SBM Mauritius Reviews Foreign Loans After $27 Million Impairment

PORT LIOUS (Capital Markets in Africa) – SBM Holdings Ltd., Mauritius’s second-biggest financial group, began an audit of loans to foreign clients by its banking unit after uncovering a suspected fraud.

The Port Louis-based company on Aug. 13 reported a 591 million-rupee ($17 million) loss in the three months through June, compared with a 728.5 million-rupee profit a year ago, after booking a once-off credit loss of 932 million rupees. Its shares have dropped 4.6 percent since.

SBM is reviewing all of its foreign clients in the wake of the impairment, it said in an emailed response to questions on Tuesday.

“We are also reviewing controls around disbursements and ensuring that the right monitoring –- which is a critical factor -– is done and reviewed right up until the time that we get our money back,” it said. “This case has been a huge wake-up call for us regarding the international cross-border segment.”

SBM Holdings has 206 billion rupees of assets. Its profit before the credit loss and tax amounted to 2.09 billion rupees in the first half, compared with 1.98 billion rupees a year earlier. The group is working to improve its systems including risk management and governance.

“We will be putting emphasis on getting our overall international risk framework and management to a higher level,” the company said. “We want to build a culture of risk awareness and not of risk averseness.”

Source: Bloomberg Business News