Published November 21, 2023 at 11:53 a.m. ET
According to media reports, Signa Holding, the Austrian real estate giant owned by investor René Benko, is to receive a critical cash injection of 600 million euros to meet immediate financial obligations and accelerate an accelerated restructuring. The loan, secured with Signa Prime assets as collateral at high interest rates, is a strategic move to address a significant debt repayment of €1.5 billion due by mid-2024. In the midst of these financial maneuvers, René Benko resigned from his leadership positions in the company.
The Swiss private banking group Julius Baer has come under the supervision of Finma due to its significant risk exposure from lending to Benkos Signa Holding GmbH. As European Central Bank guidelines prompt banks like Julius Baer to reassess their loan portfolios, concerns about liquidity problems and falling commercial property values are increasing. At the beginning of November, Julius Baer had already set aside 70 million francs for possible losses and made a write-off of 82 million francs in connection with the financing of the Globus takeover by Signa. This move reflects the bank’s attempt to mitigate the risks associated with possible defaults.
These developments had a noticeable impact on the financial markets, particularly on Julius Baer. The bank saw its stock value fall sharply by 12% on Monday, reflecting the type of market volatility seen during the pandemic. This decline points to growing investor unease about Julius Baer’s involvement in Signa’s financial challenges.
As Signa Holding navigates through this turbulent time, the company has brought on board a corporate restructuring specialist to lead the way forward. The company urgently needs around 500 million euros to cover its immediate financial needs and is targeting a further 1.5 billion euros by mid-2024. This need comes amid a downturn in commercial real estate markets that has significantly impacted asset valuations and increased the urgency for strategic financial planning.
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Written by: Investing.com