Indeed, bank finance is entering a new phase, where bank demand for loans and competition will become fiercer, especially for tier clients but where overall volumes may not permit significant growth is the conclusion of Petrofin Research.
Overall, the latest Petrofin Bank Research showed that Greek related loans fell by 2% to $50.89 million with the Petrofin Index for Greek ship finance falling to 308 in 2023 from 314 in 2022 and 443 at its peak in 2008.
The high interest rates and loan repayments made it difficult for most banks to achieve portfolio growth says Petrofin head, Ted Petropoulos. Further, shipping markets in 2023 were mixed with tankers, offshore, gas and chemical carriers experiencing improved conditions, whilst the dry bulk and container sectors were experiencing soft markets.
The long-term fall is mostly due to the exodus of major ship lenders over the years, primarily from Europe, as banks increasingly focused on non asset based lending and lending closer to home. It would appear though that this trend seems to have run its course as over 80% of existing lenders, says Petrofin seem to have both the appetite and capacity to grow.
A feature of 2023 was the increased popularity of Sale and Leaseback (SLB) deals, as well as greater interest in ship lending by funds. Such providers would offer competitive pricing but most of the time a higher loan to value (LTV) and longer maturities which Greek owners found attractive.
Admittedly, SLBs were more prevalent among public companies and/or major owners, which sought the opportunity to release capital where appropriate or finance new acquisitions or newbuildings using less of their own capital. Such competition became intense and denied shipping banks the opportunity to conclude more business.
The exception were the Greek banks which managed to grow despite the SLB competition. Greek banks had an advantage in having long term close relationships with Greek clients, as well as benefits from ancillary services.
Additionally, as the credit rating of Greece and of the banks improved, loan margins became more competitive and Greek banks experienced a considerable growth in deposits from shipping clients. Without on the whole increasing their LTVs, Greek banks were able to grow by 12.25% in 2023 and to show the highest level of year end commitments that were yet undrawn by 60.83% year-on-year.
UBS (Credit Suisse) remains the top lender to Greek shipping with a $5.1 billion book ahead of four Greek banks, Eurobank ($4 billion), Piraeus Bank ($3.7 billion), Alpha Bank ($3.69 billion) and National Bank of Greece ($3.28 billion).
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