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How risky was Hypo’s lending?

There are still many unanswered questions surrounding the granting of loans to "Signa" and the Benko private foundation.(Bild: Mathis Fotografie)

Hypo Vorarlberg, which has come under scrutiny, is likely to be left with at least around 50 million euros after granting loans to "Signa" and the Benko Private Foundation.  

It has been official since this week: the Benko private foundation is also over-indebted to the tune of 1.12 billion euros. And here too, Vorarlberger Hypo has its fingers in the pie, as the private foundation has also received a million-euro loan. This is secured with ten percent of the shares, but where there is nothing left, there is not much more to be gained. Once again, the question arises as to how high the losses for the Landesbank will be in the end - and who is responsible for such risky transactions.

"Opportunity for loss"
It is known that those responsible at Hypo had admitted to the Financial Market Authority (FMA) that there was a "loss opportunity" of EUR 47.3 million. According to experts, such as management consultant Gerald Zmuegg, there is a real risk that the Vorarlbergers will not see another cent that they once provided to the foundation and holding company.

Michel Haller, Chairman of the Managing Board of Hypo Vorarlberg, does not believe that the bank's existence is under threat, as has been emphasized several times. In addition, one or two euros could still flow back through insolvency proceedings.

National Councillor Reinhold Einwallner (SPÖ) takes Haller and the other Hypo executives to task. He sees a "considerable failure in the risk assessment". "It is alarming that of the 15 banks involved, only Hypo Vorarlberg was prepared to grant loans to the Benko family private foundation," criticizes the Bregenz resident.

Due to the difference between the declared liabilities of EUR 47.9 million and the actual amount of the loans, Einwallner also suspects that the Landesbank waived considerable interest payments. "It must be urgently clarified what financial benefit Hypo Vorarlberg derived from these risky loan transactions with Benko."

Higher interest rates for higher risk are common

In his view, it cannot be that Vorarlberg house builders with a well-secured loan paid the same margin as René Benko for such a speculative loan. On the contrary: a higher interest rate is usual. If it is confirmed that Hypo acted according to the motto "high risk, low interest rate" in the case of "Signa" and the private foundation, there is probably a lot wrong.