Hypo Vorarlberg Facing 131 Million Euro Loss in Signa Bankruptcy: FMA Documents Revealed

The Signa bankruptcy could cost Hypo Vorarlberg up to 131 million euros. According to research by “Standard”, “Vorarlberger Nachrichten” and ORF, the Landesbank classifies Signa loans of this amount as defaulted. This emerges from documents supplied by the Financial Market Authority (FMA) to the COFAG-U committee. In recent years, supervisory authorities are said to have repeatedly criticized the bank’s “loose lending” in the Signa matter.

According to media reports, the FMA is said to have contacted Hypo Vorarlberg at the end of November 2023 – one day after Signa Holding filed for insolvency – to find out how badly the Landesbank was affected by possible loan defaults in the Signa Group. In a reply letter at the beginning of December, the bank is said to have made it clear that it classifies at least 131.2 million euros in Signa loans as “defaulted”.

“Apparently without security in the form of liens”

Loans that were granted for the Lamarr luxury department store project on Mariahilfer Strasse in Vienna and the Chalet N in Lech are affected. In addition, there was a blank loan of around 47 million euros to the Benko Family Private Foundation, which “was apparently granted without security in the form of liens,” according to the “Standard” report (Friday edition).

According to media reports, the Oesterreichische Nationalbank (OeNB) is said to have carried out an on-site inspection at the bank in mid-2022 and warned of financial difficulties at Signa’s real estate holding. Among other things, the supervisory authorities are said to have criticized the fact that the risk from real estate financing was not adequately addressed.

The state of Vorarlberg is the majority owner

In 2021, Hypo is said to have approved a blank loan of 25 million euros. The liability, a so-called debt note loan, has now been repaid. But: According to the documents, the bank is said to have found that the loan was not compliant because internal lending guidelines were not met. The loan was nevertheless granted on the grounds that the term was short and the repayment was guaranteed by the Benko Family Private Foundation. As a “positive” factor for the decision to grant the loan, Hypo cited, in addition to Signa Holding’s “very high equity capital,” among other things, the fact that Benko “undoubtedly has an excellent and extensive network in business and politics.” In addition, there was a “long-term, very good, flawless and profitable business relationship with Mr. Benko”.

However, in 2021, the bank had already criticized the “overall complex group structure” as well as the “critical press reporting not only by the ‘Krone’”, which could “have a more difficult effect on the search for investors”, according to the media reports. The bank also complained back then that the positive results of Signa Prime were based “primarily on the income generated from appreciations”.

Compared to other banks, Hypo Vorarlberg’s exposure is relatively large, but the bank is not at risk. The bank said that the current developments on the real estate market have already been priced into the preliminary results for 2023. The majority owner of Hypo Vorarlberg is the state of Vorarlberg with almost 77 percent.

2024-02-29 19:59:22
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