Lending to the wealthy against equity holdings is rated as surprisingly low-risk by banks. But when it goes wrong, it goes really wrong. Just look at scandal-hit Steinhoff International. A €1.6 billion share-backed loan to Steinhoff’s recently departed chairman, Christo Wiese, is so far underwater that the banks will need a bathysphere to recover any value. Shares in the global retail group, which owns Mattress Firm and the Sleepy’s brand, collapsed suddenly when the company disclosed accounting irregularities this month.

Source: Wall Street Journal December 19, 2017 13:30 UTC