Trouble in Paradise: The Threat of Bankruptcy for Entrepreneur René Benko

Is entrepreneur René Benko threatened with bankruptcy? The insolvency administrator Arndt Geiwitz would be ready. Geiwitz from Ulm became known through his work on the bankruptcy of the Schlecker drugstore chain. His spectacular cases also include the ongoing difficulties at the Galeria Karstadt Kaufhof department stores, from which René Benko wanted to form a successful Deutsche Warenhaus AG – and thus failed.

Kassenbruch: What is the Signa still worth?

Benko has already sold some of his Signa Holding’s trading interests. Now it’s time to get down to business: international real estate investments and construction projects in several countries. In return, Benko received billions in loans from numerous banks in Austria, Switzerland and, above all, Germany. Apparently Geiwitz is already checking which assets are offset by which liabilities (which also include bonds). Geiwitz needs a month to do this: That’s what the Austrian industrialist Hans Peter Haselsteiner, one of Benko’s most important financiers, said.

Power struggle behind the scenes

Haselsteiner’s plan, which other investors would probably also support, is for Benko to step down and Geiwitz to be appointed “general representative”. But Benko apparently doesn’t want to give up and is trying to break free with a new international investor, about whom nothing is known yet. It is unclear how much fresh capital would be needed for this.

If Geiwitz takes over completely, Benko would be completely out

There is a simple reason why Benko is fighting against his own investors like against Haselsteiner and has his back to the wall: If he agrees to his financiers’ proposal and appoints the restructuring expert Geiwitz as general representative, it would be the beginning of a new beginning. Hans Peter Haselsteiner explained his plan on the Austrian public radio station Ö1: “In addition, as the most far-reaching step, Geiwitz should also be given all voting rights that René Benko and / or his foundations hold in the Signa holding.”

Who has to add money now – and what about Benko?

Haselsteiner himself owns 15 percent of Signa Holding GmbH, other shares belong – in addition to René Benko – to other wealthy financiers. They include Ernst Tanner, the chairman of the board of Lindt & Sprüngli, the Fressnapf founder Torsten Toeller, the entrepreneur Arthur Eugster and the entrepreneur Julia Dora Koranyi-Arduini. These investors are particularly disappointed and have therefore signed a joint letter in which they demand Benko’s complete withdrawal, including the transfer of all voting rights to the insolvency administrator and reorganizer Geiwitz.

It is unclear how serious the situation is. It remains to be seen whether the Signa Holding group can be retained in whole, in part or not at all. Haselsteiner has already commented on this and claimed that Benko had “basically answered positively” to the demands of the co-owners, and his willingness is evident. At the same time, Benko asked his fellow shareholders to make a possible contribution to the restructuring of the Signa Group. These negotiations were still ongoing.

The alleged billionaire Benko is only chairman of the advisory board of Signa Holding, but is obviously not a personally liable partner who would have to vouch for the company with his private property. In some company rankings, Benko was considered the richest Austrian and Signa his life’s work. It is difficult to assess what private assets look like beyond the company holding company and whether Benko can and wants to contribute something to the restructuring.

What will happen to the construction projects?

Other co-shareholders such as the German multi-billionaire Klaus-Michael Kühne, who lives in Switzerland, have so far kept a low profile during the current crisis. Together with Benko, Kühne invested around 700 million euros in a high-rise project with commercial properties in Berlin. Kühne is also said to be interested in Benko’s Hamburg Elbtower, which is currently not being built any further.

Kühne could possibly buy the tower cheaply from Signa’s possible insolvency estate and then finish building it, he is believed to be able to do that. It is said that he wants to do his hometown of Hamburg, where he was a major sponsor of the HSV football club for a long time, a favor again. Ultimately, however, his real interest was in the port of Hamburg itself, in which Kühne would have liked to be involved.

Another spectacular case is Alexanderplatz in Berlin, where an office complex with a high-rise is to be built next to a Galeria department store. Commerz Real, a real estate fund of Commerzbank, bought the property completely from Benko and is now pushing ahead with completion with new partners. Commerz Real said there were therefore no delays in this construction.

How valuable are the properties for loans?

The situation is completely different for an estimated 80 European banks, which have given Benko billions of euros in loans for his construction projects. In return, they usually received real estate as collateral. The financial world is concerned with how valuable this collateral is and how many loans now have to be written off. At the beginning of the year, the European Central Bank asked the banks – explicitly naming them – to review their loan commitments to Signa Holding. There should not be a so-called “cluster risk” because too many transactions were done with one partner.

Huge failure at Swiss bank Julius Baer not yet confirmed

Since purchasing the Swiss department store chain Globus, René Benko has been one of the best customers of the private bank Julius Baer. Over time, he is said to have received loans there with a total value of 600 million euros, reports the online business portal “Business Insider”, citing banking circles. Julius Baer has not yet commented on the spectacular individual case, which is said to have caused “great excitement” and numerous crisis meetings at the Zurich headquarters. All Benko loans in Zurich are already listed as “default” (which stands for loan loss) and have been completely written off, according to “Business Insider”. A similar fate may also threaten the numerous private investors who bought bonds from Benko’s companies.

In Germany, the question arises once again about mortgage banks and the state banks of the Sparkassen Finanzgruppe, which have been affected by numerous financial scandals in the past. Banking circles say that at least the Hessisch-Thüringische Landesbank (Helaba) and the Bayerische Landesbank (BayernLB) are among Benko’s lenders. There are also said to be significant investments and financing for Signa Holding in the German insurance industry, for example in Signal Iduna and R+V Versicherung. In Austria, the Raiffeisen Group is said to be one of the main financiers of Benko’s Signa Group.