EMEA News
Commerzbank to Buy, Run Ships
Faced with large nonperforming loans in the shipping industry, Germany's Commerzbank AG plans to buy ships from some borrowers and run them as part of restructuring efforts, Bloomberg reports.
"The reduction of the ship-financing portfolio is subject to significant risks due to the difficult market situation at the moment and the price volatility of ships," the bank said.
Hanseatic Ship Asset Management GmbH, a unit of Commerzbank, will operate the vessels with partners until the shipping market recovers enough for the ships to be sold at a higher price.
The bank, which is the world's second-largest ship financier after DNB, has ship loans worth €18.3 billion ($23.8 billion) through its unit Deutsche Schiffsbank, 25 percent of which are classified as non-performing, according to Reuters.
The bank has previously mandated shipping firms to run a few vessels for the bank in an effort to earn money and pay down loans.
Commerzbank announced last year that it was winding down its ship financing business, and HSBC Bank Plc (HSBC) sold its ship broking and consultancy unit in reaction to a shipping crisis that a Deutsche Bundesbank executive board member has termed a significant threat to the banking industry.
