INTERNATIONAL - Bank of America Corp. just joined a roster of big U.S. lenders suffering multimillion-dollar burns on their dealings linked to Steinhoff International Holdings NV.
Fourth-quarter earnings were crimped by a $292 million charge, the Charlotte, North Carolina-based company said Wednesday in a statement announcing results. The costs were incurred in two divisions: global markets and global banking.
The company got stung providing a margin loan that used Steinhoff’s stock as collateral, according to a person briefed on the matter who asked not to be identified discussing client business. Shares of the embattled South African retailer lost about 90 percent of their value last month after it announced Dec. 5 that it had uncovered accounting irregularities.
Banks and other creditors had almost 18 billion euros ($22 billion) of exposure to Steinhoff at the end of March. The company, criticized for being opaque about its finances, owns retail chains around the globe -- including Conforama in France, Poundland in the U.K. and Mattress Firm in the U.S., which encompasses stores formerly known as Sleepy’s.
JPMorgan Chase & Co. Chief Financial Officer Marianne Lake acknowledged last week that Steinhoff was the cause of a $143 million mark-to-market loss in the bank’s stock-trading unit during the fourth quarter as well as $130 million of credit costs.
On Tuesday, Citigroup Inc. CFO John Gerspach refused to identify which client was behind a “single client event” that triggered a derivatives loss of $130 million in its equities-trading unit. He told journalists the same client issue was responsible for roughly 90 percent of its institutional clients group credit loss of $267 million. That client was also Steinhoff, according to a person briefed on the results.
Goldman Sachs Group Inc. will likely disclose a quarterly loss connected to Steinhoff when the bank reports results later Wednesday, people briefed on the firm’s financial results said last week.