Reason Behind JPM's "Mystery" $143 Million Loss Revealed

Earlier this morning we reported that probably the most interesting tidbit in the just released JPM Q4 earnings release was the bank's disclosure that it had taken a substantial mark-to-market hit on a margin loan to a single client:

Equity Markets revenue was flat compared to a strong prior year and included the impact of a mark-to-market loss of $143 million on a margin loan to a single client.

As we commented, "it is unclear who the client, or what the nature of the loan is." Now, thanks to Bloomberg we at least know what the loss was related to, and it appears that lightning has struck twice, first hitting the ECB and now JPM.

While we still don't know the client (Mario Draghi?) or say what caused the loss, Bloomberg reports that the writedown was tied to Steinhoff, the South African retailer engulfed in an accounting scandal, according to a person briefed on the matter, and which as we previously reported, was quietly dumped by the ECB which had purchased the company's recent bond issuance, only to be "forced" to sell them once Steinhoff was downgraded to deep junk territory.

On December 5, Steinhoff announced it had uncovered accounting irregularities which led to a crash in the share price of the Frankfurt- and Johannesburg-listed company, a plunge in its bonds (at the time held by the ECB among others) along with the resignation of Chief Executive Officer Markus Jooste and Chairman Christo Wiese. Steinhoff last week said it’s seeking “significant near-term liquidity” for some of its business units.