US banks have lost more than R12bn on Steinhoff loans

Steinhoff International Holdings NV’s accounting scandal is getting costly for US banks.

Four of the nation’s biggest US lenders disclosed more than $1 billion (R12 billion) mark-to-market losses and charge-offs on margin loans and other debt tied to the embattled South African retailer in their fourth-quarter results. Citigroup Inc led the pack with about $370 million, followed by Bank of America Corp’s $292 million.

Shares of Steinhoff lost about 90 percent of their value last month after it announced December 5 that it had uncovered accounting irregularities. The disclosure also prompted the resignation of Chief Executive Officer Markus Jooste and Chairman Christo Wiese. Steinhoff this month said it’s seeking “significant near-term liquidity” for some business units.

“Once in a while, something doesn’t turn out the way we want because that’s what the definition of taking risk is,” Bank of America CEO Brian Moynihan told reporters Wednesday, saying the incident wouldn’t change the lender’s risk appetite.

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 UK and Mattress Firm in the US, which encompasses stores formerly known as Sleepy’s.

-Bloomberg