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Nomura joins list of banks burnt by Steinhoff meltdown

Feb 02 2018 07:50
Takahiko Hyuga, Bloomberg News

Tokyo - Nomura has joined the growing list of banks that got burned by the meltdown at Steinhoff International.

In its fiscal third-quarter earnings report on Thursday, Japan’s biggest brokerage said it booked an unrealised loss of about ¥14bn ($128bn) relating to an unidentified margin loan. The loss was tied to Steinhoff, people with knowledge of the matter said, asking not to be identified discussing a private transaction.

US banks disclosed more than $1bn of mark-to-market losses and charge-offs on margin loans related to Steinhoff when they reported earnings in January.

UBS also booked credit losses stemming from its exposure to the retailer, a person with knowledge of the matter said last month. Other European banks are likely to be impacted as well.

In 2016, Nomura was among international banks that provided a $1.9bn margin loan backed by 628 million Steinhoff shares that were pledged by the company’s chairperson Christo Wiese.

Shares of the South African retailer have slid more than 80% since it announced December 5 that it had uncovered accounting irregularities.

Nomura’s unrealised loss was shared equally by its operations in Europe and Asia excluding Japan, according to its earnings presentation.

It contributed to a drop in the Tokyo-based firm’s overseas pretax profit, which shrank to ¥1.7bn from ¥31.4bn a year earlier.

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