Credit Suisse to Take $450M Impairment on Its Stake in York Capital Management

Tier 1 FX dealer Credit Suisse said on its announcement that it would take an approximately $450M impairment to the valuation of the non-controlling interest that the bank has owned in York Capital Management (York), a global alternative investment firm, since 2010 because York has made a significant change in strategy.

More precisely, York will focus on longer duration assets such as private equity, private debt, and CLOs, while winding down its European hedge funds business, and primarily managing internal capital in its Multi Strategy fund. York's APAC business is expected to be spun out as a new and separate hedge fund in the next year in which Credit Suisse intends to have a continuing interest.

The impairment will be booked in the 4Q20 results of the Asset Management business within Credit Suisse's International Wealth Management division. The capital impact of this impairment is currently estimated to reduce Credit Suisse's 4Q20 CET1 ratio by approximately 7 basis points. However, the Tier 1 bank said that this impairment does not change their existing guidance for dividends and capital distributions in 2020 and 2021.