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Steinhoff burns another – Nomura said to loss $128 million in margin loan

By Takahiko Hyuga

(Bloomberg) – Nomura Holdings Inc. has joined the growing list of banks that got burned by the meltdown at South African retailer Steinhoff International Holdings NV.

In its fiscal third-quarter earnings report Thursday, Japan’s biggest brokerage said it booked an unrealized loss of about 14 billion yen ($128 million) 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.

A pedestrian walks past signage displayed at a Nomura Securities Co. branch, a unit of Nomura Holdings Inc., in Tokyo, Japan. Photographer: Kiyoshi Ota/Bloomberg

U.S. banks disclosed more than $1 billion of mark-to-market losses and charge-offs on margin loans related to Steinhoff when they reported earnings in January. UBS Group AG 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 1.5 billion-euro ($1.9 billion) margin loan backed by 628 million Steinhoff shares that were pledged by the company’s Chairman Christo Wiese. Shares of the South African retailer have slid more than 80 percent since it announced Dec. 5 that it had uncovered accounting irregularities.

Nomura’s unrealized 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 1.7 billion yen from 31.4 billion yen a year earlier.

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