Thursday 22 March 2018
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Steinhoff saga: No credit losses says Investec

Although it has credit exposure to the Steinhoff Group of Companies, Investec says it does not expect to suffer any losses on its credit exposures.
Investec wishes to clarify its exposure to Steinhoff International holdings NV (Steinhoff) and Vits subsidiaries, including Steinhoff Africa (PTY) Ltd (Steinhoff Africa) and Steinhoff Africa Retail Ltd (STAR), it´s separately listed African retail activities.
“Investec has credit exposures to the Steinhoff Group of companies, which represent a small portion of the group´s balance sheet.
Based on the information currently available to the group, Investec is not expecting to suffer any losses on these credit exposures” said the company in a trading statement issued on the Namibian Stock Exchange this week.
According to Investec, the exposures are largely to Steinhoff Africa´s subsidiaries, with an immaterial exposure to Steinhoff. “The majority of the transactions have been undertaken by Investec Bank Limited (South Africa), with Investec plc having an insignificant exposure to Steinhoff.

The exposures to Steinhoff Africa largely comprise lending exposures and overnight facilities, and are secured by guarantees from certain of the Steinhoff Africa and STAR subsidiaries.”
Exposures to client share covered loans where reliance is placed on value being accorded to the Steinhoff share price to support repayment is negligible, the company says in a statement.
Investec Bank Limited (South Africa) does have certain derivative exposures linked to the Steinhoff share price, where a trading loss could materialise.
The loss could be 0% but the maximum potential loss could be approximately 3% of the Investec group´s post-tax operating profit.

In addition to the above, Investec Bank Limited (South Africa) holds Steinhoff convertible bonds in it´s available for sale portfolio. The carrying value of these bonds represents less than 0.3% of the group´s consolidated tier one capital.
The group´s associate investment, The IEP Group, has no exposure to the Steinhoff Group of companies, and Markus Jooste who was a director on their board resigned last week.
Investec said it manages credit exposures within strict risk parameters to avoid any specific concentrations in its credit portfolios.
“Thus, any one particular exposure would represent a small portion of the group´s total credit and counterparty exposures, as is the case with the group´s exposure to Steinhoff.”
As at 30 September 2017 (the group´s last reporting period) Investec Limited (South Africa) had cash and near cash balances of R102.6 billion and tier one capital of R36.6 billion.
The South African banking business reported solid results for the six months to 30 September 2017 as announced on 16 November 2017.[]

Issued on 11th December 2017

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