Hypo treats Signa: -landeschlungshof complains about a high risk

Has the Hypo-country bench entered into too high risks for the Shadow Kingdom of the Real Estate Gambler René Benko? Has the financial institution complied with all its reporting and supervisory tasks? And did the internal and external control mechanisms work? The employees of the State Audit Office have treated these questions for almost ten months. Now the test report is available – and this essentially confirms the criticism that have been to the Chamber for about a year and a half.

As is known, the Imperium of Tyroolean Imperium collapsed at the end of 2023, and shortly thereafter it became public that the Landesbank had been maintaining an intensive business relationship with the Tyrolean for years. At the end of 2023, seven loans with a total volume of almost 200 million euros were open – six of them for real estate, one for a private foundation of the Benko family. In the case of real estate loans, the bank had no accusations, the risks would have been adequately estimated – and were also guaranteed accordingly.

Rough defects in loan to Private Foundation
However, the situation is very different with the loan to the Private Foundation, from which a good 47 million euros was still open at the end of 2023. From the Audit Office of the State, it is asked whether the bank will provide sufficient information at the time of loans. As is known, Benko had seriously nested his network of company and had not kept it particularly precisely in transparency. Moreover, the Court of Auditors complains that the quality of the preservation was limited and that contractual design options were used too little. Conclusion from the test report: “The bank has therefore taken risks in this loan without securing it sufficiently.”

The question arises as to how this could happen, especially because loan transactions are already regulated heavily by European and national regulations. Even in the case of hypo, the loan process in the business area of ​​the business customer is generally clearly regulated and the legally offered functional separation follows. However, internal communication will probably be hung in the specific case, at least the LRH encourages “to reinforce cross -take responsibility for the development and quality of the loan process”. There is a further need for improvement in the formation of groups of connected customers, risk analyzes and strategies for commitment. “It is important to further increase the quality of loan applications as a central basis for loan decisions, for example through a more differentiated representation of the financial or liquidity situation of borrowers.”

Landes Hypo did it too hesitantly
For example, it is openly criticized that in the case of the Signa Group the hypo has calculated the freely available money of an important subcorporation incorrect and clearly too positive in individual years. Further development potential also exists in the bank’s reporting system, for example in the information flow to the supervisory board. Another central point of criticism continues to exist- and it sheds an extremely poor light on the bank’s management. According to LRH, the hypo reacted far too hesitantly to critical development in the Signa. Already in 2021 it became difficult that the Signa had to do with problems. The board then tried to pursue the case, but it was too much to rely on the information from Signa and external information – such as reviews from rating agencies – was not included in the evaluation.

The bank only differs from the motto “will go well” when the first rumors about insolvency came. This attempt to reduce the risk of empty – but apparently with a manageable emphasis: “This goal could have been pursued more consistently, for example, disposal options were examined only shortly before keeping the company.” It is remarkable that the State audit agency also devotes a large chapter to the majority owner, ie the State Vorarlberg, in his test report. This does not save with criticism: “It is not sufficiently clear which interests the country strives for participating in Hypo Vorarlberg Bank AG”. Sadge: The goals that have been agreed with the bank are not specific and therefore difficult to check, the participation control is only effective. In other words, the country has made the bank, the most important thing is that the dividend flows. This is followed by a clear recommendation: “The country must clarify what strategy it wants to pursue with its participation in the future.”

There are three basic design options for this: strategic participation, financial participation or (partial) sale. If the country was retained substantial participation, it had to ensure a sufficient flow of information about the bank’s business development based on its obligation as the owner. In total, the Landesrechungshof has created 18 recommendations to the bank and the country.