Focus shifts to Steinhoff’s ex-chair Christo Wiese

Some of the biggest names in global banking have incurred billions in losses because of bad loans to just one client — and increasingly it appears that client is Upington-born billionaire Christo Wiese.

Recent reporting by United States banks reveal that four of the biggest banks in the world incurred a collective $1-billion, or R12-billion, in losses because of write-downs related to a “single-client event”.

Although it seemed at first this would be for Steinhoff’s account, this is not the case. Instead it appears the loans were made to Wiese, which would suggest the tycoon’s personal wealth has taken a far bigger hit than has been quantified so far.

Goldman Sachs and JP Morgan lost $130-million and $273-million respectively, and said the losses were related to “margin loans” that were linked to Steinhoff. Citigroup and Bank of America reported losses of $370-million and $292-million but declined to name the client involved, although it is understood to be Steinhoff-related.

But Steinhoff International confirmed that “the loans in question were given directly to shareholders and not to Steinhoff”.

The Steinhoff market value has dropped about 88% since allegations of accounting fraud surfaced in early December last year.

A report by The Wall Street Journal in December claimed the aforementioned banks and others, such as HSBC and BNP Paribas, are on the hook for share-backed margin loans extended to Wiese. These and other European banks will begin to report on Friday, February  2. Japan’s Nomura is also reported to have financed Wiese who, until recently, was Africa’s sixth-richest man.

A margin loan is when money is borrowed for investments, and shares are used as security.

In Wiese’s case, this would imply that he put his Steinhoff shares up as collateral and to finance the purchase of more Steinhoff shares.

Neither the banks nor Wiese would say anything more but, market observers claim that the collateral for these loans would probably have been Wiese’s Frankfurt-listed Steinhoff shares. According to one analyst, who asked not to be identified, it would have been problematic for a loan to be backed by Wiese’s South African-listed Steinhoff shares, or any other local assets for that matter, as they would be subject to complex exchange controls if a foreign bank wanted to collect on them.

Wiese’s South African assets may then be out of the reach of foreign banks and their only recourse is to take ownership of the Frankfurt-listed shares that were put up as collateral, or to sell them.

This could mean Wiese’s net worth is significantly less than the current $1.06-billion estimate by Forbes.

The outstanding debt would then be deemed uncollectable and written-down.

A snapshot of the Steinhoff shareholder register, as of November 24, published by Moneyweb, shows that the largest shareholding, 26.8%, was held by Clearstream, the clearing house for the Frankfurt Stock Exchange.

Clearstream said it was acting for some of the banks and holding these assets under custody. The analyst said, while some of Wiese’s shares may have been held there, Clearstream is likely to have held shares on behalf of a number of investors.

As shown by the registry snapshot, there was a cumulative 6.6% Steinhoff shareholding held by Wiese-owned Upington Investment Holdings.

Wiese was known to have had a shareholding of about 22% in the retailer, suggesting the balance must have been in the custody of one or more of the other listed shareholders.

Neither the JSE nor the Frankfurt Stock Exchange have access to an updated Steinhoff shareholder registry. Steinhoff International keeps this, but the company said it is not at liberty to disclose this information publicly and is only obliged to disclose its public shareholders larger than 3%, which is done when issuing financial statements. The company must produce overdue audited financial statements by next week Wednesday to comply with the listing requirements of the Frankfurt Stock Exchange.

There was a forced sale of 98.5-million of Wiese’s Steinhoff shares on the South African market in December, ostensibly to cover a loan liability, according to 
Business Day. That reportedly brought Wiese’s shareholding to below 30% and as such scuppered his intention to sell his controlling stake of Shoprite into Steinhoff Africa Retail.

Wiese, possibly in need of cash, has also sold billions worth of Shoprite shares. His cashing out of between four million and five million of his shares in Aspen earlier this month may well have been the reason for the panic selling of the shares amid rumours that the pharmaceutical giant was the next target of short-sellers who profited from Steinhoff’s demise.

Wiese’s assistant said it was his policy not to reply to any queries until Steinhoff’s audited results are released.

Advertisting

Mabuza’s ‘distant relative’ scored big

Eskom’s woes are often because of boiler problems at its power plants. R50-billion has been set aside to fix them, but some of the contracts are going to questionable entities

ANC faction gunning for Gordhan

The ambush will take place at an NEC meeting about Eskom. But the real target is Cyril Ramaphosa

Despite tweet, Zuma keeps silent about providing his taxpayer information

The Public Protector has still not received confirmation from former president Jacob Zuma that she may access his tax records —...

Ahead of WEF, Mboweni will have to assure investors that...

The finance minister says despite the difficult fiscal environment, structural reforms are under way to put SA on a new growth path
Advertising

Press Releases

New-style star accretion bursts dazzle astronomers

Associate Professor James O Chibueze and Dr SP van den Heever are part of an international team of astronomers studying the G358-MM1 high-mass protostar.

2020 risk outlook: Use GRC to build resilience

GRC activities can be used profitably to develop an integrated risk picture and response, says ContinuitySA.

MTN voted best mobile network

An independent report found MTN to be the best mobile network in SA in the fourth quarter of 2019.

Is your tertiary institution is accredited?

Rosebank College is an educational brand of The Independent Institute of Education, which is registered with the Department of Higher Education and Training.

Is your tertiary institution accredited?

Rosebank College is an educational brand of The Independent Institute of Education, which is registered with the Department of Higher Education and Training.

VUT chancellor, Dr Xolani Mkhwanazi, dies

The university conferred the degree of Doctor of Science Honoris Causa on Dr Xolani Mkhwanazi for his outstanding leadership contributions to maths and science education development.

Innovate4AMR now in second year

SA's Team pill-Alert aims to tackle antimicrobial resistance by implementing their strategic intervention that ensures patients comply with treatment.

Medical students present solution in Geneva

Kapil Narain and Mohamed Hoosen Suleman were selected to present their strategic intervention to tackle antimicrobial resistance to an international panel of experts.