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BofA, Citi among banks bracing for €1B losses as Steinhoff's stock plummets

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BofA, Citi among banks bracing for €1B losses as Steinhoff's stock plummets

Bank of America Corp., Citigroup Inc., Goldman Sachs Group Inc. are among Wall Street banks bracing for possible losses of more than €1 billion as the value of South African home retailer Steinhoff International Holdings NV's shares plummet, the Financial Times reported Dec. 15.

The banks lent €1.6 billion to Christo Wiese, who stepped down as Steinhoff's chairman in Dec. 14, secured against €3.2 billion worth of Wiese's shares in Steinhoff, the FT added, citing public documents.

Since Dec. 6 when the company disclosed that it was probing possible accounting irregularities, shares of Steinhoff have plummeted, and the worth of Wiese's collateral on the margin loan has become less than his debt to the banks, according to the report.

Citi, Goldman Sachs, HSBC Holdings Plc and Nomura Holdings Inc. assembled the margin loan, which was later extended to more financial institutions, FT reported.

Sources told FT that BofA's net exposure to the loan is between €300 million and €400 million, Citi's exposure is more than €200 million, Goldman Sachs and HSBC are each exposed to about €120 million, and BNP Paribas SA's exposure is about €100 million. The sources added that JPMorgan Chase & Co., Nomura and UBS Group AG are also exposed to the loan, FT added.