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China Merchants, Credit Suisse submit bids to buy RBS shipping business

China Merchants, Credit Suisse submit bids to buy RBS shipping business
It has emerged China Merchants Bank (CMB) is a leading bidder for the Royal Bank of Scotland’s (RBS) Greek shipping finance business which is worth about $3bn.

CMB and Credit Suisse are said to be among those showing strongest interest in RBS’ Greek business, which not only includes the loan portfolio but a going operation, including a banking licence as well as some 40 staff.

RBS had previously been a top lender to global shipping and its Greek office played a pivotal role in this. "RBS has held preliminary discussions with a number of interested parties," reported Reuters news agency. A year ago, it became publicly known RBS was winding down its Greek operation and putting its shipping loan portfolio up for sale.

RBS has long been the leading lender to Greek shipping. According to the annual ship finance survey by Petrofin Research, five years ago (end 2010) RBS' Greek book stood at $12,344bn, more than double the second biggest lender, Deutche Schiffsbank's $5.566bn. At the dawn of this year, Petrofin put RBS' Greek book at $5.2bn, now second to Credit Suisse's $6.72bn. Total lending to Greek shipping by the 39 banks engaged in the business stood at $62.7bn at the end of 2015, down from $64bn at the end of 2014, according to Petrofin.

Having received a GBP46bn ($67.4bn) bailout during the 2009 financial crisis, RBS is in the midst of a restructuring aimed at returning the bank to profit after eight straight years of losses.

Regarding the Greek business, quoting an unnamed source, Reuters said: "The big difference here is they are not selling a portfolio of loans but a business, with staff in it able to do the debt collection stuff."

RBS had a shipping loan portfolio worth GBP7.1bn in the first quarter of 2016. It has classed about 11% of that portfolio as significantly in arrears and any final value on the sale will depend on the number of non-performing loans in the unit’s portfolio.

Latest Petrofin survey does not include China-state owned CMB among the top 30 lenders to Greek shipping all of which have books of over $200m. However, there are three Chinese lenders in the group, China Exim Bank, about $2.4bn, China Development Bank, $1.85bn, and China Everbright Bank with a $650m loan book to Greeks.

Interest on the part of CMB underlines the growing relationship between Greece and China.

CMB has been looking for shipping and commodities-related assets in Europe, for sometime and for a Chinese bank, buying RBS' Greek business is seen an inroad into Europe.

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