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Shift in Control at Signa Holding Amid Financial Distress

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Nitish Verma
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Shift in Control at Signa Holding Amid Financial Distress

Swiss entrepreneur Arthur Eugster has reclaimed an 11.5% stake in Austrian real estate giant Signa Holding, ending his trusteeship that had previously granted control of his shares to René Benko, the renowned Austrian investor. This move, first reported by Austrian newspaper Der Standard and confirmed by a spokesperson, doesn’t increase the Eugster family's stake in Signa but signals a potential shift in control and a reduction in Benko's operational leeway.

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Signa Holding’s Financial Distress

Signa Holding, still primarily dominated by Benko through his private foundation and other affiliated companies, is under significant financial strain. Several of its online shops have declared bankruptcy, with Signa Sports United following suit in October. Signa's real estate subsidiaries are also facing severe difficulties. Major construction projects, including Hamburg's Elbtower and Munich's Alte Akademie, have come to a halt. To compound the situation, Signa Real Estate Management Germany has also filed for insolvency.

Julius Baer Caught in the Crossfire

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Swiss private banking group Julius Baer's exposure to Signa has raised concerns about the bank's risk management practices. The bank has set aside substantial reserves following revelations of a problematic loan exposure to a single European conglomerate. As per Swiss private bank Vontobel, Julius Baer will likely end up making provisions for about 50% of its exposure to Signa, a move that reflects the seriousness of Signa's financial predicament.

Signa Prime Sells Stake Amid Financial Turmoil

Amid these challenges, Signa Prime, the luxury real estate division of Signa Holding, has sold a 24.69% stake in Tuchlauben Immobilien GmbH. This company owns the Goldenes Quartier, a luxury real estate development in Vienna's city center. The stake was sold to the German company RAG-S Real Estate, a part of the RAG-Stiftung. This move can be seen as a desperate attempt to raise funds amidst the financial turmoil plaguing Signa.

While René Benko's control over Signa Holding may be shrinking, he still holds significant sway through his private foundation and other companies tied to him. However, the future seems uncertain for Signa Holding as it grapples with financial distress and a shifting power dynamic.

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