Credit Suisse expects to take a $450m hit after York Capital Management, the US alternative investment group in which it owns a stake, said it would wind down its European hedge fund business.
The Swiss lender said the impairment charge would be booked in its fourth-quarter results and would reduce its core equity tier one ratio — a measure of its financial strength — by about 7 basis points.
It is the latest in a series of setbacks for Credit Suisse this year after it was caught up in scandals at Luckin Coffee and Wirecard, having worked on deals for both, as well as holding an internal review over its supply chain finance funds linked to SoftBank and Greensill Capital.
On Monday night, York Capital informed its investors that it planned to focus on longer duration assets such as private equity, private debt and collateralised loan obligations, while exiting its European hedge fund strategies.
It is expected to spin out its Asia-Pacific business as a new and separate hedge fund, in which Credit Suisse will remain an investor.
York Capital was launched in New York in 1991 by Jamie Dinan. Credit Suisse first invested in the business in 2010 through its asset management arm, part of the bank’s international wealth management business. It paid $425m for a 30 per cent stake in the business and offered its funds to its clients.
York’s assets make up less than 1 per cent of the SFr438bn of assets under management in Credit Suisse’s investment division.
The bank said the impairment would not affect its plans for dividends and capital distribution in 2020 and 2021. Its shareholders are expected to vote in favour of it paying the second instalment of its 2019 dividend at a meeting on Friday, following in the footsteps of rival UBS last week.