC	New York, USA	USD	0.0
	100		Credit Suisse Asset Management Ltd.	London, United Kingdom	GBP	0.0
	100		Credit Suisse Asset Management SIM S.p.A.	Milan, Italy	EUR	7.0
	100		Credit Suisse Trust and Banking Co Ltd.	Tokyo, Japan	JPY	9'000.0
	100		Credit Suisse Asset Management International Holding	Zurich, Switzerland	CHF	20.0
	100		Credit Suisse First Boston (International) Holding AG	Zug, Switzerland	CHF	37.5
	100		Credit Suisse First Boston (Latam Holdings) LLC	George Town, Cayman Islands	USD	29.6
	100		Credit Suisse First Boston Australia (Finance) Ltd.	Melbourne, Australia	AUD	10.0
	100		Credit Suisse First Boston Australia (Holdings) Ltd.	Sydney, Australia	AUD	42.0
	100		Credit Suisse First Boston Finance (Guernsey) Ltd.	St. Peter Port, Guernsey	USD	0.2
	100		Credit Suisse First Boston Finance (US) LLC	Wilmington, USA	USD	0.0
	100		Credit Suisse First Boston Finance BV	Amsterdam, The Netherlands	EUR	0.0
	100		Credit Suisse First Boston International (Guernsey) Ltd.	St. Peter Port, Guernsey	USD	0.2
	100	3)	Credit Suisse First Boston, Inc.	New York, USA	USD	187.1
	100		Credit Suisse Asset Management Funds	Zurich, Switzerland	CHF	7.0
	100		Credit Suisse Bond Fund Management Company	Luxembourg, Luxembourg	CHF	0.3
	100		Credit Suisse Equity Fund Management Company	Luxembourg, Luxembourg	CHF	0.3
	100		Credit Suisse Money Market Fund Management Company	Luxembourg, Luxembourg	CHF	0.3
	100		Credit Suisse Portfolio Fund Management Company	Luxembourg, Luxembourg	CHF	0.3
	100		Column Financial Inc.	Atlanta, USA	USD	0.0
	100		Credit Suisse First Boston Mortgage Capital LLC	New York, USA	USD	0.0
	100		DLJ Mortgage Capital, Inc.	New York, USA	USD	0.0
	100		GTN Global Properties Holding Ltd.	Limassol, Cyprus	USD	0.0
1) January 2003, name changed to Credit Suisse First Boston LLC.
2) January 2003, name changed to Pershing LLC. Sold subsequent to the year end.
3) 43% of voting rights held by CSG.
	100		"Winterthur" Swiss Insurance Company	Winterthur, Switzerland	CHF	260.0
	100		Winterthur Life	Winterthur, Switzerland	CHF	175.0
	100		The Federal	Zurich, Switzerland	CHF	10.0
	67		Winterthur-ARAG Legal Assistance	Winterthur, Switzerland	CHF	9.0
	100		Gartenhotel	Winterthur, Switzerland	CHF	2.5
	100		Xenum Services	Zurich, Switzerland	CHF	0.1
	100		Credit Suisse Life & Pensions AG, Vaduz	Vaduz, Liechtenstein	CHF	15.0
	100		Winterthur Beteiligungsgesellschaft m.b.H.	Wiesbaden, Germany	EUR	0.3
	100		WinCom Versicherungs-Holding AG	Wiesbaden, Germany	EUR	52.5
	71		DBV-Winterthur Group	Wiesbaden, Germany	EUR	87.2
	100		Credit Suisse Leasing Deutschland GmbH	Wiesbaden, Germany	EUR	0.0
	100		Medvantis Group	Wiesbaden, Germany	EUR	6.2
	100		Winterthur Insurance Health & Accident	Wiesbaden, Germany	EUR	0.1
	100		Winterthur Italia Holding S.p.A.	Milan, Italy	EUR	132.6
	100		Winterthur Assicurazioni S.p.A.	Milan, Italy	EUR	129.5
	100		NewWin Assicurazioni S.p.A.	Milan, Italy	EUR	5.2
	100		Winterthur Vita S.p.A.	Milan, Italy	EUR	74.9
	100		Hispanowin S.A.	Barcelona, Spain	EUR	97.8
	100		Winterthur Inmuebles 2	Barcelona, Spain	EUR	55.9
	100		Winterthur Seguros Generales	Barcelona, Spain	EUR	48.7
	100		Winterthur Inmuebles	Barcelona, Spain	EUR	56.8
	100		Winterthur Ibérica	Barcelona, Spain	EUR	26.6
	100		Winterthur Vida Española	Barcelona, Spain	EUR	53.0
	100		WINVALOR Agencia de Valores	Barcelona, Spain	EUR	0.9
	100		Winterthur Salud de Seguros	Barcelona, Spain	EUR	6.9
	100		Winterthur Pensiones	Barcelona, Spain	EUR	9.0
	100		Webinsurance S.L.	Barcelona, Spain	EUR	0.1
	96		Winterthur-Europe Assurances	Brussels, Begium	EUR	348.3
	100		Les Assurés Réunis	Brussels, Begium	EUR	14.8
	100		Touring Assurances	Brussels, Begium	EUR	9.2
	100		I.S.C.C. International Service Call Centre	Brussels, Begium	EUR	3.6
	60		Jean Verheyen	Brussels, Begium	EUR	0.1
	100		Credit Suisse Life & Pensions	Luxembourg, Luxembourg	EUR	12.8
	100		Winterthur-Europe Vie	Luxembourg, Luxembourg	EUR	8.7
	100		Winterthur (UK) Holdings	London, United Kingdom	GBP	200.0
	100		Churchill Insurance Group	Bromley, United Kingdom	GBP	400.0
	100		Churchill Insurance	Bromley, United Kingdom	GBP	362.0
	92		Churchill Management	Bromley, United Kingdom	GBP	2.6
	100		The National Insurance & Guarantee Group	London, United Kingdom	GBP	185.0
	100		Winterthur UK Financial Services Group Ltd.	Basingstoke, United Kingdom	GBP	0.0
	100		Capital.e. Ltd.	St. Peter Port, Guernsey	CHF	4.4
	100		Credit Suisse Life & Pensions Management GmbH	Vienna, Austria	EUR	0.0
	100		Companhia Europeia Seguros	Lisbon, Portugal	EUR	24.3
	100		Winterthur Pensiones	Lisbon, Portugal	EUR	1.7
	98		Rhodia Assurances	Lyon, France	EUR	18.3
	65		Credit Suisse Life & Pensions Pojistovna A.S.	Prague, Czech Republic	CZK	374.0
	80		Credit Suisse Life & Pensions Penzijní fond a.s.	Prague, Czech Republic	CZK	142.4
	100		Credit Suisse Life & Pensions Poistovna, a.s.	Bratislava, Slovak Republic	SKK	135.0
	51		Credit Suisse Life & Pensions Slovensko, a.s.	Bratislava, Slovak Republic	SKK	323.0
	65		Credit Suisse Life & Pensions Péntàrszolgàltato Rt.	Budapest, Hungary	HUF	700.0
	65		Credit Suisse Life & Pensions, Biztosito Rt.	Budapest, Hungary	HUF	3'602.0
	100		Winterthur Towarzystwo Ubezpieczeniowe S.A.	Warsaw, Poland	PLN	40.0
	65		CS Life & Pensions Zycie Towarzystwo Ubezpieczeniowe S.A.	Warsaw, Poland	PLN	135.0
	70		CS Life & Pensions Powszechne Towarzystwo Emerytalne S.A.	Warsaw, Poland	PLN	105.0
	100		Winterthur U.S. Holdings	Wilmington, USA	USD	0.0
	100		General Casualty	Sun Prairie, USA	USD	3.0
	100		Republic Financial Services	Dallas, USA	USD	0.0
	100		Southern Guaranty	Montgomery, USA	USD	2.0
	100		Unigard Incorporated	Bellevue, USA	USD	22.1
	100		Winterthur Canada Financial	Toronto, Canada	CAD	0.0
	100		The Citadel General	Toronto, Canada	CAD	36.4
	100		L'Unique	Québec City, Canada	CAD	7.0
	100		Winterthur Holdings Australia	Sydney, Australia	AUD	23.2
	100		Winterthur Insurance (Far East)	Singapore, Singapore	SGD	25.0
	52		Winterthur Insurance (Asia)	Hong Kong, China	HKD	176.6
	100		Winterthur Insurance Services Asia Ltd.	Hong Kong, China	HKD	38.8
	60		Credit Suisse Life & Pensions Indonesia	Jakarta, Indonesia	IDR	44'500.0
	100		Credit Suisse Life Insurance Co. Ltd.	Tokyo, Japan	JPY	17'995.0
	100		Credit Suisse Life & Pensions (Bermuda) Ltd.	Hamilton, Bermuda	USD	0.3
	100		Harrington International Insurance Ltd.	Hamilton, Bermuda	USD	70.0
	100		Winterthur Atlantic Ltd.	Hamilton, Bermuda	GBP	0.1
	100		Winterthur Capital Ltd.	Hamilton, Bermuda	EUR	0.0
	100		Winterthur Swiss Insurance Ltd. (Macau)	Macau, Macau	MOP	20.0
	82		Winterthur Alternative Investment Strategies Limited	George Town, Cayman Islands	USD	160.0
	100		SRS Holdings Ltd.	George Town, Cayman Islands	USD	55.3

46 Principal participations (continued)
Principal participations as of 31.12.02, valued according to the equity method
				Equity interest
Company name	Domicile	Currency	Capital in m	in %
Credit Suisse Group	Zurich, Switzerland
Inreska Ltd.	St. Peter Port, Guernsey	GBP	3.0	100.0
Capital Union	Dubai, UAE	USD	50.0	26.0
SECB Swiss Euro Clearing Bank GmbH	Frankfurt, Germany	EUR	9.2	25.0
Credit Suisse	Zurich, Switzerland
Sauber Holding AG	Vaduz, Liechtenstein	CHF	2.0	63.3	1)
Cornèr Bank S.A.	Lugano, Switzerland	CHF	12.0	27.3
Credit Suisse First Boston	Zurich, Switzerland
Banco Comercial SA	Montevideo, Uruguay	UYP	98	33.3	2)
Innovent Capital Ltd.	George Town, Cayman Islands	CHF	0.1	37.9	3)
Valcambi SA	Balerna, Switzerland	CHF	12	100.0
"Winterthur" Swiss Insurance Company	Winterthur, Switzerland
Expertisa	Winterthur, Switzerland	CHF	0.2	100.0
Swiss Prime Site	Olten, Switzerland	CHF	604.0	23.3
Technopark Immobilien	Zurich, Switzerland	CHF	40.0	33.3
Wincare Versicherungen	Winterthur, Switzerland	CHF	0.1	100.0
Winterthur Financial Services	Winterthur, Switzerland	CHF	0.5	100.0
Zentrum Regensdorf	Regensdorf, Switzerland	CHF	4.5	50.0
Zürcher Freilager	Zurich, Switzerland	CHF	4.0	36.2
Allgemeine Hypothekenbank Rheinboden AG	Frankfurt, Germany	EUR	100.9	10.4
Winterthur Fund Management Co.	Luxembourg, Luxembourg	EUR	0.1	100.0
Carflash S.p.A	Milan, Italy	EUR	0.3	40.0
Bahosa	Barcelona, Spain	EUR	15.2	10.0
Winterthur-Service SA	Barcelona, Spain	EUR	0.2	100.0
Norwich Winterthur Holdings	Norwich, United Kingdom	GBP	54.5	48.5
Norwich Winterthur Reinsurance	Norwich, United Kingdom	GBP	57.8	46.5
Seguros Atlas	Mexico City, Mexico	MXN	150.0	30.0
Principal participations as of 31.12.02, valued at cost
				Equity interest
Company name	Domicile	Currency	Capital in m	in %
Credit Suisse
Pfandbriefbank Schweizerischer Hypothekarinstitute	Zurich, Switzerland	CHF	300.0	9.5
Swiss Steel AG	Emmen, Switzerland	CHF	137.7	30.7
TORNOS Holding SA	Moutier, Switzerland	CHF	115.0	25.2
Credit Suisse First Boston
Banco General de Negocios	Buenos Aires, Argentina	ARS	163.0	26.4	4)
Central Banco Investimento SA	Lisbon, Portugal	PTE	2'500.0	5.0
Euro-Clear Clearance System Ltd.	London, United Kingdom	EUR	3.0	4.0
SWIFT	La Hulpe, Belgium	EUR	10.8	1.5
Swiss Financial Service Group AG	Zurich, Switzerland	CHF	26.0	20.0
Telekurs Holding AG	Zurich, Switzerland	CHF	45.0	17.4
Madison Square Equity Inc	Wilmington, USA	USD	68'200.0	39.0
Praedium Performance Fund IV LP	Wilmington, USA	USD	55 900.0	28.7
1) Voting rights 33.18%.
2) Voting rights 27.4%.
3) Voting rights 38.57%.
4) Voting rights 12.14%.

47 Bonds issued
All bonds denominated in currencies superseded by the Euro have been converted to Euro amounts for the purposes of this disclosure. Although not all such bonds have been formally redenominated, all underlying cashflows now take place in Euro.
As of 31.12.02
				Year	Earliest date		Par value		< /font>
Maturity date		Interest rate		of issue	callable	Currency	in m
Bonds issued by Credit Suisse Group
	12.2003	6.00%		1994		CHF	250	1)
	10.2004	4.13%		2000		CHF	600
	10.2006	4.00%		1997		CHF	800
	05.2007	4.00%		1997		CHF	1'000
	09.2008	3.50%		1998		CHF	500
	07.2009	3.50%		1999		CHF	500
Bonds issued by Subsidiaries									< /sup>
Credit Suisse Group Finance (Guernsey) Ltd., St. Peter Port
	02.2003	5.50%		1999		USD	250
	02.2004	3.75%		1999		EUR	250
	03.2004	2.50%		1999		CHF	250
	06.2013	6.38%		2001		EUR	750	1)
	07.2019	floating		1999		EUR	400
	perpetual	6.88%		2002	07.06.17	GBP	500	1)
All bonds issued by Credit Suisse Group Finance (Guernsey) Ltd. are guaranteed by Credit Suisse Group.
With respect to the Mandatory Convertible Securities issued by Credit Suisse Group Finance (Guernsey) Ltd. see note 35.
Credit Suisse Group Finance (Luxembourg) S.A., Luxembourg
	01.2005	0.00%	Convertible bond (into Swiss Life shares)	2002		CHF	500
All bonds issued by Credit Suisse Group Finance (Luxembourg) S.A. are guaranteed by Credit Suisse Group.
Credit Suisse Group Finance (U.S.) Inc., Wilmington
	10.2003	floating		2000		USD	1'000
	10.2005	5.75%		2000		EUR	1'250
	10.2010	6.63%		2000		EUR	500	1)
	10.2010	floating	Step-up callable bonds	2000	05.10.05	EUR	300	1)
	10.2010	floating	Step-up callable bonds	2000	05.10.05	USD	750	1)
	10.2020	7.00%		2000		GBP	250	1)
All bonds issued by Credit Suisse Group Finance (U.S.) Inc. are guaranteed by Credit Suisse Group.
Neue Aargauer Bank, Aarau
	04.2010	5.00%		2000		CHF	130	1)
	02.2012	4.38%		2002		CHF	100
Bank Leu AG, Zurich
	11.2006	5.00%		1986		CHF	100	1)
Credit Suisse, Zurich
	01.2003	7.75%		1991		CHF	100	1)	7)
	01.2003	7.25%		1992		CHF	100	1)	7)
	03.2003	5.25%		1993		CHF	250
	02.2005	5.50%		1995		CHF	100	7)
	04.2005	5.75%		1995		CHF	120	1)
	10.2005	5.00%		1995		CHF	150	1)
	11.2005	3.13%		1995		CHF	300	1)	7)	9)
	01.2006	4.38%		1996		CHF	150	1)
	02.2008	4.50%		1996		CHF	200	1)	7)
	07.2009	4.00%		1997		CHF	200	1)
	11.2009	5.00%		1999		CHF	600	1)
	02.2010	4.63%		2000		CHF	300	1)
	09.2010	4.75%		2000		CHF	200	1)
	03.2011	4.38%		2001		CHF	300	1)
Credit Suisse (Luxembourg) S.A., Luxembourg
	08.2003	7.25%		1993		EUR	37	1)
Credit Suisse Guernsey Branch, St. Peter Port
	perpetual	6.25%		1999	09.07.09	EUR	125	1)
	07.2011	4.25%		2001		CHF	300	1)
JOHIM (Holdings) Ltd., London
	02.2004	variable		2001		GBP	50	8)
Credit Suisse First Boston, Zurich
	01.2003	0.00%		2002		GBP	6	3)
	01.2003	various		2001-2002		USD	135	3)	4)
	01.2003	7.00%		2001-2002		EUR	25	3)
	01.2003	0.00%		2001		EUR	12	6)
	02.2003	various		2001-2002		EUR	47	3)	4)
	02.2003	various		2002		USD	22	4)
	02.2003	8.27%		2002		CHF	10	3)
	03.2003	9.03%		2002		EUR	10	3)
	03.2003	7.02%		2002		CHF	6	3)
	03.2003	various		1998		CHF	41	6)
	03.2003	0.00%		2001		EUR	24	6)
	03.2003	0.00%		2000		USD	100	6)
	03.2003	0.00%		1999		GBP	5	6)
	03.2003	0.00%		2001		JPY	1'638	6)
	03.2003	3.50%		1993		CHF	125	1)
	03.2003	3.50%		1993		CHF	75	1)
	04.2003	various		2001-2002		USD	43	3)	4)
	04.2003	7.00%		2001		EUR	10	3)
	04.2003	0.00%		2001		GBP	11	6)
	04.2003	1.00%		1996		USD	75	3)
	04.2003	7.30%		2002		NOK	65	3)
	05.2003	15.75%		2001		VEB	7'000	4)
	05.2003	variable		2002		EUR	20	4)
	05.2003	various		2002		USD	19	4)
	05.2003	various		2002		TRL	49'223'448	4)
	06.2003	0.00%		2001		EUR	225	3)
	06.2003	various		2001-2002		CHF	32	3)
	06.2003	various		2002		USD	48	4)
	07.2003	0.00%		2000		EUR	110	6)
	07.2003	various		1997-2002		USD	49	3)	4)
	07.2003	various		2001-2002		CHF	27	3)
	08.2003	various		2000-2002		USD	60	3)	4)
	09.2003	0.00%		2002		AUD	10	3)
	09.2003	various		1997-2002		USD	33	3)	4)
	09.2003	various		2000-2002		EUR	47	3)
	09.2003	0.00%		2002		NOK	86	3)
	09.2003	17.00%		2002		CHF	10	3)
	09.2003	6.13%		1993		USD	200	1)	3)
	10.2003	6.25%		2001		CHF	25	3)
	10.2003	various		2001-2002		USD	66	4)
	10.2003	9.50%		2001		EUR	15	3)
	11.2003	5.00%		1998-2000		CHF	63	3)
	11.2003	0.00%		2001		EUR	10	3)
	11.2003	6.25%		1993		EUR	307	1)	3)
	11.2003	various		2002		USD	5	4)
	12.2003	various		2000-2002		USD	107	3)	4)
	12.2003	0.00%		2001		CHF	35	6)
	12.2003	0.00%		2002		CHF	5	3)
	12.2003	1.00%		2001		EUR	13	3)
	01.2004	various		2001-2002		USD	64	3)	4)
	01.2004	7.75%		2002		CHF	10	3)
	02.2004	various		2002		USD	10	4)
	02.2004	4.50%		2002		CHF	25	3)
	02.2004	various		2002		EUR	20	3)
	03.2004	various		2001-2002		USD	44	3)	4)
	03.2004	various		2000-2001		EUR	44	3)
	03.2004	0.00%		2001		EUR	48	6)
	03.2004	2.50%		2001		GBP	4	3)
	03.2004	0.00%		2001		JPY	2'879	6)
	04.2004	various		2001-2002		USD	26	4)
	04.2004	4.38%		1996		CHF	200
	05.2004	various		2002		USD	8	4)
	05.2004	0.00%		2001		EUR	5	3)
	06.2004	various		2002		USD	5	4)
	06.2004	8.05%		2001		EUR	2	4)
	07.2004	various		2001-2002		USD	43	4)
	07.2004	various		2002		EUR	46	3)	4)
	07.2004	6.00%		2002		CHF	10	3)
	07.2004	variable		2001		JPY	2'500	4)
	08.2004	various		2001-2002		USD	19	3)	4)
	09.2004	various		2001-2002		USD	18	3)	4)
	09.2004	0.00%		2001		USD	7	6)
	10.2004	0.00%		2002		USD	4	6)
	10.2004	various		2001-2002		USD	25	4)
	10.2004	various		2001-2002		EUR	16	3)	4)
	11.2004	various		2001-2002		USD	46	4)
	11.2004	various		2001-2002		EUR	43	3)
	11.2004	8.50%		1994		USD	300	1)	3)
	12.2004	various		1999-2002		USD	128	3)	4)
	12.2004	various		2001-2002		EUR	25	3)
	12.2004	6.04%		1994		EUR	51	1)	3)
	01.2005	various		1999-2002		USD	86	3)	4)
	01.2005	0.00%		2002		CHF	12	3)
	01.2005	0.00%		2002		GBP	5	3)
	02.2005	various		2000-2002		USD	56	3)	4)
	02.2005	2.50%		2002		EUR	5	3)
	03.2005	various		2001-2002		USD	52	3)	4)
	03.2005	6.70%		2002		EUR	13	3)
	03.2005	5.75%		1995		CHF	225	1)
	04.2005	various		2000-2002		USD	99	3)	4)
	04.2005	0.00%		2002		CHF	20	3)
	04.2005	0.00%		2002		EUR	64	3)
	05.2005	various		1999-2002		USD	140	3)	4)
	05.2005	0.00%		1999		EUR	3	3)
	05.2005	0.00%		2002		GBP	10	3)
	06.2005	various		2002		USD	30	3)	4)
	06.2005	various		2000-2002		EUR	39	3)
	07.2005	various		2001-2002		USD	35	3)	4)
	07.2005	0.00%		2002		EUR	26	3)
	08.2005	various		1999-2002		USD	137	3)	4)
	09.2005	0.00%		2002		EUR	10	3)
	09.2005	various		2002		USD	16	3)	4)
	10.2005	various		2002		USD	12	3)	4)
	10.2005	0.00%		2002		EUR	15	3)
	11.2005	various		1997-2002		USD	238	3)	4)
	12.2005	various		2001-2002		USD	48	4)
	12.2005	0.00%		2002		EUR	8	3)
	01.2006	various		2002		USD	75	3)	4)
	01.2006	1.25%		2002		EUR	10	3)
	02.2006	0.00%		2001-2002		USD	16	3)
	03.2006	0.00%		2002		USD	17	3)
	04.2006	various		2002		USD	58	3)	4)
	05.2006	0.00%		2002		USD	6	4)
	06.2006	various		2002		USD	10	3)	4)
	06.2006	7.21%		1996		USD	238	1)	4)
	06.2006	6.84%		1997		USD	95	1)	4)
	07.2006	0.00%		2001		EUR	10	3)
	07.2006	various		2002		USD	16	3)
	08.2006	various		2001-2002		USD	34	3)	4)
	09.2006	various		2002		USD	76	3)
	09.2006	0.00%		2002		EUR	14	3)
	10.2006	0.00%		2002		EUR	27	3)
	11.2006	0.00%		1998		EUR	1	3)
	12.2006	various		2001-2002		USD	115	3)
	03.2007	2.06%		2001		USD	2	4)
	03.2007	0.00%		2002		CHF	18	3)
	04.2007	0.00%		2002		USD	29	3)
	05.2007	various		2002		EUR	15	3)
	05.2007	various		2002		USD	37	3)	4)
	06.2007	0.00%		2002		USD	29	3)
	07.2007	5.25%		1995		CHF	100	1)
	07.2007	5.25%		1995		CHF	150	1)
	07.2007	0.00%		2002		USD	7	3)
	08.2007	0.00%		2002		EUR	28	3)
	08.2007	0.00%		2002		USD	20	3)
	09.2007	0.00%		2002		USD	87	3)
	09.2007	0.00%		2002		CHF	41	3)
	09.2007	0.00%		2002		EUR	26	3)
	10.2007	0.00%		2002		USD	117	3)
	10.2007	0.00%		2002		CHF	17	3)
	11.2007	various		2002		USD	77	3)	4)
	11.2007	0.00%		1998		EUR	2	3)
	12.2007	0.00%		2001-2002		USD	839	3)
	12.2007	0.00%		2002		EUR	247	3)
	01.2008	0.00%		2002		USD	67	3)
	02.2008	2.00%		2000		USD	165	3)
	05.2008	6.50%		1998		USD	200	1)	5)
	05.2008	0.00%		2002		EUR	20	3)
	06.2008	0.00%		2002		EUR	27	3)
	07.2008	0.00%		2002		USD	26	3)
	08.2008	0.00%		2002		USD	5	3)
	09.2008	0.00%		2002		USD	17	3)
	11.2008	0.00%		1998		EUR	2	3)
	12.2008	0.00%		2002		USD	19	3)
	06.2009	0.00%		2002		CHF	107	4)
	06.2009	0.00%		2002		EUR	541	4)
	06.2009	0.00%		2002		USD	351	4)
	07.2009	0.00%		2002		USD	3	3)
	09.2009	various		2002		USD	58	3)	4)
	09.2009	0.00%		2002		CHF	89	4)
	09.2009	0.00%		2002		EUR	82	4)
	10.2009	0.00%		2002		USD	33	3)
	10.2009	6.25%		1999		EUR	225	1)	3)
	11.2009	0.00%		2002		USD	5	3)
	12.2009	0.00%		1999-2002		USD	18	3)
	12.2009	6.00%		1999		EUR	150	1)	3)
	03.2010	6.50%		2000		EUR	100	1)	4)
	04.2010	variable		2000		USD	160	1)	4)
	04.2010	variable		2000		USD	250	1)	4)
	05.2010	5.75%		1998		EUR	33	1)	3)
	05.2010	5.75%		1998		EUR	179	1)	3)
	07.2010	0.00%		2002		USD	66	3)
	08.2010	2.19%		2000		JPY	3'000	1)	4)
	10.2010	0.00%		2002		USD	10	3)
	11.2010	0.00%		2002		USD	15	3)
	07.2011	various		2002		USD	248	4)
	03.2012	12.50%		2002		PHP	1'020	4)
	08.2012	0.00%		2002		USD	38	3)
	09.2012	0.00%		2002		USD	37	3)
	11.2012	various		2002		USD	79	3)
	12.2012	0.00%		2002		USD	183	3)
	12.2012	0.00%		2002		CHF	120	3)
	12.2012	0.00%		2002		EUR	152	3)
	06.2013	6.45%		2001		EUR	750	1)	4)
	10.2014	8.68%		1999		EUR	15	1)	3)
	01.2015	9.00%		2000		EUR	15	1)	4)
	03.2016	5.00%		1986		CHF	176	1)
	03.2016	5.00%		1986		CHF	24	1)
	01.2017	6.35%		2000		AUD	24	2)
	10.2019	7.15%		1999		EUR	12	1)	3)
	01.2022	0.00%		1999		USD	5	1)	3)
	01.2022	6.18%		2000		USD	64	1)	4)
	12.2024	0.00%		1999-2002		USD	17	1)	3)
	01.2025	0.00%		1999		USD	15	1)	3)
	01.2026	0.00%		1999		USD	20	1)	3)
	12.2026	0.00%		1999-2002		USD	34	1)	3)
	10.2027	0.00%		2002		JPY	320	3)
	11.2027	0.00%		2002		JPY	510	3)
	12.2027	0.00%		1999-2002		USD	14	1)	3)
	01.2028	0.00%		1999		USD	40	1)	3)
	10.2029	7.05%		1999		EUR	25	1)	3)
	10.2029	9.35%		1999		EUR	25	1)	3)
	10.2032	0.00%		2002		JPY	200	3)
	11.2032	0.00%		2002		JPY	100	3)
	perpetual	7.74%		1997		USD	100	1)	4)
	perpetual	6.91%		2001		EUR	400	1)	4)
	perpetual	3.50%		2002		JPY	17'000	1)	4)
	perpetual	3.57%		2001		JPY	30'500	1)	4)
	perpetual	6.41%		1997		EUR	114	1)	3)
	perpetual	6.50%		1997		EUR	76	1)	3)
	perpetual	8.25%		1997		GBP	150	1)	3)
	perpetual	7.90%		1997		USD	500	1)	3)
	perpetual	4.39%		1997		CHF	500	1)	3)
Credit Suisse First Boston Finance B.V., Amsterdam
	05.2003	5.88%		1993		USD	200	1)
	07.2003	7.75%		1993		EUR	74	1)
	08.2003	5.50%		1993		USD	200	1)
	perpetual	variable		1986		USD	150
Credit Suisse First Boston (Cayman) Ltd., George Town
	01.2003	variable		1998		RUR	429
	02.2003	variable		1998		RUR	704
	04.2003	0.00%		2000-2002		RUR	5'883
	05.2003	various		1998-2001		RUR	349
	06.2003	various		1998-2000		RUR	408
	08.2003	7.00%		2000		RUR	56
	09.2003	variable		1998		RUR	379
	10.2003	various		1998-2000		RUR	2'165
	11.2003	various		2000		RUR	683
	01.2004	variable		1998		RUR	751
	07.2004	variable		1999		RUR	87
	08.2004	0.05%		2000		RUR	537
	09.2004	various		1999-2000		RUR	2'052
	11.2004	0.03%		2000		RUR	2'500
	12.2004	variable		1999		RUR	1'167
	01.2005	variable		2000		RUR	1'166
	03.2005	12.00%		2001		RUR	1
	10.2005	0.00%		2002		RUR	154
	10.2005	0.00%		2002		USD	111
	11.2005	6.00%		2000		RUR	375
	12.2005	6.00%		2000		RUR	66
	01.2006	6.00%		2001		RUR	309
	06.2006	0.03%		2001		RUR	542
	09.2010	0.00%		2000		RUR	1'511
	11.2010	0.00%		2000		RUR	1'912
	01.2011	0.00%		2001		RUR	2'344
Banco de Investimentos Credit Suisse First Boston S.A., São Paulo
	11.2007	11.22%		1999		USD	50	1)
Credit Suisse First Boston Inc., New York
	01.2003	various		1999-2002		USD	360
	01.2003	7.65%		1993		USD	5	1)
	02.2003	8.10%		1993		USD	5	1)
	02.2003	various		1993-2000		USD	55
	03.2003	various		2000-2002		USD	210
	04.2003	various		1993-2002		USD	728
	04.2003	variable		1993		USD	7	1)
	05.2003	various		1998-2001		USD	387
	06.2003	0.00%		2000		USD	8
	06.2003	variable		2000		EUR	400
	07.2003	various		1998-2002		USD	525
	08.2003	various		2000-2001		USD	441
	09.2003	variable		2001		USD	100
	10.2003	various		2001		USD	190
	11.2003	various		2001		USD	249
	12.2003	0.00%		2000		USD	4
	01.2004	various		1999-2002		USD	360
	02.2004	various		2000-2002		USD	78
	02.2004	variable		1994		USD	150	1)
	03.2004	various		1992-2002		USD	235
	03.2004	variable		1994		USD	165	1)
	04.2004	various		1992-2002		USD	200
	04.2004	7.00%		1995		EUR	77
	05.2004	various		1999		USD	70
	06.2004	various		2002		USD	295
	07.2004	various		1999-2002		USD	88
	09.2004	various		2001		USD	375
	10.2004	various		2001		USD	170
	11.2004	various		2001		USD	365
	12.2004	various		2001		USD	55
	01.2005	various		2002		USD	53
	02.2005	various		2000-2002		USD	426
	03.2005	various		2000-2002		USD	631
	04.2005	variable		2002		USD	500
	05.2005	variable		2000		USD	400
	06.2005	0.00%		2000		USD	2
	07.2005	variable		2002		USD	150
	08.2005	7.20%		2000		USD	1
	09.2005	7.05%		2000		USD	1
	10.2005	variable		1993		USD	200	1)
	11.2005	6.88%		1995		USD	500
	11.2005	6.95%		1995		USD	5	1)
	01.2006	variable		2002		USD	70
	05.2006	7.75%		1996		USD	267	1)
	06.2006	0.00%		2000		USD	1
	08.2006	5.88%		2001		USD	2'250
	02.2007	various		2002		USD	250
	03.2007	various		2000-2002		USD	102
	04.2007	variable		2002		USD	1'750
	10.2007	various		1997		USD	250
	11.2007	variable		2001		EUR	140
	01.2008	4.63%		2002		USD	1'400
	04.2008	6.50%		1998		USD	150
	05.2008	various		2000		USD	14
	06.2008	6.50%		1998		USD	500
	09.2008	7.42%		1999		USD	10
	11.2011	6.13%		2001		USD	3'000
	01.2012	various		2002		USD	2'750
	02.2013	8.50%		1993		USD	3
	11.2013	variable		2001		GBP	10
	03.2014	7.06%		1999		USD	40
	02.2016	5.63%		1996		USD	1
	04.2018	7.71%		1993		USD	5	1)
	12.2021	variable		2001		EUR	25
	04.2032	variable		2002		USD	20
	07.2032	variable		2002		USD	1'000
Credit Suisse First Boston International, London
	2003	various		1995-2002		EUR	221
	2003	various		2002		HKD	1'387
	2003	various		1995-2002		USD	712
	01.2003	various		2002		SGD	10
	2003	various		1998-2002		JPY	13'672
	2003	various		1997-2002		GBP	44
	03.2003	7.65%		1993		EUR	33	1)
	2004	various		1997-2001		NOK	170
	2004	various		1997-2002		EUR	445
	2004	various		1998-2001		CHF	120
	2004	various		1996-2001		USD	152
	04.2004	variable		2002		SEK	63
	2004	various		1995-1998		JPY	1'000
	2004	various		1994-1998		EUR	61	1)
	12.2004	various		1994		CHF	13	1)
	2005	various		1995-2002		USD	1'279
	2005	various		1997-2002		EUR	347
	2005	various		1995-1998		EUR	109	1)
	2005	various		1997		JPY	800
	09.2005	0.00%		2002		HKD	30
	11.2005	0.00%		2002		NOK	500
	2006	various		1995-2002		USD	207
	02.2006	variable		2002		SEK	95
	02.2006	9.13%		1998		GBP	5
	2006	various		1997-2002		EUR	364
	2006	various		1996-1998		EUR	25	1)
	2006	various		1996-2001		JPY	2'000
	07.2006	0.00%		1994		USD	40	1)
	08.2006	0.00%		2002		NOK	35
	2007	various		1997-2002		EUR	247
	2007	various		2002		GBP	13
	2007	various		1997-2002		USD	442
	2007	various		1996-1997		CHF	120
	04.2007	0.00%		2001		NOK	150
	2007	various		1997		JPY	1'900
	05.2007	3.52%		1997		EUR	41	1)
	07.2007	1.96%		1997		USD	40	1)
	11.2007	0.00%		2002		NOK	500
	2008	various		2002		SEK	288
	2008	various		1995-2002		USD	235
	02.2008	3.41%		1998		EUR	52	1)
	2008	various		1998-2002		EUR	575
	05.2008	6.30%		1998		JPY	100
	2008	0.00%		1993-1994		EUR	78	1)
	2009	various		1999-2002		USD	67
	2009	various		1997-2002		EUR	158
	2009	various		1994-1996		EUR	109	1)
	2010	various		1997-2000		EUR	105
	02.2010	0.00%		2000-2002		USD	50
	2010	0.00%		1995-1997		EUR	46	1)
	2011	various		1999-2001		EUR	414
	2011	various		1993-2001		USD	149
	2012	various		1997-2002		EUR	187
	2012	various		1997-1999		USD	24
	04.2012	8.00%		1998		EUR	10	1)
	2013	various		1998-2001		EUR	66
	2013	various		1998-2001		JPY	4'300
	03.2014	various		2002		USD	99
	12.2014	0.00%		1994		EUR	126	1)
	2016	various		2001		EUR	91
	2016	various		1998-2002		USD	15
	09.2017	0.00%		1997		EUR	9
	02.2018	6.00%		1998		EUR	15	1)
	07.2018	variable		1998		JPY	500
	08.2018	various		1998		EUR	16
	12.2021	0.00%		1995		USD	77	1)
	05.2022	3.97%		2002		USD	18
	12.3032	various		2002		JPY	200
	09.2049	variable		2001		EUR	103
	perpetual	various		1992-1997		USD	220	1)
	perpetual	various		1993-1995		JPY	20'000	1)
	perpetual	10.25%		1995		GBP	100	1)
	perpetual	various		1995-1998		CHF	130	1)
	perpetual	various		1995-1997		EUR	27	1)
	perpetual	various		1998		EUR	335	1)
	perpetual	3.62%		1998		EUR	8	1)
	perpetual	variable		1997		USD	50	1)
Winterthur Capital Ltd., Hamilton
	04.2005	5.38%		2000		EUR	500
«Winterthur» Swiss Insurance Company, Winterthur
	03.2006	4.00%		2000		CHF	500
DBV-Winterthur Group, Wiesbaden
	07.2003	0.88%	Convertible Bonds	1998		DEM	100
	07.2003	0.75%	Convertible Bonds	1998		DEM	100
1) Subordinated bonds.
2) Credit linked notes issued by CSFB Guernsey branch.
3) Issued by CSFB London branch.
4) Issued by CSFB Nassau branch.
5) Issued by CSFB New York branch.
6) Structured notes, reclassed from due to customer to bonds and mortgage-backed bonds in 2002.
7) Subparticipation of CSFB issued bonds.
8) Preference shares.
9) Issued bonds with warrants: ex warrant.

REPORT OF THE GROUP AUDITORS

Report of the Group auditors to the Annual General Meeting of Credit Suisse Group, Zurich

As auditors of the Group we have audited the consolidated financial statements (income statement, balance sheet, statement of cash flows and notes) of Credit Suisse Group for the year ended December 31, 2002.

These consolidated financial statements are the responsibility of the Board of Directors. Our responsibility is to express an opinion on these consolidated financial statements based on our audit. We confirm that we meet the legal requirements concerning professional qualification and independence.

Our audit was conducted in accordance with auditing standards promulgated by the Swiss profession and with auditing standards generally accepted in the United States of America. These standards require that an audit be planned and performed to obtain reasonable assurance about whether the consolidated financial statements are free from material misstatement. We have examined on a test basis evidence supporting the amounts and disclosures in the consolidated financial statements. We have also assessed the accounting principles used, significant estimates made and the overall consolidated financial statement presentation. We believe that our audit provides a reasonable basis for our opinion.

In our opinion, the consolidated financial statements give a true and fair view of the financial position, the results of operations and the statement of cash flows based on Swiss Accounting Rules for Banks and Swiss GAAP FER for the insurance business of the Group, which are explained in the notes to the consolidated financial statements, and comply with Swiss law.

We recommend that the consolidated financial statements submitted to you be approved.

As discussed in note 2 to the consolidated financial statements, the Group has modified for the financial year 2002 its accounting policy in relation to deferred taxation.

KPMG Klynveld Peat Marwick Goerdeler SA

Brendan R. Nelson Peter Hanimann

Chartered Accountant Certified Accountant

Auditors in Charge

Zurich, February 21, 2003



PARENT COMPANY FINANCIAL STATEMENTS

Parent Company
Page
Financial statements
Income statement
Balance sheet before appropriation of retained earnings
Notes to the financial statements
1	Contingent liabilities
2	Balance sheet assets with retention of title to secure own obligations
3	Off-balance sheet obligations relating to leasing contracts
4	Fire insurance value of tangible fixed assets
5	Liabilities relating to pension plans and other retirement benefit obligations
6	Bonds issued
7	Principal participations
8	Release of undisclosed reserves
9	Revaluation of long-term assets to higher than cost
10	Own shares held by the company and by Group companies
11	Share capital, conditional and authorized capital of Credit Suisse Group
	Report of the auditors on capital increases to the Board of Directors of
	Credit Suisse Group on conditional capital increases
12	Significant shareholders
13	Legal reserves
14	Provisions
Proposal to the Annual General Meeting
Report of the statutory auditors

Income statement
	12 months	9 months
in CHF 1,000	2002	2001
Income
Interest income and income from securities	1'623'833	939'719
Income from investments in Group companies	1'820'165	113'844
Other income	335'058	435'336
Total income	3'779'056	1'488'899
Expenses
Interest expenses	471'088	312'612
Personnel expenses and directors' emoluments	105'579	78'070
Other expenses	133'920	137'593
Depreciation, write-offs and provisions	851'120	521'080
Taxes	(2'423)	40'197
Total expenses	1'559'284	1'089'552
Net profit	2'219'772	399'347

Balance sheet before appropriation of retained earnings
					Change
in CHF 1,000	Notes	31.12.02	31.12.01	Change	in %
Assets
Investments in Group companies	7	34'297'025	32'203'521	2'093'504	7
Long-term loans to Group companies		4'327'318	3'023'860	1'303'458	43
Securities		655'359	3'039'166	(2'383'807)	(78)
Long-term assets		39'279'702	38'266'547	1'013'155	3
Liquid assets held at third parties		19	10	9	90
Liquid assets held at Group companies		2'638'722	1'497'234	1'141'488	76
Securities		604'590	1'438'380	(833'790)	(58)
Other receivables from third parties		4'148	38'785	(34'637)	(89)
Other receivables from Group companies		3'239	490'054	(486'815)	(99)
Accrued income and prepaid expenses		976'427	1'271'726	(295'299)	(23)
Current assets		4'227'145	4'736'189	(509'044)	(11)
Total assets		43'506'847	43'002'736	504'111	1
Shareholders' equity and liabilities
Share capital	11	1'189'892	3'589'829	(2'399'937)	(67)
Legal reserve	13	13'081'244	11'816'898	1'264'346	11
Reserve for own shares	10	1'950'228	2'468'764	(518'536)	(21)
Free reserves		14'540'000	14'100'000	440'000	3
Retained earnings:
retained earnings brought forward		4'732	45'385	(40'653)	(90)
net profit		2'219'772	399'347	1'820'425	456
Shareholders' equity		32'985'868	32'420'223	565'645	2
Bonds	6	3'400'000	3'650'000	(250'000)	(7)
Long-term loans from Group companies		4'398'712	3'826'511	572'201	15
Provisions	14	579'017	817'293	(238'276)	(29)
Long-term liabilities		8'377'729	8'293'804	83'925	1
Payables to third parties		257'338	8'759	248'579	-
Payables to Group companies		1'055'282	1'160'998	(105'716)	(9)
Accrued expenses and deferred income		830'630	1'118'952	(288'322)	(26)
Current liabilities		2'143'250	2'288'709	(145'459)	(6)
Total liabilities		10'520'979	10'582'513	(61'534)	(1)
Total shareholders' equity and liabilities		43'506'847	43'002'736	504'111	1

1 Contingent liabilities
in CHF 1,000	31.12.02	31.12.01
Aggregate indemnity liabilities, guarantees and other contingent liabilities (net of exposures recorded as liabilities)	13'472'902	23'222'817
of which have been entered into on behalf of subsidiaries	13'302'902	22'956'312
The company belongs to the Swiss value-added tax (VAT) group of Credit Suisse Group, and thus carries joint liability to the Swiss federal tax authority for value-added tax debts of the entire Group.
2 Balance sheet assets with retention of title to secure own obligations
There are no such assets.
3 Off-balance sheet obligations relating to leasing contracts
There are no such obligations.
4 Fire insurance value of tangible fixed assets
There are no such assets.
5 Liabilities relating to pension plans and other retirement benefit obligations
There are no such liabilities.

6 Bonds issued
in CHF m	Interest rate	Year of issue / maturity date	31.12.02	31.12.01
Bonds (subordinated)	6.000%	1994 – 15.12.03	250	250
Bonds	4.000%	1997 – 31.10.06	800	800
Bonds	4.000%	1997 – 23.05.07	1'000	1'000
Bonds	3.500%	1998 – 15.09.08	500	500
Bonds	3.500%	1999 – 02.07.09	500	500
Bonds	4.125%	2000 – 04.10.04	600	600
Bonds with a maturity of less than one year are recorded as payables to third parties.
7 Principal participations
The company's principal participations are shown in the notes to the consolidated financial statements.

8 Release of undisclosed reserves
No significant undisclosed reserves were released.
9 Revaluation of long-term assets to higher than cost
There was no such revaluation.
10 Own shares held by the company and by Group companies
			12 months		9 months
in CHF 1,000, except no. of shares		No. of shares	2002	No. of shares	2001
Shares included in financial investments from the banking and insurance business
At beginning of financial year
In registered share equivalents, physical holdings	1)	13'600'422	957'352	11'096'548	831'123
In registered share equivalents, net of derivatives		11'048'553	776'680	7'125'104	533'205
At end of financial year
In registered share equivalents, physical holdings	1)	3'415'053	102'454	13'600'422	957'352
In registered share equivalents, net of derivatives		1'451'653	43'552	11'048'553	776'680
Shares included in securities trading portfolio
At beginning of financial year
In registered share equivalents, physical holdings	1)	62'286'154	4'409'859	101'547'468	7'755'688
In registered share equivalents, net of derivatives		(92'891)	(6'577)	11'009'504	840'853
At end of financial year
In registered share equivalents, physical holdings	1)	70'418'663	2'112'560	62'286'154	4'409'859
In registered share equivalents, net of derivatives		191'133	5'734	(92'891)	(6'577)
The number of shares has been adjusted for the 4-for-1 split effective as of 15.08.01.
1) Representing 6.2%, 6.3% and 9.4% of issued shares as of 31.12.02, 31.12.01 and 31.03.01, respectively.

11 Share capital, conditional and authorized capital of Credit Suisse Group
		No. of	Par value	No. of	Par value
		registered shares	in CHF	registered shares	in CHF
Share capital as of December 31, 2001				1'196'609'811	3'589'829'433
Issued capital
Cancellation of shares				(7'730'000)	(23'190'000)
Par value reduction payment					(2'377'759'622)
Conditional capital
Warrants and convertible bonds
AGM of June 1, 2001 / Convertible bonds		827'100	2'481'300
Bonds converted April 1 - December 31, 2001		(171'600)	(514'800)
AGM of May 31, 2002 (Par value reduction)		–	(1'311'000)
AGM of May 31, 2002		655'500	655'500
Bonds converted January 1 - November 19, 2002		(650'700)	(650'700)	650'700	650'700
Lapsed conversion rights on November 19, 2002		(4'800)	(4'800)
Remaining capital		–	–
Warrants and convertible bonds
AGM of June 1, 2001		50'000'000	150'000'000
AGM of May 31, 2002 (Par value reduction)		–	(100'000'000)
AGM of May 31, 2002		50'000'000	50'000'000
Securities converted December 23 - December 31, 2002		–	–
Remaining capital		50'000'000	50'000'000
Staff shares
AGM of June 1, 2001		78'000'000	234'000'000
Subscriptions exercised April 1 - December 31, 2001		(126'176)	(378'528)
AGM of May 31, 2002 (increase)		39'326'176	117'978'528
AGM of May 31, 2002 (Par value reduction)		–	(234'400'000)
AGM of May 31, 2002		117'200'000	117'200'000
Subscriptions exercised January 1 - December 31, 2002		–	–
Remaining capital	1)	117'200'000	117'200'000
Staff shares (Donaldson, Lufkin & Jenrette option programs)
AGM of June 1, 2001		20'000'000	60'000'000
Subscriptions exercised April 1 - December 31, 2001		(923'251)	(2'769'753)
AGM of May 31, 2002 (Par value reduction)		–	(38'153'498)
AGM of May 31, 2002		19'076'749	19'076'749
Subscriptions exercised January 1 - December 31, 2002		(361'209)	(361'209)	361'209	361'209
Remaining capital		18'715'540	18'715'540
Authorized capital
Acquisitions of companies/participations
AGM of June 1, 2001		45'480'000	136'440'000
AGM of May 31, 2002 (Par value reduction)		–	(90'960'000)
AGM of May 31, 2002		45'480'000	45'480'000
Remaining capital		45'480'000	45'480'000
Share capital as of December 31, 2002				1'189'891'720	1'189'891'720
1) As of 21.02.03 115,613,436 shares (par value CHF 115,613,436) were reserved for rights issued to the management and staff.

NOTES TO THE PARENT COMPANY FINANCIAL STATEMENTS

Report of the auditors on capital increases
to the Board of Directors of Credit Suisse Group
on conditional capital increases

We have examined the issuance of shares for the period from January 1, 2002 to December 31, 2002 in accordance with the resolutions passed by the Annual General Meeting of Shareholders of June 4, 1992, September 29, 2000, June 1, 2001 and May 31, 2002 in accordance with Swiss law and the Company's Articles of Association.

It is the responsibility of the Board of Directors to execute the issuance of new shares in accordance with the Company's Articles of Association. Our responsibility is to examine whether the issuance of new shares was done in accordance with Swiss law, the Company's Articles of Association, the applicable offering documents, regulations and contracts. We confirm that we meet the legal requirements concerning professional qualification and independence.

Our examination was conducted in accordance with the auditing standards promulgated by the Swiss profession, which require that our examination be planned and performed to obtain reasonable assurance about whether the issuance of new shares is free from material errors. We have performed the audit procedures required in the circumstances and are of the opinion that they form a reasonable basis for our opinion.

In our opinion the issuance of 1,011,909 registered shares is in agreement with Swiss law, the Company's Articles of Association, the applicable offering documents of November 18, 1992, regulations and contracts.

KPMG Klynveld Peat Marwick Goerdeler SA

Zurich, August 20, 2002, November 26, 2002, and January 30, 2003

12 Significant shareholders

As of December 31, 2002 Credit Suisse Group has no significant shareholders. With respect to own shares refer to note 10 to the financial statements.

13 Legal reserves

The change in legal reserves compared to December 31, 2001 equals the capital surplus of CHF 26.5 million received for newly issued shares and the proceeds of CHF 1,250.0 million received from the issuance of Mandatory Convertible Securities by Credit Suisse Group Finance (Guernsey) Ltd., less issuing costs of CHF 12.2 million.

14 Provisions

This item includes general provisions of CHF 311 million.

PROPOSAL TO THE ANNUAL GENERAL MEETING

Proposed appropriation of retained earnings
in CHF
Retained earnings brought forward		4'732'718
Net profit		2'219'771'546
Retained earnings available for appropriation		2'224'504'264
Dividend	CHF 0.10 per registered share of CHF 1.00 par value	118'989'172
	(1,189,891,720 registered shares eligible for dividend as of December 31, 2002)
To be carried forward		2'105'515'092
Total		2'224'504'264
The number of registered shares eligible for dividend at the dividend payment date may increase due to the issuance of new registered shares.
On behalf of the Board of Directors:
The Chairman: Walter B. Kielholz
The Executive Board:
Oswald J. Grübel, John J. Mack, Hans-Ulrich Doerig, Brady W. Dougan, Brian D. Finn, David P. Frick, Ulrich Körner, Jeffrey M. Peek, Philip K. Ryan, Richard E. Thornburgh, Stephen R. Volk, Alex W. Widmer
Zurich, February 21, 2003

REPORT OF THE STATUTORY AUDITORS

Report of the Statutory Auditors to the
Annual General Meeting of Credit Suisse Group, Zurich

As Statutory Auditors, we have audited the accounting records and the financial statements (income statement, balance sheet and notes) of Credit Suisse Group for the year ended December 31, 2002.

These financial statements are the responsibility of the Board of Directors. Our responsibility is to express an opinion on these financial statements based on our audit. We confirm that we meet the legal requirements concerning professional qualification and independence.

Our audit was conducted in accordance with auditing standards promulgated by the Swiss profession, which require that an audit be planned and performed to obtain reasonable assurance about whether the financial statements are free from material misstatement. We have examined on a test basis evidence supporting the amounts and disclosures in the financial statements. We have also assessed the accounting principles used, significant estimates made and the overall financial statement presentation. We believe that our audit provides a reasonable basis for our opinion.

In our opinion, the accounting records, financial statements and the proposed appropriation of retained earnings comply with Swiss law and the Company's Articles of Association.

We recommend that the financial statements submitted to you be approved.

KPMG Klynveld Peat Marwick Goerdeler SA

Brendan R. Nelson Peter Hanimann

Chartered Accountant Certified Accountant

Auditors in Charge

Zurich, February 21, 2003



FIVE-YEAR SUMMARY OF SELECTED FINANCIAL DATA

Share data
		31.12.02		31.12.01	31.12.00	31.12.99	31.12.98
Shares issued		1'189'891'720		1'196'609'811	1'201'751'960	1'088'825'952	1'076'345'476
To be issued upon conversion of MCS	1)	40'413'838		–	–	–	–
Shares repurchased	2)	–		7'730'000	–	–	–
Shares outstanding		1'230'305'558		1'188'879'811	1'201'751'960	1'088'825'952	1'076'345'476
Weighted-average shares outstanding	3)	1'190'206'207		1'194'090'788	1'111'100'088	1'085'243'040	1'070'169'864
1) Maximum number of shares in connection with Mandatory Convertible Securities issued by Credit Suisse Group Finance (Guernsey) Ltd.
2) Shares cancelled on 09.08.02, as previously approved by the Annual General Meeting.
3) Adjusted for weighted average shares repurchased.
Market capitalization
		2002		2001	2000	1999	1998
Year-end, in CHF m		36'909		84'173	92'535	86'153	57'854
Change in %		(56.2)		(9.0)	7.4	48.9	(3.7)
As a % of SMI (at year-end)		6.2		9.3	8.7	9.9	7.5
Share price
in CHF		2002		2001	2000	1999	1998
At year-end		30.00		70.80	77.00	79.13	53.75
High (closing price)		73.60		87.00	97.13	79.13	95.50
Low (closing price)		20.60		44.80	73.25	53.00	37.38
Per share information
in CHF		2002		2001	2000	1999	1998
Book value		23.2		29.9	34.1	27.1	24.0
Gross operating profit		3.8		7.4	10.9	7.2	6.2
Dividend / repayment of capital		0.1	1)	2.0	2.0	1.8	1.3
Basic earnings per share		(2.78)		1.33	5.21	3.92	2.87
Diluted earnings per share		(2.78)		1.32	5.19	3.89	2.85
Price/earnings ratio		(10.8)		53.2	14.8	20.2	18.7
Price/book value ratio		1.3		2.4	2.3	2.9	2.2
1) Proposal of the Board of Directors to the Annual General Meeting on April 25, 2003.
Note: Within the framework of Swiss GAAP FER Financial Reporting Standards, Credit Suisse Group has changed its accounting principles in the year 2000 in order to increase the transparency for its insurance business and to align with a more internationally-recognized standard. Prior year comparative figures have been adjusted accordingly, excluding the year 1998.

Trading volume on Swiss Exchange (SWX)
		2002	2001	2000	1999	1998
in CHF m	Total per year	95'455	115'487	108'361	88'107	115'362
	Daily average	377.3	461.9	431.7	346.9	459.6
in 1000 units	Total per year	2'222'370	1'603'663	1'335'344	1'301'988	1'775'428
	Daily average	8'784.1	6'414.7	5'320.0	5'126.0	7'073.6

Consolidated income statement
in CHF m	2002	2001	2000	1999	1998
Net interest income	8'036	6'751	5'313	5'338	5'152
Net commission and service fee income	15'334	18'115	16'596	10'856	8'327
Net trading income	2'254	8'913	8'791	6'578	2'378
Net income from the insurance business	3'312	6'300	6'166	4'166	5'357
Other ordinary income/(expenses), net	(898)	(925)	365	(294)	486
Operating income	28'038	39'154	37'231	26'644	21'700
Personnel expenses	16'910	21'890	18'503	13'554	10'586
Other operating expenses	6'619	8'394	6'645	5'227	4'473
Operating expenses	23'529	30'284	25'148	18'781	15'059
Gross operating profit	4'509	8'870	12'083	7'863	6'641
Depreciation, valuation adjustments and losses	8'102	6'341	3'021	2'631	3'832
Profit/(loss) before extraordinary items, cumulative effect of change in accounting principle and taxes	(3'593)	2'529	9'062	5'232	2'809
Extraordinary income	746	52	105	93	1'554
Extraordinary expenses	(403)	(281)	(1'796)	(152)	(573)
Cumulative effect of change in accounting principle	520	–	–	–	–
Taxes	(596)	(486)	(1'349)	(855)	(575)
Net profit/(loss) before minority interests	(3'326)	1'814	6'022	4'318	3'215
Minority interests	17	(227)	(237)	(68)	(147)
Net profit/(loss)	(3'309)	1'587	5'785	4'250	3'068
Certain reclassifications have been made to conform to the current presentation.
Return on equity
in %	2002	2001	2000	1999	1998
Return on equity	(10.0)	4.1	17.7	15.6	11.7
Consolidated balance sheet
in CHF m	31.12.02	31.12.01	31.12.00	31.12.99	31.12.98
Total assets	955'656	1'022'513	987'433	729'022	652'437
Shareholders' equity	31'394	38'921	43'522	30'683	28'162
Minority interests in shareholders' equity	2'878	3'121	2'571	1'154	2'325
Capital data/ratios
	31.12.02	31.12.01	31.12.00	31.12.99	31.12.98
BIS risk-weighted assets in CHF m	201'466	222'874	239'465	209'870	202'078
BIS Tier 1 ratio in %	9.7	9.5	11.3	11.8	12.0
BIS total capital ratio in %	16.5	15.7	18.2	17.8	17.8
Assets under management
in CHF bn	31.12.02	31.12.01	31.12.00	31.12.99	31.12.98
Total assets under management	1'195.3	1'430.6	1'392.0	1'132.7	937.8
In 2002, the Group adjusted its definition of assets under management to be more restrictive and comparable with competitors. Previous year comparative numbers have been adjusted accordingly, excluding the years 1999 and 1998.

Number of employees (full time equivalents)
		31.12.02	31.12.01	31.12.00	31.12.99	31.12.98
Switzerland	banking	21'270	21'794	21'454	20'885	20'625
	insurance	7'063	6'849	6'781	6'569	6'827
Outside Switzerland	banking	25'057	28'415	30'666	17'249	15'753
	insurance	25'067	23'103	21'637	19'260	18'375
Total employees Credit Suisse Group		78'457	80'161	80'538	63'963	61'580
Certain reclassifications have been made to conform to the current presentation.

CORPORATE GOVERNANCE





CORPORATE GOVERNANCE


Introduction
Corporate governance has become the focus of attention for many stakeholders and regulatory bodies worldwide. Credit Suisse Group strives to ensure compliance with internationally accepted high standards of corporate governance to safeguard the interests of all stakeholders. Credit Suisse Group therefore welcomes ongoing constructive development of meaningful standards in Switzerland and abroad. Good corporate governance helps stakeholders to better assess the quality of the company and its management and supports investors in their investment decisions.

Credit Suisse Group has actively supported and contributed to the development of a Swiss Code of Best Practice, which was presented to the public in April 2002. Parallel to the Swiss Code of Best Practice, the SWX Swiss Exchange has implemented a directive governing the disclosure of information on corporate governance, which became effective on July 1, 2002. As an SWX-listed company with headquarters in Zurich, Switzerland, Credit Suisse Group is subject to this directive. The required disclosures are provided primarily in this section of the annual report. For the sake of efficiency, reference is periodically made to other parts of this annual report.

The governance of a company is subject to changes and adaptation to internal and external factors. Therefore, corporate governance may be derived from a number of different governing documents. In order to facilitate the understanding and to summarize the most important elements of Credit Suisse Group’s corporate governance, the Board of Directors of Credit Suisse Group has adopted the Corporate Governance Guidelines . These guidelines create the basis for a sound corporate governance framework and refer to other documents which regulate certain governance aspects in more detail. Other key documents in the area of Corporate Governance include:

• Credit Suisse Group’s Articles of Association, which define the business purpose and our basic organizational framework;  

• Credit Suisse Group’s Internal Regulations Governing the Conduct of Business, which define the responsibilities and authorities of the various bodies within Credit Suisse Group as well as the reporting procedures;

• Credit Suisse Group’s Board of Directors Committees’ Charters, which define the duties and responsibilities of each committee; and   

• Credit Suisse Group’s Code of Conduct, which lists 12 core ethical and performance values. It is a form of voluntary self-regulation, with which all Credit Suisse Group companies and their employees must comply.  

Since September 25, 2001, Credit Suisse Group’s stock has been listed on the New York Stock Exchange, or NYSE. Recent legislation and a number of rules in the United States in the area of corporate governance, many of which are not yet finally adopted, are or will therefore be applicable to Credit Suisse Group. Moreover, the NYSE has proposed a set of recommendations relating to good corporate governance. These recommendations are not yet finalized and have not yet been adopted.


Company
Credit Suisse Group has established two business units, Credit Suisse First Boston and Credit Suisse Financial Services. For details of the principal areas of activity of each business unit refer to “Information on the Company”. A detailed review of the respective business unit’s results and activities in 2002 can be found in the section “Operating and Financial Review”. A list of the principal fully consolidated subsidiaries of Credit Suisse Group and the principal participations valued according to the equity method or at cost can be found in note 46 to the consolidated financial statements. With the exception of Neue Aargauer Bank, Aarau, Switzerland, 99% of which is held by Credit Suisse Group and which is listed on the SWX Swiss Exchange (Swiss Security Number 397719, market capitalization as of December 31, 2002 of CHF 1,492.2 million) and DBV Winterthur Holding AG, Wiesbaden, Germany, 71% of which is i ndirectly held by Credit Suisse Group and which is listed on the Frankfurt Stock Exchange (ISIN DE0008416900, market capitalization as of December 31, 2002 of EUR 954.6 million) no other subsidiaries have shares listed on the SWX Swiss Exchange or a foreign stock exchange.


Major shareholders
On December 31, 2002, no shareholder was recorded in our share register as holding more than 5% of our stock. However, Credit Suisse Group and its affiliates as of December 31, 2002 held 73,833,716 registered shares with no voting rights, corresponding to 6.2 % of the total registered shares of Credit Suisse Group.

In the course of 2002, BZ Gruppe Holding, Wilen, advised the SWX Swiss Exchange that its holdings of Credit Suisse Group shares had been reduced to below 10% (on January 18, 2002) and had further dropped to below 5% (on July 31, 2002).

As of December 31, 2002, according to our share register, 39,557,543 shares, or 3.3% of the total shares outstanding, were held by shareholders with registered addresses in the United States. To the best of our knowledge, we are not directly or indirectly owned or controlled by another corporation or any government or other person, and, to the best of our knowledge, there are no arrangements in place that could lead to a change in control of Credit Suisse Group.


Capital structure
Credit Suisse Group’s total outstanding share capital as of December 31, 2002 was CHF 1,189,891,720 each with a nominal value of CHF 1 per share. Credit Suisse Group’s shares are listed in Switzerland and Frankfurt, and in the form of American Depositary Shares in New York.

Details of changes to the share capital occurring in the course of the business year and information as to the authorized and conditional capital and changes thereto during the year can be found in note 11 to the parent company financial statements as well as in the Articles of Association, articles 26, 26a, 26b and 27. For the two previous years’ information reference is made to Credit Suisse Group’s 2001 Annual Report or our 2001 Annual Report on Form 20-F.

During the course of 2002, Credit Suisse Group, through its wholly owned subsidiary, Credit Suisse Group Finance (Guernsey) Limited, issued subordinated mandatory convertible securities in the aggregate principal amount of CHF 1.25 billion. Detailed information about the mandatory convertible securities is contained in note 35 to the consolidated financial statements.

Information on employee participation plans including option plans is contained in note 42 to the consolidated financial statements. Traded options and options connected to derivative or structured market instruments issued by subsidiaries of Credit Suisse Group are not separately disclosed in this annual report. Subsidiaries issuing such instruments to the capital markets pursue independent hedging strategies.


Board of Directors of Credit Suisse Group

Membership and qualifications
The Articles of Association provide that the Board of Directors, or the Board, shall consist of a minimum of seven members. Credit Suisse Group believes that the size of the Board must be such that the standing committees can be staffed with qualified members, but, at the same time, the Board must be small enough to enable an effective and rapid decision-making process. The members are elected individually for a period of three years and are eligible for re-election. There is no requirement in the Articles of Association for staggered renewal of the Board. One year of office is understood to be the period of time from one ordinary General Meeting of Shareholders to the close of the next ordinary General Meeting of Shareholders. While the Articles of Association do not provide for any age or term limitations, Credit Suisse Group’s Internal Regulations Governing the Conduct of Business specify that the members of the Board shall retir e at the ordinary General Meeting of Shareholders in the year in which they reach age 70 and that the Chairman of the Board must retire at the ordinary General Meeting of Shareholders in the year in which he or she reaches age 68. None of our directors have a service contract with the Group or any of its subsidiaries providing for benefits upon termination of the mandate.

The Chairman’s and Governance Committee recruits and evaluates candidates for Board membership based on a set of criteria established by the Chairman’s and Governance Committee. The Committee may also retain outside consultants with respect to the identification and recruitment of potential new Board members. In its assessment of candidates, the Chairman’s and Governance Committee considers the requisite skills and characteristics as well as the composition of the Board as a whole. Among other considerations, the Committee takes into account independence, diversity, age, skills and management experience in the context of the needs of the Board to fulfill its responsibilities. Any newly appointed director participates in an orientation program to familiarize himself or herself with Credit Suisse Group’s organizational structure, strategic plans, significant financial, accounting and risk matters and other important issues.


Independence
The Board currently consists of non-executive directors only and includes a majority of independent directors, as determined by the Board in its sole discretion taking into account the factors set forth in the Internal Regulations Governing the Conduct of Business, the Committee Charters and any applicable laws and listing standards. The Board of Directors will continue to review its independence criteria in light of evolving standards, including the finalization of SEC and NYSE proposed corporate governance rules. The Chairman’s and Governance Committee performs an annual assessment of the independence of each Board member and reports to the Board on its findings. In general, a director is considered independent, if he or she is a non-executive director who has not been an employee of Credit Suisse Group or an employee or affiliate of the Group’s external auditor for the past five years and does not maintain, in the sole dete rmination of the Board, a material direct or indirect business relationship with Credit Suisse Group or any of its subsidiaries. No Board member is considered independent if he or she is part of an interlocking directorate in which a member of the Group Executive Board serves on the compensation committee of another company that employs the Board member. Board members with immediate family members who would not qualify as independent are subject to a five-year cooling-off period before they are considered to be independent.


Meetings
The Board of Directors holds at least six regular, generally full-day meetings per year. In addition, the Board convenes as often as required to discuss any urgent matters. Ordinarily, the Chairman calls the meeting with sufficient notice and prepares an agenda for each meeting. However, any other Board member has the right to call an extraordinary meeting, if necessary. It is at the Chairman’s discretion to invite members of management to attend the meetings. Generally, all members of the Group Executive Board attend the meetings to ensure an effective interaction with the Board. At most meetings, the Board of Directors holds separate private sessions, without management presence, to discuss particular issues. Minutes are kept of the proceedings and resolutions of the Board of Directors.


Board responsibilities
By establishing the Internal Regulations Governing the Conduct of Business of Credit Suisse Group, the Board of Directors has delegated the management of the company and the preparation and implementation of its resolutions to committees of the Board and to certain management bodies or executive officers to the extent permitted by law, in particular article 716a and 716b of the Swiss Code of Obligations, and Credit Suisse Group’s Articles of Association.

With responsibility for the overall direction, supervision and control of the company, the Board regularly assesses the Group’s competitive position and approves strategic and financial plans. At each meeting, the Board receives a status report on the financial results of the Group. In addition, the Board receives a management information package each quarter, which provides detailed information on the performance and the financial status of the Group as well as a quarterly risk report outlining recent developments and outlook scenarios. In addition, management provides the Board members with regular updates on key issues as deemed appropriate. All members of the Board have access to all information concerning the Group. Should a member of the Board require information or wish to review Group documents outside a meeting, he can address this request to the Chairman of the Board.

The Board also reviews and approves significant changes in the Group’s structure and organization and is actively involved in major projects including acquisitions, divestitures and major investments. The Board also performs a self-assessment once a year.


Board Committees
As of year-end 2002, the Board had two standing committees, the Audit Committee and the Compensation and Appointments Committee. In addition, as of January 1, 2003, the Board has established the Chairman’s and Governance Committee, which has also taken over the responsibility of assessing and reviewing management appointments from the Compensation and Appointments Committee. Consequently, the Compensation and Appointments Committee has been renamed the Compensation Committee. Furthermore, the Board has resolved to establish a Risk Committee, which will assume its responsibilites after the Annual General Meeting on April 25, 2003. The committee members are appointed for a term of one year. The Board will determine the membership and constitute the various committees following the Annual General Meeting.


Chairman’s and Governance Committee
The Chairman’s and Governance Committee consists of the Chairman of the Board and not less than two other members. The current Committee members are: Walter B. Kielholz (Chairman), Peter Brabeck-Letmathe and Aziz R.D. Syriani. The Chairman's and Governance Committee has its own charter, which has been approved by the Board. It generally meets once a month. The Chairman may ask members of management to attend all or parts of a meeting.

The Chairman’s and Governance Committee acts as counselor to the Chairman and discusses a broad variety of topics in preparation of Board meetings. In addition, the Chairman’s and Governance Committee has the responsibility to develop and recommend to the Board a set of Corporate Governance Guidelines and to review these guidelines from time to time. At least annually, the Chairman’s and Governance Committee reviews the independence of the Board members and reports its findings to the Board. The Chairman’s and Governance Committee is also responsible for identifying, evaluating, recruiting and nominating new Board members in accordance with the criteria established by the Chairman’s and Governance Committee.

Moreover, at least annually, the Chairman’s and Governance Committee reviews and evaluates the performance of the Chairman of the Board and the Co-Chief Executive Officers and makes recommendations to the Board. The Chairman of the Board does not participate in the discussion on his own performance. The Chairman’s and Governance Committee proposes to the Board the appointment, promotion, dismissal or replacement of members of the Group Executive Board. The Chairman’s and Governance Committee also reviews with the Chairman and the Co-Chief Executive Officers the succession plans relating to positions held by senior executive officers of the Group and makes recommendations to the Board with respect to the selection of individuals to occupy these positions.


Audit Committee
The Audit Committee consists of not less than three independent members. The current Committee members are: Thomas W. Bechtler (interim Chairman until the Annual General Meeting of April 25, 2003), Thomas D. Bell, and Marc-Henri Chaudet. The Audit Committee has its own charter, which has been approved by the Board.

The members of the Audit Committee are subject to additional independence requirements. In particular, they may not serve on the audit committee of more than two other companies, unless the Board deems that such membership would not impair the member’s ability to serve on Credit Suisse Group’s Audit Committee. Furthermore, none of the Audit Committee members may be an affiliated person of the Group or may, directly or indirectly, accept any consulting, advisory or other compensatory fees from the Group other than their regular compensation as Board and Audit Committee members. In line with its charter, all Audit Committee members must be financially literate.

The Audit Committee meets at least quarterly prior to the publication dates of the financial statements. The meetings are attended by management representatives in line with the meeting agenda. In addition, the head of Internal Audit and senior representatives of the External Auditors also attend.

The primary function of the Audit Committee is to assist the Board in fulfilling its oversight responsibilities by monitoring and assessing the integrity of the financial statements and disclosures of the financial condition, results of operations and cash flows of the Group, monitoring processes designed to ensure compliance by the Group with legal and regulatory requirements, monitoring the qualifications, independence and performance of the External and Internal Auditors and monitoring the adequacy of financial reporting processes and systems of internal accounting and financial controls. The Audit Committee also pre-approves the retention of and fees paid to the External Auditor for all audit and non-audit services.


Compensation Committee
The Compensation Committee consists of not less than three independent members. The current Committee members are: Peter Brabeck-Letmathe (Chairman), Aziz R.D. Syriani and Daniel L. Vasella. The Compensation Committee has its own charter, which has been approved by the Board. Besides a number of shorter meetings throughout the year as needed to perform its duties and responsibilities, the Compensation Committee has one main meeting per year, where it convenes for the primary purpose of reviewing the performance of the business units and the respective management teams, and determining and approving the compensation payable to the members of the executive boards of the Group and its two business units as well as other members of senior management. Other duties and responsibilities include the approval of compensation plans and the overall amount of the performance-related compensation.


Risk Committee
The Risk Committee, which the Board of Directors has decided to establish following the Annual General Meeting on April 25, 2003, will consist of not less than three members. The Committee will have its own charter, which has been approved by the full Board. The Committee will meet at least twice a year. Its main duties will be to assist the Board in assessing the different types of risk and the risk management processes in the Group. The Risk Committee will, in particular, make recommendations to the Board on all its risk-related responsibilities including the review of major risk management and capital adequacy methods.


Members of the Board of Directors and the Committees
Walter B. Kielholz
Chairman since January 1, 2003 (previously Vice-Chairman) ^{1) 4)}
Peter Brabeck-Letmathe
Vice-Chairman ^{1) 2)}
Thomas W. Bechtler ³⁾
Thomas D. Bell ³⁾
Robert H. Benmosche
Marc-Henri Chaudet ³⁾
Aziz R. D. Syriani ^{1) 2)}
Ernst Tanner
Daniel L. Vasella ^{2) 5)
1)} Member of the Chairman’s and Governance Committee,
chaired by W.B. Kielholz.
²⁾ Member of the Compensation Committee,
chaired by P. Brabeck-Letmathe.
³⁾ Member of the Audit Committee, chaired by Thomas W. Bechtler.
⁴⁾ Chairman of the Audit Committee until December 31, 2002.
⁵⁾ Until April 25, 2003.

Changes in the Board of Directors since the last Annual General Meeting
Lukas Mühlemann, Chairman of the Board of Directors and Chief Executive Officer, stepped down from his responsibilities at Credit Suisse Group on December 31, 2002.

The composition of the Boards of Directors of Credit Suisse, Credit Suisse First Boston, “Winterthur” Swiss Insurance Company and Winterthur Life is the same as the composition of the Board of Directors of Credit Suisse Group.

Walter B. Kielholz
Born 1951, Swiss Citizen
Credit Suisse Group
Paradeplatz 8
P.O. Box 1
8070 Zurich, Switzerland
Chairman of the Board of Directors and the Chairman’s and Governance Committee since January 1, 2003. Prior to that Mr. Kielholz served as Vice-Chairman of the Board (from May 31, 2002 to December 31, 2002) and Chairman of the Audit Committee (from May 28, 1999 to December 31, 2002). He has been a member of the Board since 1999. His term expires at the Annual General Meeting in 2003. Mr. Kielholz stands for re-election for a further term of 3 years.

Walter B. Kielholz studied business administration at the University of St. Gallen, and graduated in 1976 with a degree in business finance and accounting.

His career began at the General Reinsurance Corporation, Zurich. After working in the United States, the United Kingdom and Italy, he assumed responsibility for the company's European marketing. In 1986, he moved to Credit Suisse, Zurich, where he was responsible for client relations with large insurance groups in the Multinational Services department.

Mr. Kielholz joined Swiss Re, Zurich, at the beginning of 1989. He became a member of Swiss Re's Executive Board in January 1993 and was Swiss Re's Chief Executive Officer from January 1, 1997 to December 31, 2002. A Board member since June 1998, the Board of Directors of Swiss Re appointed him Vice-Chairman with effect from January 1, 2003. Walter B. Kielholz is President of the International Association for the Study of Insurance Economics - The Geneva Association, Geneva, President of the Foundation Avenir Suisse, and Chairman of the Zurich Art Society.

Peter Brabeck-Letmathe
Born 1944, Austrian Citizen
Nestlé SA
Avenue Nestlé 55
1800 Vevey, Switzerland
Vice-Chairman of the Board, Chairman of the Compensation Committee since 2000 and member of the Chairman’s and Governance Committee since 2003. Mr. Brabeck-Letmathe has been a member of the Board since 1997 and served as Lead Independent Director from March 2001 until the end of 2002. His term as a member of the Board expires at the Annual General Meeting in 2005.

Peter Brabeck-Letmathe studied economics at the University of World Trade in Vienna. After graduation in 1968, he joined Nestlé’s sales operations in Austria. His career within Nestlé includes a variety of assignments in several European countries as well as in Latin America. Since 1987, he has been based at Nestlé’s headquarters in Vevey. Since 1997, Mr. Brabeck-Letmathe has served as the Chief Executive Officer of Nestlé. Also, since 1997 he has been a member of Nestlé’s Board of Directors, currently serving as its Vice-Chairman (since 2001).

Mr. Brabeck-Letmathe is a member of the Boards of Directors of L'Oréal SA, Paris, and of Roche Holding SA, Basle. He is also Deputy Chairman of the Board of The Prince of Wales International Business Leaders Forum as well as a member of ERT (European Round Table of Industrialists), of the Bretton Woods Committee's International Council, Avenir Suisse, and the World Economic Forum.

Thomas W. Bechtler
Born 1949, Swiss Citizen
Seestrasse 21
8700 Küsnacht, Switzerland
Member of the Board since 1994 and member of the Audit Committee since 1999. From January 1, 2003 to the Annual General Meeting of April 25, 2003, Mr. Bechtler has served as the interim Chairman of the Audit Committee. His term as a member of the Board expires at the Annual General Meeting in 2005.

Thomas W. Bechtler studied law at the universities of Zurich and Geneva. After graduation in 1973, he obtained a Master of Laws degree from Harvard University, Cambridge in 1975 and a doctorate from Zurich University in 1976. Mr. Bechtler is the Vice-Chairman and the delegate of the Boards of Directors of Hesta AG, Zug, and Hesta Tex AG, Zug, both family-owned companies and majority shareholders in Zellweger Luwa AG, Uster, and Schiesser Group AG, Küsnacht. Mr. Bechtler has been Chairman of these companies since 1994 and 1992, respectively. Banking subsidiaries of the Group maintain significant commercial banking relations with Mr. Bechtler or companies affiliated with him.

Other Board memberships of Mr. Bechtler include: Bucher Industries, Niederwenigen (since 1987), Conzzetta Holding AG, Zurich (since 1987), Sika AG, Baar (Vice-Chairman; since 1989), and Swiss Reinsurance Company, Zurich (since 1993). Mr. Bechtler is a member of the Board of Trustees of Swisscontact, Zurich, and he recently retired as the Chairman of the Board of the Zurich Art Society, a mandate he held from 1987 to 2002.

Thomas D. Bell
Born 1949, US Citizen
Cousins Properties Inc.
2500 Windy Ridge Parkway
Suite 1600
Atlanta, GA 30339, USA
Member of the Board and the Audit Committee since 2002. His term as a member of the Board expires at the Annual General Meeting in 2005.

Thomas D. Bell serves as Vice Chairman of the Board (since 2000) and President and Chief Executive Officer (since 2002) of Cousins Properties Inc., a diversified real estate development company based in Atlanta. Prior thereto, Mr. Bell spent ten years at Young & Rubicam Inc., New York, retiring as Chairman and Chief Executive Officer when it was merged with the WPP Group.

During the Reagan administration, Mr. Bell chaired the Committee on the Next Agenda, which focused on prioritizing issues for President Reagan’s second term. He also chaired the Workforce 2000 Advisory Committee for the U.S. Secretary of Labor.

Mr. Bell serves on the Boards of Lincoln Financial Group, Philadelphia (since 1988), McLeod USA, Cedar Rapids (since 2001), Regal Entertainment Group, Knoxville (since 2002), and the U.S. Chamber of Commerce.

Mr. Bell served as a senior advisor to Credit Suisse First Boston from September 2001 to January 2002, advising management on the company’s real estate activities. During his tenure as a member of the Audit Committee, Mr. Bell did not receive any form of fee or compensation from Credit Suisse Group or any of its subsidiaries other than the remuneration for his Board and Audit Committee membership.

Robert H. Benmosche
Born 1944, US Citizen
Metropolitan Life Insurance Company
One Madison Avenue
New York, NY 10010, USA
Member of the Board since 2002. His board term expires at the Annual General Meeting in 2005.

Robert H. Benmosche has been Chairman of the Board and Chief Executive Officer of MetLife, Inc., New York, since the demutualization of the company in 2000 and Metropolitan Life Insurance Company, New York, since 1998. Before joining MetLife in 1995, Mr. Benmosche has been with PaineWebber, New York, for 13 years, most recently in the position of an Executive Vice President and a member of the company’s Board of Directors. He received a B.A. degree in mathematics from Alfred University in 1966.

He is currently on the Board of Trustees of Alfred University and on the Board of Directors of the New York Philharmonic.

Marc-Henri Chaudet
Born 1936, Swiss Citizen
Av. Paul-Cérésole 3
P.O. Box 316
1800 Vevey, Switzerland
Member of the Board since 1997 and member of the Audit Committee since 1999. His board term expires at the Annual General Meeting in 2005. Due to the age limitations set forth in the Group’s Internal Regulations Governing the Conduct of Business, Mr. Chaudet can only be re-elected for a period of one year upon expiry of his current term.

Marc-Henri Chaudet graduated from University of Lausanne Law School in 1961. In 1966, he received his doctorate from the same university. Mr. Chaudet has been a self-employed attorney-at-law since 1968 covering a broad range of legal fields.

Mr. Chaudet is a board member in a number of Swiss companies including two public companies, Pargesa Holding SA, Geneva (since 1996) and Compagnie Vaudoise d'Electricité, Morges (since 1997, Chairman since 2002).

Aziz R.D. Syriani
Born 1942, Canadian Citizen
The Olayan Group
111 Poseidonos Avenue
P.O. Box 70228
Glyfada, Athens 16610, Greece
Member of the Board since 1998, member of the Compensation Committee since 2002, and member of the Chairman’s and Governance Committee since 2003. His board term expires at the Annual General Meeting in 2005.

Aziz R.D. Syriani holds a JD from the University of St. Joseph in Beirut (granted in 1965) and a Masters of Laws degree from Harvard University, Cambridge (granted in 1972). Mr. Syriani has been with the Olayan Group since 1978 and currently serves as President (since 1978) and Chief Executive Officer (since 2002). The Olayan Group is a private multinational enterprise, with a home market in Saudi Arabia, engaged in distribution, manufacturing, services and global investment.

Mr. Syriani serves on the Board of Occidental Petroleum Corporation, Los Angeles (since 1983), where he currently serves as Lead Independent Director and Chairman of the Nominating and Corporate Governance Committee.

Ernst Tanner
Born 1946, Swiss Citizen
Chocoladenfabriken Lindt & Sprüngli AG
Seestrasse 204
8802 Kilchberg, Switzerland
Member of the Board since 2002. His board term expires at the Annual General meeting in 2005.

Ernst Tanner is Chairman of the Board (since 1994) and Chief Executive Officer (since 1993) of Lindt & Sprüngli AG, Kilchberg, a Swiss chocolate producer listed on the SWX Swiss Exchange. Before joining Lindt & Sprüngli, Mr. Tanner worked at Johnson & Johnson, which he joined in 1969, most recently in the capacity of Company Group Chairman of Johnson & Johnson Europe.

Mr. Tanner serves on the Boards of The Swatch Group, Biel (since 1995), and Adecco SA, Wallisellen (since 2000).

Daniel L. Vasella
Born 1953, Swiss Citizen
Novartis AG
Lichtstrasse 35
P.O. Box
4002 Basle, Switzerland
Member of the Board since 1997 and member of the Compensation Committee since 2000. Mr. Vasella has decided to resign as a member of the Board at the Annual General Meeting on April 25, 2003.

Daniel L. Vasella is Chairman (since 1999) and Chief Executive Officer (since 1996) of Novartis AG, Basle. Before the merger of Ciba-Geigy AG and Sandoz AG to form Novartis, Mr. Vasella was the Chief Executive Officer of Sandoz AG (since 1995). Before joining Sandoz in 1988, Mr. Vasella held a number of medical positions in Switzerland.

Mr. Vasella serves on the Board of PepsiCo, Purchase (since 2002). He is on the International Board of Governors of the Peres Center for Peace, is the Vice-Chairman of the International Business Leaders Advisory Council for the Mayor of Shanghai, a member of the Board of Directors of Associates of the Harvard Business School and a member of the Boards of INSEAD and IMD.


Honorary Chairman of Credit Suisse Group
Rainer E. Gut
Born 1932, Swiss Citizen
Credit Suisse Group
Paradeplatz 8
P.O. Box 1
8070 Zurich, Switzerland
Rainer E. Gut was appointed Honorary Chairman of Credit Suisse Group in 2000, after he stepped down as Chairman of the Board, a position he had held since 1986. Mr. Gut is the Chairman of the Board of Directors of Nestlé SA, Vevey (since 2000, Vice-Chairman since 1991 and member of the Board since 1981).

His other board memberships include L’Oréal SA, Paris (since 2000), and Sofina SA, Brussels (since 1978).

As Honorary Chairman, Mr. Gut maintains an office at Credit Suisse Group. However, he does not have any formal function and does not attend the meetings of the Board of Directors.


Secretaries of the Board of Directors
Pierre Schreiber
Béatrice Fischer

Management

Group Executive Board
The Board of Directors generally delegates management authority and the preparation and implementation of its resolutions to management bodies or executive officers. The most senior executive body is the Group Executive Board. No major management duties and responsibilities have been transferred to third parties.


Members of the Group Executive Board
Oswald J. Grübel
Co-Chief Executive Officer ¹⁾
John J. Mack
Co-Chief Executive Officer ²⁾
Hans-Ulrich Doerig
Vice-Chairman
Brady W. Dougan ³⁾
Brian D. Finn ³⁾
David P. Frick ³⁾
Ulrich Körner ³⁾
Jeffrey M. Peek ⁴⁾
Philip K. Ryan
Richard E. Thornburgh ⁵⁾
Stephen R. Volk ³⁾
Alex W. Widmer ^3)
1) Since January 1, 2003, previously Member of the
Group Executive Board.
²⁾ Since January 1, 2003, previously Vice-Chairman of the
Group Executive Board.
³⁾ Since January 1, 2003.
⁴⁾ Since April 1, 2002.
⁵⁾ Since September 1, 2002.


Hans-Ulrich Doerig
born 1940
Vice-Chairman of the Executive Board and Head Corporate Center of Credit Suisse Group  


Brady W. Dougan
born 1959
Co-President of Institutional Securities Credit Suisse
First Boston


Brian D. Finn
born 1960
Co-President of Institutional Securities Credit Suisse
First Boston


David P. Frick
born 1965
General Counsel
Credit Suisse Group


Oswald J. Grübel
born 1943
Co-CEO of Credit Suisse Group and CEO of Credit Suisse Financial Services


Ulrich Körner
born 1962
Chief Financial Officer of
Credit Suisse Financial Services


John J. Mack
born 1944
Co-CEO of Credit Suisse Group and CEO of Credit Suisse
First Boston


Jeffrey M. Peek
born 1947
Head of the Financial Services
division of Credit Suisse
First Boston


Philip K. Ryan
born 1956
Chief Financial Officer
of Credit Suisse Group


Richard E. Thornburgh
born 1952
Chief Risk Officer
of Credit Suisse Group


Stephen R. Volk
born 1936
Chairman of
Credit Suisse First Boston


Alex W. Widmer
born 1956
Head Private Banking of
Credit Suisse Financial Services

Changes in the Group Executive Board
Effective December 31, 2002, Lukas Mühlemann stepped down from his role as Chairman and Chief Executive Officer. Olivier Steimer, Head Private Banking International, retired from the Group Executive Board effective July 17, 2002, and Thomas Wellauer, Chief Executive Officer of Credit Suisse Financial Services, retired effective July 2, 2002. Moreover, Phillip M. Colebatch, Chief Executive Officer Credit Suisse Asset Management, left the Group Executive Board effective January 31, 2002.

Oswald J. Grübel
Born 1943, German Citizen
Credit Suisse Financial Services
Paradeplatz 8
P.O. Box 2
8070 Zurich, Switzerland
Oswald J. Grübel is the Co-Chief Executive Officer of Credit Suisse Group (since January 1, 2003) and the Chief Executive Officer of Credit Suisse Financial Services (since July 2002). Mr. Grübel was a member of the Group Executive Board between 1997 and 2001 and has been a member since July 2, 2002.

After starting his career with Deutsche Bank, Mr. Grübel joined White Weld Securities, Zurich and London (which was later merged into Credit Suisse First Boston) in 1970 in the trading area, where in 1978 he became Chief Executive Officer. After a distinguished career within the trading activities of the bank, including management responsibilities in Singapore and Hong Kong, Mr. Grübel was appointed member of Credit Suisse’s Executive Board in 1991, where he was responsible for equities, fixed income, global foreign exchange, money markets and asset/liability management. In 1998, Mr. Grübel was appointed Chief Executive Officer of Credit Suisse Private Banking.

Mr. Grübel does not hold any significant board memberships outside Credit Suisse Group.

John J. Mack
Born 1944, US Citizen
Credit Suisse First Boston
11 Madison Avenue
New York, NY 10010, USA
John J. Mack is the Co-Chief Executive Officer of Credit Suisse Group (since January 1, 2003) and the Chief Executive Officer of Credit Suisse First Boston (since July 2001). He has been a Vice-Chairman of the Group Executive Board since July 2001.

A graduate of Duke University, Mr. Mack joined Morgan Stanley, New York in 1972 as a member of its bond department. After a long career at Morgan Stanley, most recently as President and Chairman of the Operating Committee, he became President, Chief Operating Officer and a Director of Morgan Stanley Dean Witter & Co in May 1997 when the firm was created by the merger of Morgan Stanley and Dean Witter. In March 2001, Mr. Mack stepped down from his positions.

Mr. Mack serves on the Board of Celiant Corporation, Warren, (since 2001), and the New York Stock Exchange as well as on the International Advisory Panel for the Monetary Authority of Singapore. Mr. Mack has served on the Board of Cousins Properties Inc., Atlanta, since 2001 and has resigned effective May 6, 2003. He is also a member of the Chairman’s Advisory Committee of the National Association of Securities Dealers. Moreover, Mr. Mack serves on the Board of Catalyst, a non-profit organization to advance women in business. In the past, Mr. Mack has served on the Mayor of Beijing’s Advisory Council and was a director of CICC, the first Investment Bank in China. In addition, Mr. Mack has a number of positions of leadership for civic and philanthropic organizations.

Hans-Ulrich Doerig
Born 1940, Swiss Citizen
Credit Suisse Group
Paradeplatz 8
P.O. Box 1
8070 Zurich, Switzerland
Hans-Ulrich Doerig is Vice-Chairman of the Group Executive Board (since 1998) and the head of Corporate Center (since January 1, 2003). He was Chief Risk Officer from 1998 until 2002. The Board of Directors has decided to propose to the shareholders of Credit Suisse Group to elect Mr. Doerig as a new member of the Board of Directors at the Annual General Meeting on April 25, 2003. Assuming his appointment he will step down from the Group Executive Board.

After completing studies at the St. Gallen University with degrees in economics and law, including a doctorate received in 1968, and after five years at JP Morgan in New York he joined Credit Suisse Group in 1973. In 1982, he was appointed member of the Executive Board of Credit Suisse with responsibilities for the multinational division, securities trading, capital markets, corporate finance and commercial banking Asia. From 1993 to 1996, he served as Vice-Chairman of the Board of Directors of Credit Suisse. In 1996, he became President of the Executive Board of Credit Suisse. During 1997 he served as Chairman and Chief Executive Officer of Credit Suisse First Boston.

Mr. Doerig is a member of the International Advisory Board of Ebara, Tokyo, and serves as a member of the Board of the University of Zurich. In addition, he is a member of the supervisory bodies of various foundations, academic, arts and professional organizations. Mr. Doerig has published several books on finance. He also is a lecturer in the finance area at the University of Zurich.

Brady W. Dougan
Born 1959, US Citizen
Credit Suisse First Boston
11 Madison Avenue
New York, NY 10010, USA
Brady W. Dougan is Co-President, Institutional Securities of Credit Suisse First Boston (since October 2002), jointly with Brian D. Finn. Together they oversee day-to-day management and strategy of Credit Suisse First Boston’s equity, fixed income, investment banking and private equity businesses. He has been appointed a member of the Group Executive Board effective January 1, 2003.

Mr. Dougan received a B.A. in economics in 1981 and an M.B.A. in finance from the University of Chicago in 1982. After starting his career in the derivatives group at Bankers Trust, he joined Credit Suisse First Boston in 1990. He was the head of the equities division for five years, before he was appointed Global Head of the Securities Division in 2001.

Mr. Dougan does not hold any significant board memberships outside Credit Suisse Group.

Brian D. Finn
Born 1960, US Citizen
Credit Suisse First Boston
11 Madison Avenue
New York, NY 10010, USA
Brian D. Finn is Co-President, Institutional Securities of Credit Suisse First Boston (since October 2002), jointly with Brady W. Dougan. He has been appointed member of the Group Executive Board effective January 1, 2003.

Mr. Finn joined Credit Suisse First Boston in April 2002 from Clayton, Dubilier & Rice, a New York based private equity firm, where he had been since 1997. Prior to that, Mr. Finn was a Managing Director and Co-Head of Mergers & Acquisitions at Credit Suisse First Boston, New York, where he spent 15 years advising a wide variety of corporate clients.

Mr. Finn serves on the Undergraduate Executive Board of The Wharton School of the University of Pennsylvania and the Board of the City Kids Foundation. He received a Bachelor of Science Degree in Economics from The Wharton School of the University of Pennsylvania in 1982.

David P. Frick
Born 1965, Swiss Citizen
Credit Suisse Group
Paradeplatz 8
P.O. Box 1
8070 Zurich, Switzerland
David P. Frick is the General Counsel of Credit Suisse Group (since 2000). He has been appointed a member of the Group Executive Board effective January 1, 2003.

Prior to joining Credit Suisse Group as General Counsel, Mr. Frick was an attorney-at-law with Cravath, Swaine & Moore, the New York law firm, since 1994, where he focused on the representation of European clients in a wide variety of issues, including mergers and acquisitions, securities laws and general corporate matters. Mr. Frick received a JD degree from Zurich University Law School in 1990 and a Masters of Laws degree from Harvard Law School in 1994. He is a member of the Zurich and the New York Bar.

Mr. Frick does not hold any significant board memberships outside Credit Suisse Group.

Ulrich Körner
Born 1962, German Citizen
Credit Suisse Financial Services
Paradeplatz 8
P.O. Box 2
8070 Zurich, Switzerland
Ulrich Körner is the Chief Financial Officer of Credit Suisse Financial Services (since 2002). He has been appointed a member of the Group Executive Board effective January 1, 2003.

Mr. Körner graduated in 1988 from the University of St. Gallen majoring in banking and received a doctorate from the same university in 1993. From 1993 to 1998, he was a management consultant with McKinsey & Company in Zurich. In 1998, he joined Credit Suisse as Chief Financial Officer. From July 2000 to the end of 2001, he served as Head of Technology and Services at Credit Suisse Financial Services.

Mr. Körner does not hold any significant board memberships outside Credit Suisse Group.

Jeffrey M. Peek
Born 1947, US Citizen
Credit Suisse First Boston
11 Madison Avenue
New York, NY 10010, USA
Jeffrey M. Peek is Vice-Chairman of Credit Suisse First Boston and Head of Credit Suisse First Boston’s Financial Services division, which includes Credit Suisse Asset Management and Private Client Services (since February 2002). He has been appointed member of the Group Executive Board effective April 1, 2002.

Prior to joining Credit Suisse First Boston in February 2002, Mr. Peek was with Merrill Lynch since 1983, most recently as Executive Vice President of Merrill Lynch & Co. Inc. and President of Merrill Lynch Investment Managers.

Mr. Peek received a B.A. in International Affairs from the Woodrow Wilson School of Princeton University in 1969 and an MBA from Harvard Business School in 1972.

He also serves on the Board of Directors of Travelers Property, New York (since 2002) and has a number of philanthropic affiliations such as Princeton University, Teachers College at Columbia University, and the New York City Ballet.

Philip K. Ryan
Born 1956, US Citizen
Credit Suisse Group
Paradeplatz 8
P.O. Box 1
8070 Zurich, Switzerland
Philip K. Ryan is the Chief Financial Officer of Credit Suisse Group and a member of the Group Executive Board since April 1999.

A graduate of the University of Illinois with a BSC in Industrial Engineering (in 1978) and the Indiana University Graduate School of Business with an MBA (in 1982), Mr. Ryan has been with Dean Witter Reynolds Inc. since 1982 before he joined Credit Suisse First Boston’s Financial Institutions Group in 1985. From 1997 to 1999 he served as Chief Financial Officer of Credit Suisse Asset Management.

Mr. Ryan does not hold any significant board memberships outside Credit Suisse Group.

Richard E. Thornburgh
Born 1952, US Citizen
Credit Suisse Group
Paradeplatz 8
P.O. Box 1
8070 Zurich, Switzerland
Richard E. Thornburgh is the Chief Risk Officer of Credit Suisse Group (since January 1, 2003). He was a member of the Group Executive Board from 1997 to 2001 and has been a member since September 1, 2002.

Mr. Thornburgh began his investment banking career in New York with The First Boston Corporation, a predecessor firm of Credit Suisse First Boston, in 1976. In 1995, Mr. Thornburgh was appointed Chief Financial and Administrative Officer and a member of the Executive Board of CS First Boston. From 1997 to 1999, Mr. Thornburgh served as Chief Financial Officer of Credit Suisse Group and member of the Credit Suisse Group Executive Board and from 1999 to 2002 he was the Vice Chairman of the Executive Board of Credit Suisse First Boston. In addition, he performed the function of Chief Financial Officer of Credit Suisse First Boston from 2000 to 2002. Mr. Thornburgh continues to be an ex-officio member of Credit Suisse First Boston’s Operating Committee.

Mr. Thornburgh received a BBA from the University of Cincinnati in 1974 and an MBA from the Harvard Business School in 1976. He serves on the Board of the Securities Industry Association and the University of Cincinnati Foundation.

Stephen R. Volk
Born 1936, US Citizen
Credit Suisse First Boston
11 Madison Avenue
New York, NY 10010, USA
Stephen R. Volk is Chairman of Credit Suisse First Boston and works closely with the Chief Executive Officer, John J. Mack, on the strategic management of Credit Suisse First Boston and on key client matters. He has been appointed a member of the Group Executive Board effective January 1, 2003.

Mr. Volk joined Credit Suisse First Boston in August 2001 from Shearman & Sterling, a New York based law firm, where he had been Senior Partner since 1991. He joined Shearman & Sterling in 1960 after graduating from Harvard Law School and became a Partner in 1968. He spent his career as a business lawyer, counselling clients in domestic and international transactions.

Mr. Volk is a member of the Board of Directors of Trizec Properties Inc., Chicago (since 2002), Consolidated Edison, Inc., New York (since 1996) and ContiGroup Companies Inc., New York (since 2001). He is also a member of the Council on Foreign Relations and of the Dean's Advisory Board of Harvard Law School and is a fellow of the American Bar Foundation.

Alex W. Widmer
Born 1956, Swiss Citizen
Credit Suisse Financial Services
Paradeplatz 8
P.O. Box 2
8070 Zurich, Switzerland
Alex W. Widmer is Head of Private Banking at Credit Suisse Financial Services (since July 2002). He has been appointed member of the Group Executive Board effective January 1, 2003.

Mr. Widmer graduated from the University of St. Gallen in 1981 majoring in banking and received a doctorate from the same university in 1985. From 1982 to 1986, he was a project manager and teaching assistant at the Institute for Banking, University of St. Gallen, before he joined Credit Suisse in the capital markets business in 1986. From late 1986 to 1988 he worked in New York at the First Boston Corporation. In 1988, he transferred to Tokyo and in 1995 to Singapore, where he worked both for Credit Suisse First Boston and Credit Suisse in various functions. Back in Zurich, from 1999 to July 2002, he was responsible for the Private Banking business in the Asia Pacific and the Middle Eastern region.

Mr. Widmer has been a member of the Board of Directors of the Zurich Opera House since 2003.


Senior Management of Credit Suisse Group
Peter W. Bachmann, Group Chief Financial Reporting Officer
Gerhard Beindorff, Head of Investor Relations
Rudolf A. Bless, Group Chief Accounting Officer
Kim Fox-Moertl, Head of Group Treasury
Timothy S. Gardner, Head of Human Resources
Stefan M. Goetz, Head of Group Corporate Development
Alfred Gremli, Special Advisory
Tobias Guldimann, Head of Group Risk Management
Burkhard H. Gutzeit, Strategic Advisor
Urs P. Haenni, Group Chief Auditor
Philip Hess, Chief of Staff
Ann F. Lopez, Head of Credit Risk Management
Fritz Müller, Head of Tax
Ulrich Pfister, Head of Public Affairs
Karin Rhomberg Hug, Group Chief Communications Officer
Martin Stauffer, Head of Security Services
Yuji Suzuki, Chairman Japan
Thomas Widmer Sichler, Deputy Group Chief Financial Reporting Officer

Senior Management of the business units

Executive Board Credit Suisse Financial Services
Oswald J. Grübel, Chief Executive Officer (since 2002)
Ulrich Körner, Chief Financial Officer (since 2000)
Leonhard H. Fischer, Winterthur Group (since 2003)
Josef Meier, Corporate & Retail Banking Switzerland (since 2002)
Alex W. Widmer, Private Banking (since 2002)
Thomas Amstutz, Investment Management (since 2002)
Walter Berchtold, Trading and Sales (since 2003)
Bruno Bonati, Technology & Operations (since 2002)
Moez Jamal, Treasury/ALM (since 2002)
Urs Hofmann ¹⁾ , Human Resources (since 2000)
Claudia Kraaz ¹⁾ , Communications (since 2002)
Jan Nyholm ¹⁾ , Marketing (since 2001)
¹⁾ Member of the Extended Executive Board.

Operating Committee Credit Suisse First Boston
John J. Mack, Chief Executive Officer (since 2001)
Paul Calello, Chairman and Chief Executive Officer Asia Pacific Region (since 2002)
Christopher Carter, Chairman European Region and Chairman of Global Investment Banking (since 2000)
Michael W. Clark, Co-Head Equities Division (since 2003)
Brady W. Dougan, Co-President Institutional Securities (since 1996)
Brian D. Finn, Co-President Institutional Securities (since 2002)
Bennett J. Goodman, Chairman Merchant Banking and Leveraged Finance (since 2003)
James P. Healy, Co-Head Fixed Income Division (since 2003)
James E. Kreitman, Co-Head Equities Division (since 2003)
Gary G. Lynch, Vice Chairman and Global General Counsel (since 2001)
Eileen K. Murray, Head of Global Technology, Operations and Product Control (since 2002)
Thomas R. Nides, Chief Administrative Officer (since 2001)
Adebayo O. Ogunlesi, Global Head of Investment Banking (since 2002)
Jeffrey M. Peek, Vice Chairman and Head of the Financial Services Division (since 2002)
Hector W. Sants, Vice Chairman and Chief Executive Officer European, Middle East and African Regions (since 2002)
Richard E. Thornburgh ¹⁾ , Member of the Executive Board and Chief Risk Officer of Credit Suisse Group (since 1999)
Stephen R. Volk, Chairman (since 2001)
Jerry Wood, Co-Head Fixed Income Division (since 2003)
Barbara A. Yastine, Chief Financial Officer (since 2002)
¹⁾ Ex-officio member.

Advisory Board of Credit Suisse Group
The Credit Suisse Group Advisory Board discusses topics of significant relevance to the Group’s main activities with particular focus on our businesses in Switzerland and Europe. While not involved in the governance of the Group, the members of the Advisory Board provide input and advice to management on strategic issues, key operational priorities and organizational development.

Flavio Cotti, Chairman
Former Federal Councilor, Brione sopra Minusio, Switzerland
Herbert Henzler, Vice-Chairman
Honorary Professor for Strategy and Organization at the Ludwig-Maximilians-University, Munich, Germany
Andreas N. Koopmann, Vice-Chairman
Chief Executive Officer of Bobst SA, Lausanne, Switzerland
Franz Albers
Partner Albers & Co., Zurich, Switzerland
Susy Brüschweiler
Chief Executive Officer of SV Group, Zurich, Switzerland
Martin Candrian
Chairman of the Board of Candrian Catering AG, Zurich, Switzerland
Melchior Ehrler
Member of the Swiss National Council, Riniken, Switzerland
Brigitta M. Gadient
Lawyer and Member of the Swiss National Council, Chur, Switzerland
Riccardo Gullotti
Gullotti & Partner Management and Consulting Services, Bern, Switzerland
Felix Gutzwiller
Professor and Director of the Institute for Social and Preventive Medicine of the University of Zurich and member of the Swiss National Council, Zurich, Switzerland
Urs Hammer
Chairman of the Board of McDonald’s Holding SA, Crissier/Lausanne, Switzerland
Michael Hilti
Chairman of the Board of Hilti Corporation, Schaan, Liechtenstein
Andreas W. Keller
Chairman of the Board of Diethelm Keller Holding AG, Zurich, Switzerland
André Kudelski
Chairman of the Board and Chief Executive Officer of Kudelski SA, Cheseaux-sur-Lausanne, Switzerland
Andreas Schmid
Chairman of the Board of Barry Callebaut AG, Zurich, Switzerland
Manfred Schneider
Chairman of the Board of Bayer Aktiengesellschaft, Leverkusen, Germany
Hans-Peter Zehnder
Chairman of the Board and the Group Executive Committee of Zehnder Group AG, Gränichen, Switzerland

Compensation
Credit Suisse Group is committed to being an attractive employer in relevant labor markets and also being viewed as an employer of choice. We believe that long-term corporate success is dependent upon the strength of our human capital. In support of this commitment, our compensation principles have the following objectives:

• To attract a suitably qualified, diverse work force through competitive compensation programs in line with the operating environment of the respective business units, segments, divisions and/or business lines;

• To retain and motivate employees by recognizing and rewarding individual and group achievement, contribution and excellence in respect of business objectives, as well as core performance and ethical values; and

• To provide a non-discriminatory merit-based compensation program.

To succeed, Credit Suisse Group and its business units must formulate and implement specific strategies, tactics, and measures of performance appropriate to their competitive environment, as well as specific compensation programs to support their business objectives. In addition, the compensation programs must encourage excellence by rewarding individual and group performance that supports our core values of integrity, responsibility, fairness, compliance and confidentiality, as embodied in Credit Suisse Group’s Code of Conduct.


Core compensation principles
The four core aspects of Credit Suisse Group’s compensation principles are:


Performance based
All employees have their pay linked to a combination of group, business unit, segment, division, department and individual performance. The specific measures of success that apply and the forms of compensation that are granted will vary by business unit and position. Individual performance will be objectively measured within the scope of a formal performance appraisal process. The results of these assessments and their impact on compensation will be fair and honest.


Market driven
Credit Suisse Group’s remuneration programs are structured to be competitive both in their design and in total compensation levels. Comparison groups will vary by business and region based on the leading competitors in the market segments in which Credit Suisse Group competes for business and talent, and reflect the strategic objectives of the business units, segments and divisions.


Values oriented
The design and administration of Credit Suisse Group’s compensation programs will be guided by and supportive of its Code of Conduct and the business unit’s core values. Individual performance assessments will measure results and the extent to which each employee upholds these values.


Shareholder alignment
To focus on the common linkage to Credit Suisse Group, employees (depending on position and geographic region) may have some portion of their compensation aligned with Credit Suisse Group’s stock price or with another measure of shareholder value creation approved by the Compensation Committee.


Compensation components
Compensation can be split into two main categories:

• Fixed compensation (base salary and local allowances); and

• Variable compensation (bonus, commissions and other incentive programs).

The policies and procedures associated with each of these categories of compensation are described below. Regional and geographic modifications may be employed in accordance with local laws, customs or practice.


Fixed compensation
As part of its compensation practice, Credit Suisse Group seeks to pay all permanent employees base salaries that are market competitive and that attract, motivate and retain highly qualified people. Base salaries for employees may represent a varying portion of their total compensation depending on the position held within the Company.

Credit Suisse Group’s base salary structure is generally aimed at the median level of the industry in the relevant markets. The period of review, normally once per year, is set according to local practices.


Variable compensation
The award of a bonus and the value thereof are determined on an individual basis and, unless dictated by contractual obligation, are solely at the discretion of the employer. Employees do not have, unless pursuant to a contractual obligation, any express or implied right to receive such a bonus award. In particular, previous payment of a bonus does not constitute in any way an entitlement to receive any bonus payment, in full or in part, for any period in the future.

In determining whether a bonus is to be awarded to an employee and, if so, the amount thereof, Credit Suisse Group considers many factors, principally:

• The profitability of the Group and the employee’s business unit, segment, division and department;

• The individual contribution of the employee;

• The level of leadership and other core competencies displayed by the employee;

• The criticality of the employee’s function;

• The employee’s potential for future contribution;

• Internal and external competitive compensation levels; and

• The strategic needs of Credit Suisse Group.

Credit Suisse Group awards bonuses to employees in a form which best addresses certain objectives:

• Market competitiveness/practice;

• Alignment with Credit Suisse Group’s and shareholder’s interests;

• Cost effective application of prevailing tax legislation; and

• Retention of key and senior level employees.

An employee’s bonus may be delivered in the form (or combination) of the following components:

• Mandatory deferrals, which may be delivered as Credit Suisse Group shares, awards on such shares or options in accordance with the applicable share plan; or

• Cash or voluntary deferrals, which may include additional Credit Suisse Group shares, deferred cash awards, and pension/retirement plans.

In addition, or as an alternative to the Share Plans, certain other incentive programs may be adopted from time to time in accordance with local tax and/or other legislation.


Other incentive programs
From time to time in order to meet specific strategic objectives, such as retention and acquisition, special non-recurring awards may be made with specific approval of the Compensation Committee. In general, these awards are made in a form of Credit Suisse Group equity.


Measurement and plan documentation
The timing of performance reviews and the existence of common competencies across Credit Suisse Group, its business units, segments and divisions are intended to underscore for employees the central role of performance in the compensation model. Employee performance is measured by a number of methods such as employee reviews, Management By Objectives, or the 360° evaluation process. Contribution to Credit Suisse Group’s financial performance and individual participation in activities that promote Credit Suisse Group’s vision and strategy are also considered key factors in the overall performance appraisal.

There are various equity plans offered by Credit Suisse Group and the business units. These plans are designed according to local laws and regulations, customs and practices, which explains regional or market differences. Eligibility for participation is determined by the business unit, which submits its recommendations to the Compensation Committee for approval. The incentives are normally in the form of restricted shares and options, subject to vesting and forfeiture restrictions, and comprise an important portion of the total compensation package for executives.

Share Plans: Credit Suisse Group aims to offer its employees an attractive, fair and flexible remuneration system in keeping with the company’s overall compensation philosophy. Accordingly, the Compensation Committee adopted the Swiss and International Share Plans to provide an incentive to employees to remain in the service of Credit Suisse Group. In addition, the Share Plans are designed to align the interests of the employees with interests of shareholders, thereby maintaining and enhancing the long-term performance and profitability of Credit Suisse Group.

The plans feature long-term incentives by providing a Longevity Premium Award element that also acts as a retention tool. Currently, an additional compensation award in the form of Credit Suisse Group shares may be granted to employees under the provisions of the respective plan.

Options: Under the Credit Suisse Group Share Plans, Managing Directors, Directors and other selected employees may be granted options to purchase Credit Suisse Group shares. Options are granted in recognition of past performance and as an incentive for future contributions by the recipients. The option awards allow individuals to benefit as the price of the shares increases over time, and thus provide a long-term incentive for contribution to the success and financial results of Credit Suisse Group.

Information on compensation paid to the members of the Board of Directors and the Group Executive Board for 2002 as well as equities held by this group is found in footnote 43 to the consolidated financial statements.


Loans to Members of the Board of Directors and Group Executive Board
Information on loans made by Credit Suisse Group or any of its subsidiaries to members of the Board of Directors and the Group Executive Board or to companies in which a member holds more than 50% of the voting rights, is available in note 37 to the consolidated financial statements.

The majority of loans outstanding with the above-mentioned group of individuals are either mortgages or loans against securities. All mortgage loans are granted either with variable interest rates or with fixed interest rates over a certain period. Typically, fixed mortgages are granted for periods of up to five years. Interest rates applied are based on refinancing costs plus a margin and are consistent with those applicable to other employees. When granting a loan to these individuals the same credit approval and risk assessment procedures apply as for loans to all employees. Loans against securities are granted at interest rates applicable to similar loans granted to other employees. Interest rates applied are based on refinancing costs plus a margin. In principle, members of the Board of Directors are not granted employee conditions on any loans extended to them, but are normally subject to conditions applied to customers with a compa rable credit standing. In addition, some of the members of the Group Executive Board have outstanding loans in connection with certain private equity investment opportunities that Credit Suisse First Boston provides to some of its employees. Interest rates applied are based on refinancing cost plus an adequate margin. Such loans are no longer extended.

In addition, banking subsidiaries of Credit Suisse Group have entered into financing and other banking agreements with companies in which current members of the Board of Directors or the Group Executive Board have a significant influence. As of December 31, 2002, the total exposure to such related parties amounted to CHF 147 million, including all advances, committed but undrawn credit lines and contingent liabilities. The highest exposure to such related parties for any of the years in the three-year period ended December 31, 2002 did not exceed CHF 147 million.

Credit Suisse Group has reviewed all outstanding loans for compatibility with the Sarbanes-Oxley Act and has taken the necessary measures to ensure compliance.

Credit Suisse Group with its subsidiaries is a global financial services provider and, in particular, has major retail and corporate banking operations in Switzerland. We, therefore, typically have relationships with many large companies including those in which Credit Suisse Group Board members assume management functions or board member responsibilities. With one exception none of the members of our Board of Directors or companies affiliated with them have important business relationships with Credit Suisse Group or its banking subsidiaries. All relationships with our directors and their affiliated companies are in the ordinary course of business and are granted at-arms-length.


Shareholders

Voting rights, transfer of shares
There is no limitation under Swiss law or our Articles of Association, or AoA, on the right of non-Swiss residents or nationals to own our shares. Credit Suisse Group recognizes as a shareholder with voting rights the person whose name is entered in the share register. A person who has acquired shares will, upon application and disclosure of his or her name, address and citizenship, be entered without limitations in the share register as having voting rights provided that he or she expressly states that the shares were acquired in his or her own name for his or her own account (Art. 4, Section 1 and 2 of the AoA). Any person not expressly making such a statement, which we refer to as “nominees”, may be entered for a maximum of 2% of the total outstanding share capital with voting rights in the share register. In excess of this limit, registered shares held by a nominee will only be granted voting rights if the nominee declares in writing that he or she is prepared to disclose the name, address and shareholding of any person for whose account he or she is holding 0.5% or more of the outstanding share capital (Art. 4, Section 3 of the AoA).

In principle, each share represents one vote at the Annual General Meeting, or AGM, with the exception of the shares held by Credit Suisse Group. However, the shares for which a single shareholder can directly or indirectly exercise voting rights for his or her own shares or as a proxy may not exceed 2% of the total outstanding share capital, unless one of the following exemptions apply (Art. 10, Section 1 of the AoA). For the purposes of the restrictions on voting rights, legal entities, partnerships or groups of joint owners or other groups in which individuals or legal entities are related to one another through capital ownership or voting rights or have common management or are otherwise interrelated are regarded as being a single shareholder. The same applies to individuals, legal entities or partnerships that act in concert with intent to evade the limitation on voting rights (Art. 10, Section 2 of the AoA). The restrictions on voti ng rights do not apply to the exercise of voting rights by the Credit Suisse Group proxy or by the independent proxy as designated by Credit Suisse Group (Art. 689c of the Swiss Code of Obligations, or CO) or by persons acting as proxies for deposited shares (Art. 689d of the CO) provided all such persons have been instructed by shareholders to act as proxies (Art. 10, Section 3 of the AoA). Nor do the restrictions on voting rights apply to shares in respect of which the shareholder confirms to Credit Suisse Group in the application for registration that he or she has acquired the shares in his or her name for his or her own account and in respect of which the disclosure requirements in accordance with the Federal Act on Stock Exchange and Securities Trading and the relevant ordinances and regulations have been fulfilled (Art. 10, Sections 4 and 6 of the AoA). In addition, the restrictions on voting rights do not apply to shares which are registered in the name of a nominee, provided that this nominee furnis hes Credit Suisse Group with the name, address and shareholding of the person(s) for whose account he or she holds 0.5% or more of the total share capital outstanding at the time and for which he or she has satisfied the disclosure requirements in accordance with the Federal Act on Stock Exchanges and Securities and the relevant ordinances and regulations. The Board of Directors has the right to conclude separate agreements with nominees concerning both their disclosure requirement and the exercise of voting rights (Art. 10, Section 5 AoA). At December 31, 2002, no such agreements were in place.

Credit Suisse Group adheres to the principle that specific written voting instructions have to be obtained for each share represented at the Annual General Meeting. Hence, no shareholder votes are exercised automatically in favor of the proposals of the Board of Directors. Shareholders who choose not to attend the Annual General Meeting can either instruct another shareholder, the Credit Suisse Group proxy or the independent proxy to represent them. The Credit Suisse Group proxy only accepts mandates that authorize him or her to vote in favor of the proposals of the Board of Directors. All other mandates are passed on to the independent proxy. If a shareholder opts not to give any instructions his or her shares will not be represented at the meeting and therefore will not be voted. This principle also applies to shares directly or beneficially owned by Credit Suisse Group employees. Shares held by the Credit Suisse Group pension fund are voted based on the decision by the Board of Trustees. Shares held by a Credit Suisse managed fund company are voted in line with the respective regulation of the Swiss Funds Association. Shares directly or indirectly owned by Credit Suisse Group are by law non-voting shares. Our bank subsidiaries do not act as proxies for Credit Suisse Group shares in customer deposits.

The AoA provide that Credit Suisse Group may elect not to print and deliver certificates in respect of registered shares. Shareholders may, however, request at any time that such certificates be printed and delivered free of charge. In the case of shares not physically represented by certificates, the transfer of shares is effected by a corresponding entry in the custody records of a bank or depository institution following an assignment in writing by the selling shareholder and notification of such assignment to Credit Suisse Group by the transferor, the bank or depository institution. The transfer of shares further requires that the purchaser file a share registration form to be registered in the share register as a shareholder. Failing such registration, the purchaser may not vote or participate in shareholders’ meetings.

Each shareholder, whether registered in the share register or not, is entitled to receive dividends, if and when approved at the AGM. The same principle applies for capital repayments in the event of a reduction of the share capital and for liquidation proceeds in the event Credit Suisse Group is dissolved or liquidated. Under Swiss law, a shareholder has no liability for capital calls, but also is not entitled to reclaim his or her capital contribution. Swiss law further requires a company to apply the principle of equal treatment to all shareholders.


Annual General Meeting
Under Swiss law, the AGM must be held within six months after the end of the fiscal year. For Credit Suisse Group the fiscal year ends December 31, which means that the AGM can be held no later than June 30. The AGM may be convened by the Board of Directors or, if necessary, by the statutory auditors, with 20 days’ advance notice. The Board of Directors is further required to convene an extraordinary shareholders’ meeting if so resolved at a shareholders’ meeting or if so requested by shareholders holding in aggregate at least 10% of the nominal share capital. The request to call an AGM must be submitted in writing to the Board of Directors and at the same time shares of Credit Suisse Group representing at last 10% of the share capital are to be deposited. Shareholders holding shares with an aggregate par value of CHF 1 million have the right to request that a specific item be put on the agenda and voted upon a the next AGM. The request to include a particular item on the agenda, together with a relevant proposal must be submitted in writing to the Board of Directors not later than 45 days before the meeting and at the same time shares of Credit Suisse Group with a par value of at least CHF 1 million must be deposited for safekeeping. The shares remain in safekeeping until the day after the AGM (Art. 7 of the AoA). Notice of an AGM, including agenda items and proposals submitted by the Board of Directors and by shareholders, must be published in the Swiss Gazette of Commerce (Schweizerisches Handelsamtsblatt) at least 20 days prior to the meeting.

Holders of shares may request a registration in the share register at any time. There is, in particular, no deadline for registering shares before an AGM. However, technical reasons may make a registration on the same day as the AGM impossible.

The AGM may in principle pass resolutions without regard to the number of shareholders present at the meeting or represented by proxy. Resolutions and elections by the AGM generally require the approval of an absolute majority of the votes represented at the meeting, except as otherwise prescribed by mandatory provisions of law or by the Articles of Association (Art. 13, Section 1 of the AoA). For example, shareholders’ resolutions requiring a vote by a majority of the votes represented include (i) amendments to the AoA, unless a supermajority is necessary; (ii) election of directors and statutory auditors; (iii) approval of the annual report and the statutory and consolidated accounts; and (iv) determination of allocation of distributable profit. However, under Swiss law, a quorum of at least half of the share capital and a two-thirds majority of the votes represented is required for resolutions on (i) change of the purpose of the company; (ii) creation of the shares with increased voting powers; (iii) implementation of transfer restrictions on shares; (iv) authorized or conditional increase of the share capital; (v) increase of capital by way of conversion of capital surplus or by contribution in kind; (vi) restriction or suspension of preferential rights; (vii) change of location of the principal office; and (viii) dissolution of the company without liquidation. A quorum of at least half of the share capital and approval by at least three-quarters of the votes cast is required for resolutions on (i) the conversion of registered shares into bearer shares; (ii) amendments to the provision of the AoA relating to registration and voting rights of nominee holders; and (iii) the dissolution of the company. A quorum of at least half of the share capital and the approval of at least seven-eights of votes cast is required for amendments to provisions of the AoA relating to voting rights (Art. 12, Section 2 and Art. 13 Section 2 of the AoA).


Changes of control and defense measures

Duty to make an offer
Unless otherwise provided in the AoA anyone who, directly or indirectly or acting in concert with third parties, acquires 33 1/3 % or more of the voting rights of a listed Swiss company, whether or not such rights are exercisable must make an offer to acquire all of the listed equity securities of such company (Art. 32 of the Federal Act on Stock Exchanges and Securities Trading, or Stock Exchange Act). Credit Suisse Group’s Articles of Association do not include a contrary provision. This mandatory offer obligation may be waived under certain circumstances by the Swiss Takeover Board or the Federal Banking Commission. If no waiver is granted, the mandatory offer must be made pursuant to procedural rules set forth in the Stock Exchange Act and the implementing ordinances.


Clauses on changes of control
Subject to certain provisions in the Group’s employee benefit plans providing for the treatment of outstanding awards in the case of a change of control, there are no clauses providing for extraordinary benefits in case of a change of control in any agreements and plans benefiting members of the Board of Directors and Group Executive Board or any other members of senior management. Specifically, there are no contractually agreed severance payments in the case of a change of control of the Group. Moreover, none of our employment contracts with members of the Group Executive Board or other members of senior management provides for extraordinary benefits that would be triggered by a change of control.


Auditors
Credit Suisse Group’s statutory and group auditor is KPMG Klynveld Peat Marwick Goerdeler SA, Zurich, or KPMG. The mandate was first given to KPMG for the business year 1989/1990. The lead Group Engagement Partners, Brendan Nelson who is the Global Lead Partner and Peter Hanimann who is the Leading Bank Auditor, assumed these roles in 1997 and 1998, respectively. In addition, Credit Suisse Group has mandated BDO Sofirom, Zurich, as special auditor for the purposes of issuing the legally required report for capital increases in accordance with Article 652f of the Swiss Code of Obligations.

KPMG received the following fees related to the year 2002:



CHF million

• 44.4 Audit services; financial audit

• 16.3 Audit services; mandated by bank and insurance regulators

• 18.7 Audit related services

• 5.4 Tax services

• 8.3 1) All other services

¹⁾ In addition to this amount the Group paid CHF 16.0 million in 2002 to KPMG consulting during the period KPMG consulting was still affiliated with KPMG audit.

KPMG attends all ordinary meetings of the Audit Committee and has regular private sessions with the Audit Committee without management present. At each meeting, KPMG reports on the findings of its audit and/or review work. The Audit Committee approves on an annual basis KPMG’s audit plan and evaluates the performance of KPMG and its senior representatives in fulfilling its responsibilities. KPMG provides at least once a year a report to the Audit Committee on its independence. The Audit Committee pre-approves the retention of and the fees to be paid to KPMG for audit and non-audit services and in particular assesses whether the performance of specific non-audit services impairs the independence of the External Auditor. Moreover, the Audit Committee recommends to the Board the appointment or replacement of the External Auditors, subject to shareholder approval.


Information policy
Credit Suisse Group is committed to an open and fair information policy vis-à-vis its shareholders as well as other stakeholders. Credit Suisse Group’s Investor Relations Department and Media Relations Department are responsible for enquiries (for contact details see “Information for investors”).

All shareholders registered in the Credit Suisse Group share register automatically receive an invitation to the Group’s AGM including an order form to receive the full Annual Report of Credit Suisse Group. In addition, the Group produces Quarterly Reports on its financial performance. Shareholders can elect whether or not they would like to regularly receive the Quarterly Reports.

All of these reports, the annual report on Form 20-F and other regularly updated information can be found on Credit Suisse Group’s website www.credit-suisse.com.



MAIN OFFICES

Credit Suisse Group

Paradeplatz 8

P.O. Box 1

8070 Zurich

Switzerland

Tel. +41 1 212 1616

Fax. +41 1 333 2587



Credit Suisse Financial Services

Paradeplatz 8

P.O. Box 2

8070 Zurich

Switzerland

Tel. +41 1 334 4020

Fax. +41 1 334 9010

Private Banking

Paradeplatz 8

P.O. Box 500

8070 Zurich Switzerland

Tel. +41 (1) 333 4444

Fax. +41 (1) 334 9010



Corporate & Retail Banking

Paradeplatz 8

P.O. Box 100

8070 Zurich

Switzerland

Tel. +41 1 333 1111

Fax. +41 1 332 5555



Winterthur Life & Pensions

General Guisan-Strasse 40

P.O. Box 300

8401 Winterthur

Switzerland

Tel. +41 52 261 2121

Fax. +41 52 261 4747

Winterthur Insurance

General Guisan-Strasse 40

P.O. Box 357

8400 Winterthur

Switzerland

Tel. +41 52 261 1111

Fax. +41 52 213 6620

Credit Suisse First Boston

Uetlibergstrasse 231

P.O. Box 900

8070 Zurich

Switzerland

Tel. +41 1 333 5555

Fax. +41 1 333 5599

Credit Suisse First Boston

Eleven Madison Avenue

New York, NY 10010-3629

USA

Tel. +1 212 325 2000

Fax. +1 212 325 6665

Credit Suisse First Boston

One Cabot Square

London E14 4QJ

United Kingdom

Tel. +44 20 7888 8888

Fax +44 20 7888 1600

Credit Suisse Asset Management

Uetlibergstrasse 231

P.O Box 800

8045 Zurich

Switzerland

Tel. +41 1 335 1111

Fax. +41 1 333 2225

Credit Suisse Asset Management

Beaufort House

15 St. Botolph Street

London EC3A 7JJ

United Kingdom

Tel. +44 20 7426 2626

Fax. +44 20 7426 2828



INFORMATION FOR INVESTORS

Credit Suisse Group shares
Ticker symbols
Stock exchange listings		Bloomberg	Reuters	Telekurs
SWX Swiss Exchange/virt-x		CSGN VX	CSGZn.VX	CSGN,380
Frankfurt		CSX GR	CSGZn.DE	CSX,013
New York (ADS)	1)	CSR US	CSR.N	CSR,065
1) 1 ADS represents 1 registered share.
Swiss security number		1213853
ISIN number		CH0012138530
German security number		DE 876 800
CUSIP number		225 401 108

Ratings
Agencies	Credit Suisse Group		Credit Suisse		Credit Suisse First Boston		Winterthur
	Long term	Short term	Long term	Short term	Long term	Short term
Moody’s, New York	Aa3	–	Aa3	P1	Aa3	P1	A1
Standard & Poor’s, New York	A	A1	A+	A1	A+	A1	A
Fitch Ratings, New York	AA–	F1+	AA–	F1+	AA–	F1+	AA–

Designed by Pauffley, London

Cover photography by Mike Ellis, London

Board photography by Jürg Isler, Basle

Produced by Management Digital Data AG, Zurich

Printed by NZZ Fretz AG, Zurich

Credit Suisse Group’s Annual Report 2002 is printed on a totally

chlorine-free (TCF) paper and is fully recyclable.


Cautionary statement regarding forward-looking information
This “Annual Report” contains statements that constitute forward-looking statements. In addition, in the future we, and others on our behalf, may make statements that constitute forward-looking statements. Such forward-looking statements may include, without limitation, statements relating 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 laws.

By their very nature, forward-looking statements involve inherent risks and uncertainties, both general and specific, and risks exist that predictions, forecasts, 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, expectations, estimates and intentions expressed in such forward-looking statements. These factors include (i) market and interest rate fluctuations; (ii) 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; (iii) the ability of counterparties to meet their obligations to us; (iv) the effects of, and changes in, fiscal, monetary, trade and tax policies, and currency fluctuations; (v) political and social developments, including war, civil unrest or terrorist activity ; (vi) the possibility of foreign exchange controls, expropriation, nationalization or confiscation of assets in countries in which we conduct our operations; (vii) the ability to maintain sufficient -liquidity and access capital markets; (viii) operational factors such as systems failure, human error, or the failure to properly implement procedures; (ix) actions taken by regulators with respect to our business and practices in one or more of the countries in which we conduct our operations; (x) the effects of changes in laws, regulations or accounting policies or practices; (xi) competition in geographic and business areas in which we conduct our operations; (xii) the ability to retain and recruit qualified personnel; (xiii) the ability to maintain our reputation and promote our brands; (xiv) the ability to increase market share and control expenses; (xv) technological changes; (xvi) the timely development and acceptance of our new products and services and the perceived overall value of these -products and services by users; (xvii) acquisitions, including the ability to integrate successfully acquired businesses; and (xviii) 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 risks identified in our Form 20-F and reports on Form 6-K filed with or furnished to the US Securities and Exchange Commission.

EX-10.8

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Exhibit 10.8

INDEPENDENT AUDITORS' CONSENT

The Board of Directors
Credit Suisse Group:

        We consent to incorporation by reference in the registration statement (No. 333-100523) on Form F-3 of Credit Suisse Group of our report dated February 21, 2003, except as to notes 48 and 49, which are as of March 20, 2003, relating to the consolidated balance sheets of Credit Suisse Group and subsidiaries (CSG) as of December 31, 2002 and 2001, and the related consolidated statements of income and cash flows for each of the years in the three-year period ended December 31, 2002.

        Our report contains an explanatory paragraph that states that CSG has modified for the financial year 2002 its accounting policy in relation to deferred taxation.

        Also, our report contains an explanatory paragraph that states the accounting principles generally accepted in Switzerland vary in certain significant respects from accounting principles generally accepted in the United States of America and that the application of accounting principles generally accepted in the United States of America would have affected shareholders' equity as of December 31, 2002 and 2001 and the results of operations for each of the three years then ended, to the extent summarized in Note 48 to the consolidated financial statements.

        We also consent to the use of our report incorporated by reference herein dated March 20, 2003, related to the consolidated financial statement schedules I, III and IV.

KPMG Klynveld Peat Marwick Goerdeler SA
/s/  BRENDAN R. NELSON Chartered Accountant	/s/  PETER HANIMANN Certified Accountant
Zurich, Switzerland
March 27, 2003

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INDEPENDENT AUDITORS' CONSENT

EX-10.9

Exhibit 10.9

Annual Certification
Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002

Pursuant to subsections (a) and (b) of Section 1350, Chapter 63 of Title 18, United States Code, each of the undersigned officers of Credit Suisse Group, a company incorporated in Switzerland (the "Company"), does hereby certify, to such officer's knowledge, that:

The Annual Report on Form 20-F for the year ended December 31, 2002 of the Company fully complies with the requirements of section 13(a) or 15(d) of the Securities Exchange Act of 1934 and the information contained in the Form 20-F fairly presents, in all material respects, the financial condition and results of operations of the Company for such period presented.

Dated:    March 27, 2003	Name:	/s/  OSWALD J. GRÜBEL Oswald J. Grübel
	Title:	Chief Executive Officer
Dated:    March 27, 2003	Name:	/s/  JOHN J. MACK John J. Mack
	Title:	Chief Executive Officer
Dated:    March 27, 2003	Name:	/s/  PHILIP K. RYAN Philip K. Ryan
	Title:	Chief Financial Officer