Rating agency expects consequences for banks from Signa insolvency
Published: Wednesday, Dec 6th 2023, 14:20
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The insolvency of Signa Holding could have a negative impact on the profitability and credit quality of some banks in Germany, Austria and Switzerland, according to the rating agency Moody's. However, the "opaque and complicated structure" hinders the analysis of the consequences of insolvency, the news agency Reuters quotes a Moody's analysis from Wednesday.
According to the US rating agency, the majority of the billion-euro loans to the Signa Group are likely to be collateralized. This could mitigate the impact. However, the analysis goes on to say that real estate packages as collateral could harbor risks in view of higher interest rates and few transactions on the market.
Signa Holding, which filed for insolvency in Vienna on November 29, is said to have received loans from around 120 banks. The largest lenders include the Zurich-based private bank Julius Bär, with which Signa is indebted to the tune of CHF 606 million, as well as the Vienna-based Raiffeisen Bank International (RBI). According to insiders, German state banks such as Helaba and BayernLB also have outstanding loans in the hundreds of millions.
Correction of investments
The Austrian newspaper "Der Standard" reported on Wednesday about a massive devaluation of the Signa investments. According to the insolvency application, these would have amounted to just 2.5 billion euros by the end of September 2023; in the worst-case scenario of immediate liquidation, the value would even be just ten percent of this figure. In the 2022 balance sheet, the holding company still valued its assets at 5.28 billion euros.
The Austrian newspaper cites the Berlin department store Kaufhaus des Westens (KaDeWe) as an example of a property valuation that has melted away. According to the Financial Times, Signa sold a 50 percent stake for 300 million euros in the spring, but in documents for its creditor banks, Signa valued the entire property at 1.5 billion euros.
Intermediary companies
Signa Holding GmbH itself does not hold any department stores or luxury properties, but has direct holdings in 53 companies and indirect holdings in several hundred companies via intermediary companies, which in turn own the properties. The largest companies are Signa Prime Selection, Signa Development and Signa Retail GmbH.
The Swiss Signa Retail Selection AG, the parent company of the Globus department stores in Austria, also filed for debt restructuring moratorium with the competent court at the end of November. This step is intended to prevent the Signa subsidiary from becoming dependent on the insolvency proceedings of the Austrian parent company, according to the statement.
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