The conservative private bank Julius Bär and the state-owned Aargauische Kantonalbank (AKB) have both been implicated in risky business dealings with the now bankruptcy-threatened Signa conglomerate. The extent of their involvement has been revealed, with AKB admitting to financing a “troubled department store and real estate investor group” to the tune of 73 million Swiss francs.
The good news, according to the cantonal bankers, is that the loans are secured by real estate mortgages. The properties in question are likely Globus properties, half-owned by the Thai Central Group and Signa Prime, a company of the Signa conglomerate of Austrian investor René Benko. Signa Prime has also recently filed for bankruptcy.
However, this good news is more of an eye-opener. The properties serving as security are not in Aarau, but in Bern and Zurich, outside AKB’s home territory. The property financing in Bern was done directly by the bank itself; that in Zurich was done through a syndicated loan with other financial institutions.
Mortgage loans outside the home territory were long frowned upon among the 24 Swiss cantonal banks; only corporate loans were allowed, and private customer business in “foreign” cantonal territory was an absolute “no-go”. But in recent years, this unwritten rule has gradually softened, especially as digital offers easily penetrate old boundaries. The Signa debacle now makes it visible to the world that even a medium-sized state bank like AKB is involved with tens of millions of francs in other cantons and sometimes does business with European players.
Considering that the institute is 100% owned by the canton, has full state guarantee and has a mandate to perform in Aargau, it is clear that the claim of the Swiss cantonal banks goes far beyond their respective home territory.
On Tuesday, AKB pointed out that over 93% of the loans in the mortgage business are in the canton of Aargau and in directly adjacent areas. The AKB law also explicitly allows lending outside the cantonal borders. But not everyone in Aargau sees it that way. The bank’s engagement with Benko has already caused a stir in local politics, and the state bank’s excursions, for which the canton is fully liable, are already being watched with eagle eyes.
The Signa debacle has also been revealing for the Zurich private bank Julius Bär. This bank, which likes to market itself as a “pure play” private bank and conservative in dealing with risks, had to confess last November that it had granted structured loans amounting to 606 million Swiss francs to a “European conglomerate” – read Signa. This realization, according to banking experts, subsequently contributed to the drastic loss in value of the shares of the Zurich traditional house on the stock exchange.
Andreas Venditti, a banking analyst at the Zurich investment house Vontobel, recently put it this way: “The ongoing share price losses of Julius Bär probably still reflect the shock of investors that the conservative private bank has entered into such risky loans.”
Unlike Julius Bär, AKB is not listed on the stock exchange and did not have to make any special provisions for the Signa engagement. However, the state institute now also sees itself somewhat disillusioned as a bank serving the home canton. This scratch on the reputation could go deeper and is harder to grasp than a write-off in the bank’s books would be.
This News Article was automatically generated by Bob the Bot (AI)
| Information | Details |
|---|---|
| Geography | Europe |
| Countries | 🇨🇭 🇦🇹 🇹🇭 |
| Sentiment | negative |
| Relevance Score | 1 |
| People | René Benko, Andreas Venditti |
| Companies | Julius Bär, Aargauische Kantonalbank, Signa Prime, Signa-Konglomerat, Vontobel, Schwyzer Kantonalbank |
| Currencies | Swiss Franc |
| Securities | None |
