DGerman state banks are among the main financiers of René Benko’s Signa group, which is in difficulty. According to information from FAZ, the Hesse-Thüringen regional bank (Helaba), of which the savings banks of Hesse, North Rhine-Westphalia, Thuringia and Brandenburg are a majority members, has an amount in the fire three digits. Hannover’s Nord LB, which was only saved from difficulties in 2019 with money from the states of Lower Saxony and Saxony-Anhalt with a total volume of more than 3 billion euros, is being invested with a modest amount of three-digit millions .
Bayern LB of Munich and LBBW of Stuttgart would have granted less loans to Signa than Helaba, but more than Nord LB. LBBW downplays his commitment without wanting to quantify it. DZ Bank, the leading institution of the Volksbanken and Raiffeisenbanken, and its subsidiary DZ Hyp financed the properties in Signa with sums of double-digit millions. None of these banks would comment on this information when asked.
The Signa Group network consists of numerous companies and individual real estate projects such as the Elbtower in Hamburg, still under construction, or the luxury department store Kadewe in Berlin. The latest available annual balance sheet of Signa’s umbrella company (holding) dates back to 2021. According to information from the News.at portal, the debts of this holding company rose from 600 million to 2 billion euros in 2022. The highest interest rates high increases financing costs and lead to devaluations in the real estate portfolio of the subsidiary Signa Prime, which weighs around 15 billion euros.
Increased construction costs due to disruption of supply chains pose an additional burden. According to information from FAZ, Signa will need short-term financing between 250 and 300 million euros by the end of the year. Rating agency Standard & Poor’s cites liquidity needs of around 180 million euros alone for project development company Signa Development through debt repayments, ongoing costs and dividend calls from 2021.
New scoreboard for Signa
Company founder René Benko, under pressure from investors – and to contribute to the survival of his Signa group – agreed this week to hand over the chairmanship of Signa Holding’s advisory board to reorganizer Arndt Geiwitz. Furthermore, Geiwitz also assumes the chairmanship of the shareholders’ committee of Signa Holding. According to one shareholder, Benko transferred his voting rights to Geiwitz in trust. As Signa announced on Wednesday, the Benko family’s private foundation remains the holding’s largest shareholder. On Friday, Geiwitz introduced management consultant Ralf Schmitz as the new CRO (Chief Restructuring Officer). It is unclear whether he will ensure that the Signa Group continues to exist.
It is above all equity investors who are trembling, including wealthy individuals, but also institutional investors such as the investment company Commerz Real or the insurers R+V and Signal-Iduna, as well as the funds that have made responsible mezzanine capital available in particular.
Banks, however, oversecured their loans at the time of origination and, in most cases, the underlying properties are still at risk of exceeding the loan amount, despite the now reduced valuations. Furthermore, many banks have already taken precautions against the risks – at the latest when the ECB’s European Banking Authority carried out a special survey of Signa’s creditor banks this summer. Helaba, the most affected German state bank, increased provisions for risks in the real estate sector in the first half of 2023 to 173 million euros, followed by LBBW and Bayern LB with 127 and 109 million euros.