The former chief financial officer of Lehman Brothers, Erin Callan, who was demoted last month following the firm’s second quarter record loss, defected to rival Credit Suisse, where she will be a managing director and head of the investment bank's global hedge-fund business.

She will start in the newly created position at the start of September based in New York.

Ms Callan was the highest-ranking woman on Wall Street before Richard Fuld the chief executive and chairman of Lehman, announced she would step down from her post after the firm's projection of a $2.8 billion quarterly loss and announcement that it was forced to raise another $6 billion in new capital.

Ms Callan became the CFO at Lehman in December last year after previously heading the firm's investment-banking relationships with clients.

"We are delighted that Erin will be joining us… We and our hedge fund clients will benefit from Erin's talents and experience," commented Paul Calello, chief executive of Credit Suisse's Investment Bank.

When Mr Fuld announced Ms Callan’s demotion, he initially said she would be rejoining the Investment Banking Division in a senior capacity.