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Bank lending to Greek shipowners down, China leasing on the up

Bank lending to Greek shipowners down, China leasing on the up
Greek shipowners are still able to get their hands on funds to buy ships as evidenced by the annual Petrofin Bank Research survey of bank funding portfolios in the name of Greek owners.

Bank ship finance into Greek shipping contracted 8.77% during 2016 to $57.21bn from $62.71bn in 2015, the biggest contraction since the onset of the financial crisis in 2009, reports Petrofin, though in 2016 the Greek fleet grew by almost 3% in deadweight terms.

Ted Petropoulos, head of Petrofin Bank Research said that specifically, drawn loans are down 5.34% and commitments down a marked 38%. "This confirms the underlying contraction of bank ship finance, as well as a switch to other forms of finance like funds, Chinese leasing, etc, which are rapidly expanding," said Petropoulos.

There are 51 banks working with Greek interests, the same as in the previous year, but there has been some reshuffling. New names joining ship lending, including Warburg, Amsterdam Trade Bank, M&M Bank and local banks in the Middle East and Far East. Petrofin, predicts RBS, the longtime biggest lender to Greek shipping, and now clinging to third after Credit Suisse and DVB, will be gone next time as its sells its shipping business.

Petrofin said: “It is expected that the difficult bank finance conditions that particularly apply to small and medium Greek owners will persist for the foreseeable future and until fresh lenders targeting this sector shall appear.

“In this very negative shipping environment and with the prospects of a meaningful shipping recovery being both uncertain and distant, it is no wonder that bank appetite for new loans waned.”

Top lender Credit Suisse has a slightly reduced exposure by 3.72% to $5.935bn. DVB’s book is $4.23bn and RBS’ $3bn.

The top 10 Greek ship financing banks, though they have collectively reduced their loan portfolios by 5.36%, their share of the total has gone up to 55.19%, as the whole portfolio has fallen.

European banks account for the vast majority of total loans (81.04%), although their share is steadily dropping, from 90% in 2013.

Of the five Greek banks, two show growth, including the Spiros Latsis-backed Eurobank. Overall Greek bank exposure is down 4.93%, but Greek banks’ share of Greek ship finance is up to 15.25% from 14.63%. "Of course, this is happening within an overall reduced Greek portfolio, but this is a resilient performance by Greek banks despite continuous domestic problems," said Petropoulos.

Piraeus Bank is top domestic lender, with a book worth around $3bn. Petrofin puts it at $2.73bn, but noted "this does not include lending to the Greek ferry fleet" where it is again the leader. Indeed, all told the bank could be as high as Nr 3 on the list. Other domestic lenders, National Bank of Greece ($2.355bn) and Alpha Bank ($2.1bn) are among the top 10 lenders.

International banks with a Greek presence continued to reduce their exposure, in 2016, down by 11.49%, compared to a reduction of 9.7% in 2015, 4.23% in 2014, 9.35% in 2013 and 3.9% in 2012.

A significant development has been in the international banks without a Greek presence, which, for the first time in the research's 16 years history, show a decline, down 7.31%. The consolidation of Chinese banks is mostly due to the rapid development of Chinese leasing.

Forward commitments to newbuldings, which by definition show the position of trust in the future of shipping, are down 1% compared to an increase of 8% last year. "Overall, the bank ship finance industry is in difficulty and this is reflected in the reduced loan portfolios for Greek ship finance as well," concluded the research.