Lunde: Exodus of London-based Lenders Heralds Decline of the City's Status as Maritime Finance Centre

RBS, Lloyds Bank, Bank of Scotland, HSBC and its predecessor Midland have all opted to withdraw from traditional shipping finance in recent years.

The exit of the Royal Bank of Scotland (RBS) from shipping finance is a "hammer blow" that is heralding the end of London as a key global maritime finance centre, according to Dagfinn Lunde, the chairman of Executive Ship Management and board member of Maritime and Merchant Bank.

Writing in an opinion piece for Splash24/7, Lunde noted that in addition to RBS, Lloyds Bank, Bank of Scotland, HSBC and its predecessor Midland have all opted to withdraw from traditional shipping finance, leaving few "indigenous traditional lenders left in London."

"The fact is that London is completely disappearing from traditional ship finance," he said.

"Basic financing over the past seven years has been in export finance on newbuildings, with far less need to offer S&P finance."

He added that few owners are now willing to be based out of London given recent changes to legislation, which will affect UK residents with non-domicile status beginning April 2017 as well as property owned by offshore companies. 

Changes in taxation are also expected to act as a deterrent, as residents will also soon be expected to pay taxes on worldwide income and business carried on outside of the country. 

According to Lunde, "the Baltic Exchange has repeatedly warned that these changes in the legal system will destroy the shipowning part of the city."

Globally, Lunde places London in fifth place in terms of capital market, with New York, Oslo, Singapore, and Hamburg pulling ahead. 

Ship & Bunker reported in July that RBS was looking to offload its entire $5 billion Greek ship finance business by the end of the year, which was understood to be part of the bank's plan to downsize its international business.