..... ot,. 

Paul E. Glotzer, Esq. 

BOARD OF GOVERNORS 

OF' THE: 

FEOERAL RESERVE SYSTEM 

WASHINGTON, O. C. 20551 

Cleary Gottlieb Steen & Hamilton LLP 

One Liberty Plaza 

New York, New York 10006-1470 

Dear Mr. Glotzer: 

ADDRESS OFFICIAL CORRESPONDENCE 

TO THE BOARD 

March 27, 2007 

This letter concerns the notice filed September 12 , 2006, under 

section 4 of the Bank Holding Company Act ("BHC Act") by Credit Suisse Group 

and Credit Suisse (collectively, "Credit Suisse"), Zurich, Switzerland, to engage on 

a limited basis in physical commodity trading activities ("Commodity Trading 

Activities"). 

Credit Suisse states in the notice that it currently engages principally 

through its subsidiary, Credit Suisse Energy LLC, New York, New York, in 

commodity derivative activities that are permissible for bank holding companies 

under the BHC Act ("Commodity Derivatives Activities"). These activities 

include trading in cash-settled swaps, forwards, options, and other derivatives 

based on commodities. 1 Credit Suisse has requested approval to expand its current 

trading activities in the United States to include engaging in physically settled 

commodity derivatives, taking or making delivery of commodities in settlement of 

those derivatives, taking inventory positions in physical commodities, and trading 

activities in the spot market in physical commodities. 

The Board has previously determined that taking and making delivery 

of a physical commodity complements the financial activity of engaging regularly 

as principal in Commodity Derivatives Activities based on that commodity 

pursuant to Regulation Y. 2 The Board has delegated to the Director of the Division 

I 12 CFR 225.28(b)(8)(ii). 

2 See 12 CFR 225.28(b )(8)(ii); Board letters dated September 29, 2006, regarding 

Fortis and April 13, 2006, regarding Wachovia; Societe Generale, 92 Federal 
2 

of Banking Supervision and Regulation, with the concurrence of the 

General Counsel, the authority to approve requests by financial holding companies 

to engage in Commodity Trading Activities as an activity that is complementary to 

Commodity Derivatives Activities, if the proposal meets the conditions imposed by 

the Board when approving previous requests to engage in Commodity Trading 

Activities and does not raise significant legal, policy, or supervisory issues. 3 

In evaluating the risks posed by the proposal, the Director and the 

General Counsel have considered that Credit Suisse already incurs the price risk of 

commodities through its Commodity Derivatives Activities. Permitting 

Credit Suisse to engage in the limited amount and types of physical commodity 

trading activities described above, within the limits described in the appendix to 

this letter, would not appear to increase significantly its potential exposure to 

commodity price risk. To minimize potential increased risks associated with the 

Commodity Trading Activities (including, but not limited to, storage, 

transportation, legal, and environmental risks), Credit Suisse has committed to the 

Board that it will not (i) own, operate, or invest in facilities for the extraction, 

transportation, storage, or distribution of commodities; or (ii) process, refine, store, 

or otherwise alter a physical commodity itself. Credit Suisse has further 

committed to the Board that it will limit the aggregate market value of physical 

commodities that it and any of its subsidiaries hold at any one time to 5 percent of 

Reserve Bulletin Cll3 (2006); Deutsche Bank AG, 92 Federal Reserve Bulletin 

C54 (2006); JPMorgan Chase & Co., 92 Federal Reserve Bulletin C57 (2006); 

Barclays Bank PLC, 90 Federal Reserve Bulletin 511 (2004 ); UBS AG, 90 Federal 

Reserve Bulletin 215 (2004 ); and Citigroup Inc., 89 Federal Reserve Bulletin 508 

(2003). 

3 Credit Suisse has indicated that the transactions in which it intends to engage 

after approval of this notice include, among other things, volumetric production 

payment transactions ("VPPs") on oil or natural gas. VPPs are considered 

permissible credit transactions under 12 CFR 225 .28(b )( 1) if a bank holding 

company immediately sells any commodities it receives under the VPP to third 

parties. See Letter from Scott G. Alvarez, Esq. to Elizabeth T. Davy, Esq., dated 

May 15, 2006. Credit Suisse would rely on approval of this notice to permit it to 

retain ownership of commodities delivered to it under a VPP. The market value of 

any such commodities retained by Credit Suisse would be included in the 5 percent 

of tier 1 capital limit on the value of its physical commodity inventory to which 

Credit Suisse has committed in connection with this notice, as detailed in the 

appendix to this letter. 
3 

Credit Suisse Group's tier 1 capital. Credit Suisse also has established and 

maintained policies and systems for monitoring and controlling the risks associated 

with the Commodity Trading Activities. Going forward, Credit Suisse is expected 

to continue to maintain effective risk-management policies and systems pertaining 

to its Commodity Trading Activities. Approval of the proposal would likely 

benefit Credit Suisse's customers by enhancing its ability to provide efficiently a 

full range of commodity-related services and improving its understanding of the 

commodity markets. 

Based on the record, including all the commitments made to the Board 

in connection with the notice and the conditions imposed by the Board in previous 

cases, the Director, with the concurrence ofthe General Counsel, has determined 

that the proposed Commodity Trading Activities are complementary to the 

Commodities Derivatives Activities conducted by Credit Suisse; that the proposal 

would not appear to pose a substantial risk to Credit Suisse, depository institutions 

operated by Credit Suisse, or the financial system generally; and that the proposal 

can reasonably be expected to produce benefits to the public that outweigh any 

potential adverse effects. 

In making these determinations, the Director and the General Counsel 

relied on all the information, representations, and commitments provided by Credit 

Suisse to the Board in connection with the notice and, in particular, the 

commitments set forth in the appendix to this letter and those conditions contained 

in the Board's previous decisions noted above regarding these activities. These 

commitments and conditions are critical to the determination that the Commodity 

Trading Activities would not pose a substantial risk to the safety and soundness of 

Credit Suisse, other financial institutions, or the financial system generally. These 

commitments and conditions are deemed to be conditions imposed in writing by 

the Board in connection with the notice and this approval and, as such, may be 

enforced in proceedings under applicable law. 

This approval is specifically conditioned on Credit Suisse's 

compliance with all the commitments made to the Board in connection with the 

proposal, including those set forth in the appendix. This determination is also 

subject to all the conditions set forth in Regulation Y, including those in 

section 225.7,4 to the conditions contained in the Board's previous decisions noted 

above regarding these activities, and to the Board's authority to require 

modification or termination of the activities of a bank holding company or any of 

4 12 CFR 225.7. 
4 

its subsidiaries as the Board finds necessary to ensure compliance with, or to 

prevent evasion of, the provisions and purposes of the BHC Act and the Board's 

regulations and orders issued thereunder. 

Appendix 

Sincerely yours, 

Robert deV. Frierson 

Deputy Secretary of the Board 

cc: Federal Reserve Bank of New York 
5 

Appendix 

Commitments 

1. Credit Suisse Group and each of its subsidiaries engaged in physical commodity 

trading activities (collectively, "Credit Suisse") commits to the Board of Governors 

of the Federal Reserve System ("Board") that it will limit the aggregate market 

value of physical commodities that it and any of its subsidiaries hold at any 

one time to 5 percent of Credit Suisse Group's tier 1 capital. Credit Suisse will 

include in this 5 percent limit the market value of any physical commodities it 

holds as a result of a failure of reasonable efforts to avoid taking delivery in 

commodities transactions conducted pursuant to section 225 .28(b )(8)(ii)(B) of 

Regulation Y. In addition, Credit Suisse agrees to notify the Federal Reserve Bank 

of New York if the aggregate market value of commodities held by it under the 

approval exceeds 4 percent of Credit Suisse Group's tier 1 capital. 

2. Credit Suisse commits to the Board that it will ensure proper risk management 

and controls over its physical commodity trading activities and that it will apply to 

its physical commodity trading activities the control infrastructure that it has 

developed and tested with respect to its existing commodity derivative activities. 

3. Credit Suisse commits to the Board that it will take and make physical delivery 

of, or store, only physical commodities for which derivative contracts have been 

authorized for trading on U.S. futures exchanges by the Commodity Futures 

Trading Commission (unless specifically excluded by the Board) or other 

commodities that have been specifically authorized by the Board. 

4. Credit Suisse commits to the Board that, in the United States, (1) it will not 

own, invest in, or operate facilities for the extraction, transportation, storage, or 

distribution of commodities (except in satisfaction of debts previously contracted 

or in connection with a nonperforming loan, or where such investment is otherwise 

permissible for a financial holding company); (2) it will act solely as a financial 

intermediary in the physical commodities markets; (3) it will not process, refine, 

store, or otherwise alter a physical commodity; and ( 4) in conducting its physical 

commodity trading activities, it will contract with a third party for any services that 

are needed in connection with the handling of any commodity and use appropriate 

storage and transportation facilities owned and operated by third parties. 

5. Credit Suisse commits to the Board that, in the United States, it will only use 

storage and transportation facilities owned and operated by third parties and will 
6 

enter into service agreements only with accredited, reputable, independent 

third-party facilities. 

6. Credit Suisse commits to the Board that it will conduct its physical-commodity 

trading activities in the United States exclusively pursuant to the authority of 

section 4 of the Bank Holding Company Act of 1956, as amended ("BHC Act"), 

and in accordance with the limitations that the Board has placed on the conduct of 

such activities, and will not conduct such activities in the United States in reliance 

on section 2(h)(2) of the BHC Act or section 211.23(£)(5) ofthe Board's 

Regulation K. 

7. Credit Suisse commits to the Board that it will not, without prior Board 

approval, enter into any physically settled tolling arrangement in the United States.