Big banks have billions at risk as Steinhoff scandal deepens

US and European banks and creditors, some of whom are meeting with Steinhoff International Holdings NV on Monday, are among creditors with billions in exposure to the global retailer whose asset value has plummeted amid an accounting scandal.

Total exposure to lenders and other creditors was almost ^18 billion ($21 billion) as of the end of March. Long-term debt was ^12.1 billion and short-term debt ^5.87 billion, its first-half earnings statement shows. Those are the most recent Steinhoff results available after it indefinitely postponed publishing full-year financials on Wednesday.

“The great unknown is the funding of the off-balance-sheet structures, which could spill over into fresh bank liability,” Adrian Saville, chief executive officer of Cannon Asset Managers in Johannesburg, said Friday. The short-term debt could “fall over if the business fails,” he said.

Steinhoff, listed in Frankfurt and Johannesburg, has lost more than 80 per cent of its market value in the three days since the company started a probe into accounting irregularities and Chief Executive Officer Markus Jooste resigned. In South Africa, Steinhoff has relationships with Standard Bank Group Ltd, Investec Ltd and a unit of FirstRand Ltd. Globally some of the lenders include Citigroup Inc, Bank of America Corp, HSBC Holdings Plc and BNP Paribas SA.

Steinhoff has scheduled a meeting on December 11 with lenders from two of its syndicated facilities, according to three sources familiar with the matter.