The insolvency of Signa Holding, owned by Tyrolean real estate investor René Benko, could weigh on the profitability and credit quality of some banks in Germany, Austria and Switzerland, according to the rating agency Moody’s, the Reuters news agency quotes an analysis. According to insiders, the exposure in this country alone reaches 2.2 billion euros. According to “Der Standard”, the value of the investments has halved from 5.28 to 2.5 billion euros.
Moody’s also noted that the “opaque and complicated structure” hinders the analysis of the consequences of insolvency. The majority of the billion-dollar loans are likely to be secured, according to the US rating agency. This could mitigate the effects. Real estate packages as collateral could pose risks, for example in view of increased interest rates and few transactions on the market, according to the analysis that Moody’s published today, Wednesday. Real estate is subjected to an annual market valuation in accordance with accounting rules (IFRS).
The newspaper “Der Standard” (Wednesday edition) reports on a massive devaluation of the investments of the insolvent Signa Holding. According to the insolvency application, at the end of September 2023 these would only have amounted to 2.5 billion euros; in the immediate event of liquidation, as a worst-case scenario, it would only be ten percent of this value. In the 2022 balance sheet, the umbrella company valued its assets at 5.28 billion euros, more than double the application.
The newspaper uses the Berlin Kaufhaus des Westens (KaDeWe) as an example of a meltdown in real estate valuation. This spring, according to the “Financial Times,” Signa sold a half share for 300 million euros, but in documents for its creditor banks, Signa valued the entire property at 1.5 billion euros, and therefore the half share at 750 million euros, so again with more than double.
According to the financial plan submitted to the insolvency court, Signa Prime was devalued by 90 percent to 153 million euros, Signa Development from 240 million to 24 million and the retail division from 127 million to zero, according to “Der Standard”. The majority of Signa Holding’s 43 employees are to be laid off. According to the insolvency administrator, “all non-essential areas”, such as hunting, flights and other event management, are affected. The estimated liquidation value of the holding company is only 314 million euros, while the debts are 5 billion euros.
Signa Holding GmbH itself does not hold any department stores or luxury properties, but rather has a direct stake in 53 companies and indirectly in a few hundred companies through intermediary companies that own the properties. The largest companies are Signa Prime Selection, Signa Develompent and Signa Retail GmbH.
Signa Holding GmbH filed for insolvency in Vienna on November 29th. According to insiders, around 120 banks are said to have lent money to the Tyrolean company founder René Benko. The real estate group’s largest lenders include the Swiss bank Julius Baer, which according to an insider has an exposure of more than 600 million francs (635 million euros) to Signa, and the Vienna Raiffeisen Bank International (RBI). But German state banks such as Helaba and BayernLB are also under fire with three-digit million sums, insiders said.
RLB NÖ-Wien is affected as a creditor with 280 million euros
Overall, the Signa Group has billions in outstanding debts with credit institutions – in Austria alone, according to industry experts, there are 2.2 billion billion, most of which are in the Raiffeisen sector and at the Unicredit subsidiary Bank Austria. The Signa commitment of Raiffeisen Bank International (RBI) is said to be around 750 million euros, as the daily newspaper “Der Standard” recently reported. At the most recent extraordinary general meeting, RBI estimated its largest commitment in the real estate sector at EUR 755 million. In addition, the Raiffeisen-Landesbank Niederösterreich Wien (RLB NÖ-Wien) with 280 million euros and the Raiffeisen Landesbank Oberösterreich (RLB OÖ) with 150 million euros are also likely to be exposed to Signa.
For Bank Austria, the “Standard” gave a total signa exposure of 600 million euros, for Erste Group it was probably 40 to 50 million euros. Hypo Vorarlberg, which is majority owned by the state of Vorarlberg, is also likely to have a larger volume outstanding from Signa, at EUR 200 million. In financial circles, the figures reported by the APA were considered plausible.
The financial sector has recently calmed down regarding Signa. The deputy governor of the National Bank (OeNB), Gottfried Haber, said that possible insolvencies within the Signa Group would have “no significant impact on financial market stability or on individual institutions”. OeNB Governor Robert Holzmann also recently said that he considers the Austrian banks’ exposure to the ailing Signa Group to be “digestible”.
