STEINHOFF EXPOSURE
How Steinhoff made Wall Street banks bleed
The cost of the Steinhoff debacle is spreading far and wide
While Wall Street racked up US$1.1bn in losses linked to Christo Wiese’s Steinhoff deals, local lenders sighed in relief after having been excluded from these juicy share-covered loans. Wiese, the former Steinhoff chairman and its single-largest shareholder, had pledged 628m ordinary Steinhoff shares as collateral on a loan, which he used to buy more shares in Steinhoff. The shares were pledged to financing banks, revealed as Citi, HSBC, Goldman Sachs and Nomura at the time. These banks subsequently sold off parts of the loan to other banks, according to a Business Insider report, which could explain the exposure of JPMorgan. Over and above the mark-to-market trading loss, JPMorgan added $130m in reserves to its credit costs on the same transaction, believed to be linked to a $1.8bn margin loan to Upington Investment Holdings, a company ultimately controlled by Wiese, in September 2016. Goldman Sachs reported a fourth-quarter impairment of $130m in its debt investing and lending bus...
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