Shanghai: Leading Norwegian ship financier DnB NOR celebrated both the opening of its Shanghai branch office and the signing of a landmark ship mortgage deal with Shanghai Time Shipping Co at a gala evening held in China's financial city this week attended by 250 people.
DnB NOR has received a full banking licence to carry out foreign currency transactions on the mainland from the China Banking Regulatory Commission. The Norwegian firm, with shipping commitments in excess of $15bn, signed a loan commitment of $38.4m with Shanghai Time Shipping Co secured by the mortgage of two 1194-built PRC-flagged vessels. Shanghai Time is a joint venture between Huaneng Power and China Shipping transporting coal to power utilities. 'It is our understanding that a mortgage of a Chinese flag vessel registered by a foreign bank is a new practice in China and, as far as we know, has never in fact been tested,' said DnB NOR chief executive Svein Aaser.
18 months ago HSBC Ship Finance concluded a similar deal for two Pacific Basin ships but these were dual flagged - both the Marshall Islands and China. China currently accounts for 4% of DnB NOR's deals at the moment.
Hans Petter Aas, the bank's head of shipping, said, 'If we can lead other international ship finance firms into China then Chinese owners will get far more competitive rates.'
The bank made clear its desire to see the issuance of local currency licences become easier. DnB NOR has obtained a foreign currency licence which, under current legislation, it will have to have for three years and ensure its Shanghai affiliate is profitable for two years before a local currency licence can be issued.
In the first half of 2006 DnB NOR accounted for 20.2% of all syndicated shipping loans worldwide - its 26 deals totalled for $4.89bn. [22/09/06]
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