Bank is bankrupt

Benko’s Signa maelstrom now drags Swiss bank with it

(Bild: Krone KREATIV/APA/HELMUT FOHRINGER, stock.adobe.com)

The downward spiral of René Benko's ailing Signa construct is now causing sensational collateral damage. Because of a loan to the Signa Group, a Swiss bank is now slipping into bankruptcy. Incidentally, a former member of the Signa advisory board sits on the board of directors of this bank ...

IHAG Privatbank, based in Zurich, granted Benko a EUR 30 million loan at the beginning of 2023 - a considerable risk for the bank, which had equity of CHF 132 million at the end of 2022. If the Signa loan is converted into Swiss francs, it accounted for a full 21.4 percent of equity. The Swiss Financial Market Supervisory Authority Finma calls this a "bulk risk". 

Loan only partially secured by shares
Why did Zurich take the risk of such a transaction? The Signa Group's financial turbulence was already apparent at the time and its debts were high. A spokesperson for IHAG Bank only confirmed the sum of 30 million to the Swiss media in May 2024, and would not say any more.

According to the Swiss newspaper "Tagesanzeiger", part of the loan, namely around twelve million euros, was secured by shares in listed companies. IHAG was able to sell these and thus at least partially cover the claim of 30 million euros. However, the remaining loss was too great and on Friday, shortly before the close of trading, the Zurich-based bank announced that it was transferring its client business to Vontobel - de facto the end for IHAG after 75 years. 

Conspicuous personnel change on the Board of Directors
However, if you take a closer look, a highly controversial personnel matter catches the eye. None other than Susanne Riess-Hahn, ex-FPÖ Vice Chancellor in Wolfgang Schüssel's cabinet, sits on IHAG's Board of Directors. According to her own statements, she stepped down from the IHAG Board of Directors in 2021, but Riess-Hahn also held advisory board positions at Signa for many years. In September 2023, she still praised René Benko as a "cautious and risk-conscious financial manager". At this point, it is now clear that the "Signa child" had already fallen into the well ... However, Riess-Hahn had nothing to do with the current developments surrounding IHAG, her spokeswoman said.

IHAG Privatbank itself also took pains to state that "Dr. Susanne Riess-Hahn had already resigned from the bank's Board of Directors at the end of April 2021. In addition, IHAG clarifies that the bank always complies with corporate governance rules, which is why Dr. Susanne Riess-Hahn was not involved in the lending business for Signa in any way". 

Susanne Riess-Hahn was an advisory board member of Signa for many years.

(Bild: APA/ROLAND SCHLAGER)

The Swiss private bank is no longer of any help anyway; a redundancy plan has been drawn up for the 76 IHAG employees. One third will lose their jobs, the rest will be covered by early retirement or will move to Vontobel, the bank announced. The transition should be smooth for clients, the bank promises. 

Discretion even during the crisis
And even during the crisis, Swiss financial institutions are practicing discretion: officially, it is said that the bank slipped into bankruptcy due to "the lack of critical size of the private bank and a lack of inorganic growth opportunities". Only the annual report for the past year states: "The loss is mainly due to the creation of a value adjustment for an impaired receivable in the amount of CHF 16.98 million."

A spokesperson later confirmed that this value adjustment related to "a structured loan to a real estate group", but Signa itself was carefully concealed. What is particularly bitter is that IHAG Bank would even have improved its previous year's result if the Signa loan had not fallen through.