ECB

"The general assessments of the real estate sector's situation are, of course, known to the Single Supervisory Mechanism. However, at a meeting of the body towards the end of 2022, there was also specific discussion about René Benko's Signa. The rapid growth of the group, the company's lack of transparency, and critical media reports prompted the banking supervision to take a very unusual step. It was decided to ask banks in the eurozone exactly how many loans they had issued to Signa, how well they were secured, and whether they could absorb a potential default of payments. Usually, the ECB and BaFin do not inquire about lending to a specific company, but rather they ask more generally. It would have been appropriate to review the burden of lending to the entire real estate sector, especially since there were and are other shaky candidates. But evidently, the SSM wanted to send a clear warning signal and put a big question mark behind Signa's creditworthiness. Because with their inquiry, the supervisory authorities must have been aware that it would halt the flow of credit to Signa, which it desperately needed. No bank can afford to upset the regulators. Officially, the ECB does not comment on this, supposedly due to confidentiality obligations. In response to a query from a member of the Bundestag in November 2023, the then-chairman of the ECB's Supervisory Board, Andrea Enria, only generally indicated that since 2018, there had been several audits concerning credit risks in the commercial real estate sector. This was part of "a more comprehensive set of measures in relation to vulnerable sectors, including the real estate sector." Obviously, the review of the Signa loans was more than just one of many. Once the ECB had received the results of their survey, it decided to take a second step: it pushed several banks to either partly write off loans to Signa or to make additional provisions for potential losses. This was reported by the news agency Bloomberg in the summer of 2023. The very specific signal that Lagarde, Enria, his colleagues, and his female colleagues sent was clearly received. Since the beginning of 2023, Benko could hardly obtain new bank loans – which is devastating for any real estate company because nobody builds with equity alone. In relation to the public and his shareholders, Benko kept quiet about the bank blockade initially. Outwardly, business continued as usual. The facade of all the buildings in "irrecoverable locations" (quote Benko) was still standing, and the company continued to build – albeit on sand."

"too, the ECB under Christine Lagarde played a key role, specifically the bank supervision located there (Single Supervisory Mechanism, SSM for short). The committee at the top of the SSM, which usually meets and discusses largely unnoticed by the public, consists of representatives from the ECB and the heads of the national financial supervisory authorities such as the Federal Financial Supervisory Authority (Bafin). Established after the financial crisis of 2008/09, the goal of the SSM is clearly defined: to monitor the solidity of the banks. A second 2008 is to be prevented, when only trillion-dollar payments by states worldwide saved the banks and thus the lubricant of the global economy from bankruptcy. The aim is to eliminate risks. And in 2022, these were found mainly in the real estate sector."

"Several shareholders, who only started realizing towards the end of the year 2022 that things could financially tighten, blamed the ECB as the culprit. "Such a thing has never happened before," said a longstanding shareholder to the authors of the book in the summer of 2023, criticizing the supervisors for the decision. "That's a pretty bizarre interpretation of what happened," Enria said in December 2023 regarding accusations that the ECB was partly responsible for Signa's bankruptcy. It was obviously clear that there were big risks in financing commercial real estate."