The Swiss Times - Swiss News in English

Signa insolvency sends shockwaves through Switzerland

  • By The Swiss Times
  • 29 November 2023

It has been looming for some time and now it is official: René Benko’s Signa empire is insolvent. In Switzerland, not only the Globus department store but also Bank Julius Baer is affected by the development. However, the effects are still limited.

Signa insolvency sends shockwaves through Switzerland
Berlin: The logo of the real estate company Signa is displayed on the facade of a high-rise building at the company’s Berlin headquarters. Austrian real estate and trading entrepreneur Benko’s Signa Holding GmbH has announced insolvency proceedings. (KEYSTONE/DPA/Monika Skolimowska)

On Wednesday, Signa Holding GmbH filed for insolvency at the Vienna Commercial Court, as confirmed by the creditor protection association KSV1870. The company intends to use the insolvency proceedings to continue its business in an orderly manner and carry out restructuring proceedings under self-administration.

Signa had recently run out of money. According to media reports, the company needs 200 million euros in the short term and as much as 1.5 billion euros by mid-2024. In recent weeks and months, several subsidiaries have also filed for insolvency.

Interest rate turnaround accelerates decline

Signa grew strongly in times of low interest rates. Loans were comparatively cheap and real estate valuations rose at the same time. However, the sharp rise in interest rates since the beginning of the year has taken its toll on Benko’s real estate empire.

Higher interest rates not only made refinancing more expensive, they also recently pushed real estate valuations down significantly. In addition, the Group’s retail division has also come under pressure.

It is not yet clear what impact the bankruptcy of Signa Holding will have on the entire network of companies. The empire consists of over 1000 interlocking companies, sub-companies and individual properties.

Globus co-investor reaffirms commitment

The Globus department store chain is also part of the company empire. In 2020, Signa and the Thai Central Group each acquired half of the shares from Migros. The deal included the department store activities and eight Globus properties.

Signa insolvency sends shockwaves through Switzerland
Migros has found a buyer for Globus. The joint venture made up of the Austrian Signa and the Thai Central Group has acquired Globus. (KEYSTONE/Laurent Gillieron)

However, no immediate effects are to be expected. The Central Group reaffirmed its commitment to the luxury department store to the news agency AWP on Wednesday. However, the company did not wish to provide any further information at this time.

Construction work on the shell of the Elbtower in Hamburg recently had to be halted because Signa did not pay on time, according to the construction company. Recently, construction work also came to a standstill at the Alte Akademie in Munich. However, work is continuing on the Globus construction site in Basel. This was reported by a journalist from the Keystone-SDA news agency.

Julius Baer shares stabilize

The Swiss private bank Julius Bär is also involved in the Signa crisis. René Benko is owed more than 600 million francs.

As a result, Julius Baer shares have been significantly punished on the stock market in recent days. Since mid-November, the drop has amounted to more than 20 percent. The now announced insolvency hardly moved the shares in current trading. At around 3 p.m., Julius Baer was even up 0.2 percent on the previous day.

Swiss investors also on board

Benko’s investors and business partners include numerous prominent figures from the worlds of politics and business, including from Switzerland. For example, billionaire Klaus-Michael Kühne, majority shareholder of logistics company Kühne+Nagel, is a business partner of Benko.

Ernst Tanner, Chairman of the Board of Directors of Lindt & Sprüngli, is also one of the early investors in Signa. He also sits on the advisory board of Signa Holding.

©Keystone/SDA

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