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Credit Suisse says earned $23 million in fees on Mozambique loans
June 26, 2017 / 2:47 PM / 6 months ago

Credit Suisse says earned $23 million in fees on Mozambique loans

LONDON, June 26 (Reuters) - Banking fees charged by Credit Suisse to arrange loans for Mozambique’s state-owned companies amounted to $23 million, the Swiss lender said, disputing reports it had received more than $100 million.

Credit Suisse and Russian lender VTB have come under scrutiny after negotiating loans totalling some $2 billion with three firms owned by Mozambique - one of the poorest countries in the world.

Discovery of the loans - unapproved by parliament - to tuna fishing company EMATUM, security firm Proindicus and Mozambique Asset Management (MAM) led the International Monetary Fund and Western donors to halt support to Mozambique, triggering the collapse of its currency and leading to a default on debt.

An external forensic audit of the debt - demanded by the IMF and conducted by Kroll - was released on Saturday by the Mozambique prosecutor general. The audit said Credit Suisse, as the lead arranger of loans to Proindicus and EMATUM, received $10.1 million and $13.7 million respectively in bank fees.

“Banking fees for Credit Suisse totalled $23 million – roughly 2.3 percent of the total financings and is in line with comparable emerging market financing transactions,” Credit Suisse said in a statement emailed on Sunday.

Previous reports that the bank had realised $100 million or more in “arranging” fees had been “incorrect and misleading”, it added.

However, the audit found that $141 million in so-called “contractor fees” were charged across the two arrangements by Credit Suisse. The auditor said Credit Suisse had explained it had effectively passed those fees on to syndicated loan members or - in the case of EMATUM - bond investors.

VTB received a $35 million fee for being the lead arranger for a $535 million loan to MAM, Kroll said. This brought total fees paid on the $2 billion loan to 199.7 million - or some 10 percent - the auditor added.

VTB has not commented.

The audit also concluded that not enough had been done to explain how $2 billion in loans was spent and roughly a quarter of the money remained unaccounted for. Kroll accused officials in the southern African country of giving inconsistent answers about how $500 million earmarked for the tuna fishing company had been spent.

The report flagged concerns over the discrepancies in the prices for assets and services that had been provided, adding the process for providing government guarantees for a combined value of $1 billion appeared to be “inadequate”.

Reporting by Olivia Kumwenda in Johannesburg; Additional reporting by Alexander Winning in Moscow; Writing by Karin Strohecker; Editing by Robin Pomeroy

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