Morgan, other financial firms are expected to confirm their exposure to the same individual client. It is reported that Steinhoff’s accounting scandal has led to losses for several banks, including Citigroup and Bank of America.
The incident highlights the risks associated with margin loans, which are loans provided to clients to invest in securities. If the value of the securities falls below a certain level, the lender may require the client to provide additional collateral or sell the securities to repay the loan. In this case, it appears that the value of Steinhoff’s shares fell significantly, resulting in a margin call that the client was unable to meet, and ultimately a loss for J.P.Morgan.