FRANKFURT (Reuters) -Three more divisions of the European real estate and retail group Signa filed for insolvency on Wednesday, another turn for the worse for the embattled Austrian company that has become the biggest casualty so far of Europe’s property crash.
The divisions – Signa Financial Services GmbH, Signa REM Germany Rent GmbH, and SCAx GmbH – filed for insolvency with a court in Berlin, according to filings.
Controlled by Austrian magnate Rene Benko, Signa is an owner of New York’s Chrysler Building as well as several high-profile projects and department stores in Germany, Austria and Switzerland.
The Vienna-based holding company – with debts of around 5 billion euros ($5.4 billion) – filed for insolvency last week in a dramatic stumble in the conglomerate’s two-decade history that underscored the dimming prospects for the broader property sector.
Separately, the credit rating agency Moody’s said Signa’s insolvency is a drag on the credit quality and profitability at some Austrian, German and Swiss banks.
Calling Signa’s structure “opaque and complicated”, Moody’s said in a report on Wednesday that most of Signa’s bank loans were secured, which would soften the blow.
“However, the declining valuations of the underlying pledged assets … imply additional risks, increasing potential losses in the work out of defaulted loans,” Moody’s said.
Non-performing loans and risk costs are likely to rise in the fourth quarter of this year, it said.
The Moody’s report adds to concerns voiced by the European Central Bank, which has said that euro zone’s sinking commercial property sector could struggle for years, posing a threat to the banks and investors which financed it.
($1 = 0.9267 euros)
(Reporting by Tom Sims, Matthias Inverardi and Alexander HuebnerEditing by Madeline Chambers and David Evans)