2016 Saw "Substantial Drop" in Banks' Lending to Shipping: Report

by Ship & Bunker News Team
Tuesday July 11, 2017

Petrofin Research Friday released a new research report that suggests that banks' lending to shipping companies saw a "substantial drop" in 2016, falling by approximately $42.5 billion.

The research firm says the drop can be largely attributed to the removal of Commerzbank and Royal Bank of Scotland, lower bank portfolios, and the stabilisation of exposure by Chinese banks due to a sharp increase of Chinese leasing.

"Loan portfolios of banks have slimmed as a result of vessel sales, write offs, loan sales and normal reductions via repayments," explained Petrofin Research.

"This has been useful for Western banks seeking to contract their lending as a result of capital constraints. The one ray of hope is the US banks who are coming out of the difficult years in a more robust way and whose capital ratios are stronger and which have room to expand."

Petrofin Research says that, as of December 2016, the Top 40 Global banks were lending a total of $355.25 billion to shipping.

"We anticipate that over the next couple of years, global shipfinance may form a base. The departure of the previous big lenders, RBS and Commerzbank and the reduction of HSH Nordbank, plus a lot of retrenchment by others, is expected to complete soon," said Petrofin Research.

"On the other hand, successful banks with a bigger appetite for shipping, such as Credit Suisse, ING, BNP Paribas, ABN Amro, and DVB should assist in the above base being formed."

In January, HSH Nordbank invited expressions of interest from potential buyers for the bank's public sale process.

As Ship & Bunker previously reported, HSH Nordbank, one of the world's largest lenders for the maritime sector, has long been working to reduce its exposure to the "crisis-prone" shipping industry.