German institutions gladly financed the construction of René Benko's empire. Photo: Franziska Krug/Getty Images for Oberpollinger/The KaDeWe Group < p>Perhaps it was the cold wind blowing down Oxford Street or the early hour, but there were few signs of life behind the heavy swinging doors of Selfridges' front entrance on Thursday morning.
The employees seemed to sense this. exceed the number of clients by approximately 20 times. Among the sea of perfume counters spread out on the ground floor, employees looked expectantly or buried their heads in their mobile phones. The man behind the information desk seemed to have succumbed to boredom and yawned widely.
If only life in the boardroom were so calm. The retailer, which spent 15 years in the warm embrace of Canada's Weston family, has become embroiled in the chaos that has engulfed Austrian billionaire René Benko's business empire following its spectacular collapse. In 2022, Selfridges was sold to Benko's Signa Holding and Thailand's Central Group for £4bn.
It means one of Britain's most celebrated retailers faces a shameful decision over its future ownership. is located almost 800 miles away in a Vienna bankruptcy court as Benko's stake comes up for sale in a desperate bid to raise cash.
However, this is nothing compared to the shame that Benko's downfall threatens to bring to Germany's political and business elite. His Signa Holding real estate empire was one of the largest and most attractive in the world, with trophy assets scattered across the continent and beyond.
Benko owned half of New York's Chrysler Building and the historic five-star Bauer Hotel on the Grand Canal in Venice. Investors include the French Peugeot family, Arab states and Japan's SoftBank.
Austrian high society took place in the ring during Benko's amazing rise. He looked after the great and good people of his homeland. Among those with whom he developed close relationships were two former Austrian chancellors, Sebastian Kurz and Alfred Gusenbauer, but there were many more former members of parliament, senior civil servants and municipal officials.
Perhaps due to a common language Benko was not welcome anywhere. outside of Austria, like Germany. Its financial institutions financed his extraordinary empire-building with great enthusiasm, leaving provincial land banks among his largest creditors.
Insurance giants Allianz and Munich reportedly provided Signa with a loan totaling €3bn (£2.6bn), a third of which was not secured by any collateral. Many of the country's leading businessmen, including Germany's richest man Klaus-Michael Kühne, were among its largest shareholders.
As mayor of Hamburg, Olaf Scholz actively supported the Signa Elbtower project. Photo: Buch Florian/Action Press/Shutterstock
He was even supported by German Chancellor Olaf Scholz, who, as mayor of Hamburg, actively supported Benko's efforts to erect several iconic buildings in the city, including the Elbtower on the banks of the Elbe River. Scholz called the project, due for completion in 2025, “a signal of Hamburg’s ambitions.”
For the eurozone's largest economy, the consequences will come at the worst possible time. ING economist Carsten Brzeski described Germany as a country in “permanent crisis mode.” Over-reliance on Russian oil and gas and demand from China has brought the industrial powerhouse to the brink of recession.
The manufacturing and construction sectors have shrunk sharply, and the growing real estate crisis, driven by rising interest rates and rising construction costs, is now set to worsen the scale of Signa's presence, as Germany has quickly become one of the company's largest markets.
Construction on six projects — three in Hamburg and three in Berlin — stopped in November, according to data analytics company Bulwiengesa, raising serious questions about other sites in Düsseldorf, Munich, Frankfurt, Stuttgart, Wolfsburg and Dresden.
Germany's most prestigious department store, KaDeWe, filed for administration last Monday, saying it could no longer afford to pay rising rents imposed by Signa.
In a country where high-profile corporate scandals such as VW's emissions fix and the giant accounting fraud exposed at tech darling Wirecard are still fresh in Germany's collective memory, the revelation of such a high-profile property developer promises new introspection.
Berlin department store KaDeWe has filed for administration after saying it could no longer afford to pay Signa's rent. Photo: CLEMENS BILAN/EPA-EFE/Shutterstock/Shutterstock
The insolvency process is unlikely to offer much respite as it has already descended into chaos. As each part of the Signa empire appoints its own administrator, shareholders and creditors from the respective parts are pitted against each other in an insolvency battle royale, with each trying to protect their own assets and interests.
< p>Words from the man tasked with overseeing What will soon become one of the biggest and most complex corporate crises Europe has ever seen offers little hope to those chasing Benko's companies to pay off their debts.
“Coordination with the other insolvency trustees was not possible, despite the significant efforts of the insolvency manager, due to different interests,” warned Christoph Stapf, the insolvency lawyer who now controls Signa, in a statement.< /p>
The first signs are that many, if not most, may leave empty-handed. Many important figures are still far from being a coincidence. Signa announced it had debt of around 5 billion euros when it was hit by a cash crunch last year.
However, claims totaling €8.6 billion have been received, and Stapf says he only recognizes €80.3 million of the claims filed, with many claims were received either without the necessary supporting materials or late.< /p>
Meanwhile, when long overdue accounts were filed for one of Signa's largest subsidiaries, it showed just €32 million in assets that could easily be converted into cash. It also emerged that one of the group's companies transferred more than 300 million euros to two organizations controlled by the Benko family.
Another problem is complexity. A diagram of the group's labyrinthine structure runs to 46 A3 pages, and Signa brings together more than 1,000 legal entities, Stapf recently explained.
The experience of Swiss asset manager Julius Baer provides a glimpse of what might be in store for these companies. which allowed them to enter Benko's dizzying orbit. On Thursday, the private bank reported a 52% drop in profits and a CHF606 million (€650 million) write-down on its investment in Signa. But the matter did not end there. CEO Philipp Rickenbacher has stepped down after five years at the helm.
He is unlikely to be the latest victim of an extraordinary saga that in many ways is just beginning.
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