Signa made billions of dollars in balance sheet changes in 2020

In the consolidated balance sheets of two Signa companies of Tyrolean real estate investor Rene Benco, “adjustments to incorrect previous year numbers” were made in 2020. In the meantime, the ECB should only check banks for their business and lending relationships with Signa. Both came out of the media reports.

At Signa Development, €161 million was subsequently reclassified to financial liabilities. In Signa Prime Selection, 496 and 763 million euros have been repackaged in financial liabilities, writes “Der Standard”. Signa talks about a technical amendment to the International Accounting Standards for Financial Reporting.

Signa: “Technical Reclassification”

The auditor KPMG mentions in its statements on the balance sheets that the so-called covenants, that is, the contractually binding guarantees by the borrower, were, of course, complied with. “These adjustments are due to IFRS (International Financial Reporting Standards and Reporting Standards, note) accounting guidelines — it’s just a matter of more detailed reporting — so it’s a technical reclassification,” the company said when requested by the Standard.

According to Signa, all points are disclosed in detail in several places in “Notes”. “The facts have been properly rearranged, presented and explained.” Signa maintained that no further reclassification was necessary in the years that followed. For example, the German department store giant Galeria Kaufhof belongs to Signa Prime. In Austria, Signa hasn’t been out of the headlines in the wake of the Kika/Leiner bankruptcy. This came shortly after Signa was sold to the furniture store chain.

According to the published balance sheets for 2020, the two main parts of the Signa Group will have to repay about 3.7 billion euros in liabilities and pay 800 million euros in interest from 2022 to 2025. According to the “Standard”, approximately 8.2 billion euros in bank liabilities are secured in the register real estate.

According to the management consultancy “Finanzombudsteam” in the report, it is clear that the huge increases in rental income and the increase in property values ​​were necessary to close the gap between cash flow in 2020 and repayment of reported loans in the future. Managing Director Gerald Smog was quoted as saying that banks accept the concentration of risk here, while it has become difficult for small and medium-sized businesses to obtain credit.

European Central Bank to review bank loans to Signa

Press reported, however, with reference to an article in the Frankfurter Allgemeine Zeitung, that for the first time the European Central Bank (ECB) was conducting bank checks for only one borrower – the Benco Signa Group. A team of bank supervisors – mostly Austrians – checks European banks for this selected borrower. “This has not happened before,” the German newspaper quoted an old bank manager who requested anonymity.

Accordingly, all banks that have business relations with Signa are included in the OSI: state banks, private real estate banks, German and Austrian finance houses. According to Presse, bank supervisors should know how much Benko loans each institution, even if Signa’s empire is branching out. Under the parent company Signa (the holding company), two-thirds of which belong to the Benko family enterprise, there are three separate companies, one of which also includes the Galeria Karstadt Kaufhof department store chain. This has received enormous help from the state in Germany.

The investigation team collects data on whether Signa Group lenders have complied with lending standards. They also question the collateral of the loan and check whether all interest payments have been made and whether the financial covenants agreed upon in the loan agreement have been complied with or may have been broken. These examinations usually last from six to eight weeks.

The ECB itself has not confirmed the report. According to the press, Signa does not want to comment on this. However, companies are never informed of any bank audits by the European Central Bank.