Hypo Vorarlberg Could Lose 131 Million Euros Due to Signa Bankruptcy

On Friday, Hypo Vorarlberg Bank reiterated its commitment to granting loans under typical market conditions and with adequate collateral. This general statement was made by board members Michel Haller and Wilfried Amann in response to media speculation about the bank potentially losing up to 131 million euros following the Signa bankruptcy. The reports suggested that the bank had granted loans without any security, a claim that Haller rejected without providing specific details on the Signa issue.

Referring to banking confidentiality, CEO Haller remained vague. He clarified that collateral could take various forms, including guarantees, sureties or pledged business shares. Haller pointed out that such collateral is not publicly accessible. He stated, “Certain guarantees are not visible in the reporting system.”

However, the CEO stressed that the invisibility of these guarantees does not mean their nonexistence. Hypo Vorarlberg follows strict criteria and procedures for lending, which are uniformly applied to all potential customers. If the loan volume is large, the decision is not made by a single person. When discussing a “default” of a loan, it signifies that the debtor is unable to service it – not that the loan lacks security.

Haller recognized that lending is a risky business subject to defaults. However, he highlighted that Hypo Vorarlberg has consistently posted excellent annual results in the past few years. He was also satisfied with the beginning of 2024. In previous years, approximately 5 million euros were consistently paid to the majority owner, the state of Vorarlberg, a trend expected to continue this year.

Haller also highlighted a rise in equity from 1.2 to 1.7 billion euros over the past decade. In January 2023, the bank reported a “solid result” for 2023, with a pre-tax profit (EGT) of 92.2 million euros or 53.1 million euros after fair value valuation effects. In 2022, these figures were 83.5 million and 160.7 million euros respectively, indicating a 67 percent drop in EGT compared to the previous year after accounting for valuation effects. Haller asserted that all necessary risk precautions were in place. “When entering into a recycling agreement with a customer, the final outcome is uncertain,” added Amann.

Governor not accountable

In relation to Governor Markus Wallner‘s (ÖVP) role as the representative of the owner, Haller upheld the state head of government’s justification. “The state governor is not part of the bank’s management; banking secrecy applies. We report to the supervisory board,” said Haller. Wallner has consistently dismissed political demands for clarity on Hypo’s involvement with Signa, asserting that the bank’s operational activities are managed by the board of directors, not the owner.

The supervisory boards are also bound by banking confidentiality. Regarding the Financial Market Authority (FMA)’s comments on the loans granted to Signa, Haller stated: “The supervisory authority and the bank may have different perspectives and may evaluate things differently. However, these are not the FMA’s final statements,” said Haller.