FirstFT: Insurers built €3bn exposure to struggling Signa property empire

Stay informed with free updates

Simply sign up to the World myFT Digest — delivered directly to your inbox.

Good morning.

German insurers including Munich Re and Allianz have amassed more than €3bn of exposure to the struggling property empire owned by real estate billionaire René Benko.

The network of firms in Benko’s Signa group not only borrowed from banks including Julius Baer and UniCredit, but also relied heavily on funding from more than half a dozen insurers, according to documents reviewed by the Financial Times and people with first-hand knowledge of the details.

The people added that about a third of this exposure was not backed by any collateral. “For some insurers, this will be extremely painful,” one of the people said.

Signa Holding, the central company in the group that owns Selfridges in London, the Chrysler building in New York and KaDeWe in Berlin, filed for administration last month. The company had built up €5bn in debt by the end of September, the majority of it during the first nine months of this year.

Benko has not disclosed the total debt accumulated by firms across the Signa group, but people familiar with the structure say his other entities have borrowed more than twice that amount. Many companies within the group are still trading, but people close to the business said further insolvencies were expected within days. Read the full exclusive story.

And here’s what else I’m keeping tabs on today:

• Economic data: The UK releases monthly labour market data, Zew publishes its economic sentiment survey for Germany, while the US has its consumer price index.

• COP28: A draft agreement which has dropped references to the phaseout of fossil fuels will face fierce opposition from many countries at the UN climate summit’s final day.

• Thames Water: Cathryn Ross and Alastair Cochran, interim co-chiefs of the utility, will be grilled by MPs on the Environment, Food and Rural Affairs Committee following revelations in the FT that £500mn in “new equity funding” was in fact a loan by the company’s owners.

• Egyptian elections: Polls close in a race where Abdel Fattah al-Sisi is running for a third presidential term.

• UK politics: Prime Minister Rishi Sunak will seek to face down hardening opposition from rightwing Tory rebels at a parliamentary vote for “emergency” legislation to save his Rwanda migration policy. For more on British politics, sign up for our Inside Politics newsletter by Stephen Bush.

Five more top stories

1. The EU is exploring emergency funding for Ukraine outside the bloc’s shared budget, after Hungarian Prime Minister Viktor Orbán said he would block Brussels’ bid to provide a critical €50bn financial aid lifeline to Kyiv at an EU summit on Thursday. Failure to agree to funding would mark the most egregious reversal in the bloc’s support since Russia’s invasion.

2. Exclusive: An Indian billionaire will pay £138mn in London’s most expensive home sale this year and the UK capital’s second-most expensive home ever sold. “Vaccine prince” Adar Poonawalla will buy Aberconway House, a 25,000 square foot Mayfair mansion near Hyde Park, through a UK subsidiary of his family’s Serum Institute of India. Here’s more on the sale.

3. KKR is in talks to buy a nearly $11bn stake in a Veritas Capital business, according to people briefed on the matter. The deal for a 50 per cent stake in healthcare technology company Cotiviti comes after a similar deal with another bidder, Carlyle, fell apart in April. The new deal could be clinched in the next few weeks. Read the full story.

4. Exclusive: Puma is terminating its sponsorship of Israel’s national football team in a decision the world’s third-biggest sportswear company said was taken a year ago and was not related to renewed calls for consumer boycotts. In recent weeks, the brand’s stores in some western cities have been targeted with demonstrations. Here’s why the German group made the move.

• Israel-Hamas war: Israel’s defence forces will open a second checkpoint for the screening of humanitarian aid into Gaza, which they said could double the support flowing into the strip.

• Opinion: Rebuilding Gaza will require a long-term vision for Palestine, but the conditions for a two-state solution have worsened considerably in the past decades, writes Gideon Rachman.

5. Google has lost an antitrust lawsuit brought against it by Epic, the company behind popular video game Fortnite, which accused the search giant of suppressing competition in the Android app market to secure billions of dollars in profits from its Play Store. The verdict by a federal jury was returned yesterday after a weeks-long trial in San Francisco. Here’s what will happen next.

The Big Read

Industry figures have described Kirkland & Ellis’s singular, aggressive way of doing business as more akin to a hedge fund or an investment bank such as Goldman Sachs, shaking up the traditionally risk-averse corporate law industry. A boom in private equity meant bumper pay and rapid promotion for its partners, but as dealmaking slows, is the party over for the world’s most profitable law firm?

We’re also reading . . . 

• Bidenomics’ lessons: Labour should heed both the warnings and successes of Biden’s investment programme in the US, writes Claire Ainsley, the UK party’s former executive director of policy.

• Iran’s ‘first lady’: The wives of Iran’s past presidents were rarely seen in public, much less politics. Jamileh-Sadat Alamolhoda, who has broken with tradition, speaks with the FT.

• Catalan independence: Now is the time for a fresh round of negotiations with Spain towards a referendum for independence, writes Catalonia’s regional president Pere Aragonès.

• Guyana on edge: Venezuela’s threat to annex a large part of its neighbour’s territory following a divisive referendum has stoked fears of invasion.

Chart of the day

Is the market right in expecting a lowering of borrowing costs soon? What could prevent interest rate cuts in March? Martin Arnold answers questions that will be on policymakers’ minds when the European Central Bank meets on Thursday.

Take a break from the news

From an Egyptian oasis to a yurt in Tromsø, Norway, travel writers share with the FT their top discoveries — and disappointments — of the past year.

Additional contributions from Benjamin Wilhelm and Gordon Smith