(November 22) – “Wall Street’s Credit Suisse First Boston suffered the most serious blow yet to its ambitious $11.5 billion acquisition of the former Donaldson, Lufkin & Jenrette Inc., with the defection of star investment banker Ken Moelis,” write Randall Smith and Gregory Zuckerman in today’s Wall Street Journal.

“In a surprise move, Mr. Moelis, who played a critical role in taking DLJ to the No. 1 ranking in junk-bond issuance in the 1990s, Tuesday was snatched away by UBS Warburg, whose parent, UBS AG, is a big Swiss rival to Credit Suisse First Boston’s parent, Credit Suisse Group.”

“Although the junk-bond business has been in a slump over the past two years, Mr. Moelis — who had been a junk-bond specialist at the old Drexel Burnham Lambert Inc. in the 1980s — was considered by rivals and clients to be among the handful of DLJ’s top bankers who are critical to making the combined firm a success. (The merged firm has dropped the DLJ name and remains Credit Suisse First Boston.)”

“For now, he appears to be in a holding pattern. Because he had agreed in September to remain at the new Credit Suisse First Boston as joint head of investment banking in the Americas, he won’t be able to begin work at UBS for six months from now, according to a spokeswoman for Credit Suisse First Boston.”

“The UBS announcement of the move alluded to this possible delay by saying Mr. Moelis had ‘signed an agreement to join the firm upon satisfaction of his obligations to CSFB. No date for his commencement of work with UBS Warburg was announced.'”

“Some rival investment bankers faulted Credit Suisse First Boston for not sewing up Mr. Moelis’s services in the course of negotiating the DLJ acquisition. The loss is all the more stinging because Mr. Moelis was influential is getting Credit Suisse First Boston to acquire DLJ. First Boston was in talks to hire Mr. Moelis when Mr. Moelis suggested that Allen Wheat, First Boston’s chief executive, call DLJ chief executive Joe Roby about a full-blown takeover.”

“Mr. Moelis signed a three-year retention agreement in September entitling him to certain economic benefits if he remained for the full three years; it is that agreement that requires Mr. Moelis to give the firm three months’ notice before leaving, and imposes another three months’ period in which he can’t compete with First Boston, according to people familiar with the firm.”

“UBS made its own big U.S. acquisition this year, with a $10 billion purchase of brokerage firm PaineWebber Group Inc. (whose brand name is retained under the UBS umbrella). It has been expanding in U.S. investment banking with selective hiring. Last year, the firm hired star health-care investment banker Benjamin Lorello from Salomon Smith Barney for a lucrative multiyear package.”