Lagarde

"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."

"The shock in interest rates, triggered by Lagarde and her board, can be read from the stock price of Germany's largest real estate group, Vonovia: reaching its peak at 60.08 Euros on August 18, 2021, it plummeted to 16.58 Euros by March 24, 2023. Hence, the market capitalization decreased by nearly three-quarters – even though the demand for Vonovia apartments remains strong."