EMEA News
"Too Much Capital" in Shipping Industry
Equity fund investment in shipping could delay the industry's recovery by exacerbating the imbalance between supply and demand, Hans Christian Kjelsrud, head of shipping for Nordea, one of the largest lenders to the industry, told industry news site ShippingWatch.
"There is still a certain degree of overcapacity in an otherwise somewhat weak freight market, but an improved growth in the global economy over the next two or three years, along with a slower delivery rate of new ships, will lead to a gradual improvement," he said.
"It's difficult to say how big the recovery will be, but we believe in a gradual recovery.
"The big threat to the shipping industry remains the fact that there is too much capital, and thus overcapacity in shipping."
Kjelsrud said interest from the equity funds has been strong for the past year, but he did not say whether he believes their focus on shipping has peaked.
The Nordic bank earned a €82 million ($113 million) profit for its Shipping, Offshore & Oil Services in the first quarter of 2014, while its shipping portfolio declined by 6 percent.
"We have the resources and capacity to take on new customers, and we're in pretty good shape," Kjelsrud said.
"I wouldn't say that we're demanding new and different requirements of shipping customers, but the financial structure today is generally a bit more conservative than it has been, based on the experience of recent years."
The European Central Bank (ECB) will take over supervision of the largest Eurozone banks, increasing their capital requirements, which has focused attention on the condition of German shipping banks.
"We have virtually zero exposure to the German shipping market, and we have a very limited exposure to container ships," Kjelsrud said.
"The German banks have always been big in ship financing, and this will probably impact what German banks can offer their shipping customers."
Germany's HSH Nordbank lost €814 million ($1,131) in 2013, and has been in discussions with European officials over its future viability.
