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Piraeus Bank teams up with Japanese finance house Orix

Piraeus Bank, the leading and longstanding domestic lender to Greek shipping, has teamed up with Japanese finance house, Orix Group to provide loans to Greek shipowners.

According to a filing with the Athens Stock Exchange, last week, the Athens-based bank is to provide the connections to Greek maritime companies and Orix will contribute its financial firepower.

The announcement did not contain information on how much money will be lent other than to say that the cooperation “is expected to expand in both scope and sectors over time”.

Last summer Piraeus Bank revealed it was in negotiation with an unmanned Far Eastern financing house after taking a significant haircut on the sale of a EUR507m ($565m) shipping loan portfolio to US fund Davidson Kempner Capital Management. The deal fetched EUR240m.

Just the day before the announcement of the Orix deal, Piraeus head of shipping finance Konstantinos Petropoulos told a Capital Link finance conference:  “We’ve been quite active from last year and I believe the trend will continue over the next five years.”

Following the deal with Davidson Kempner, Piraeus Bank, has a shipping loan portfolio of about $2.1 bn, and usually refinances acquisitions of secondhand vessels and loan balloons. It prefers doing business with known owners with solid track records. Generally, Greek banks' lending capacity has been curtailed after the country’s crippling debt crisis, which has loaded billions of euros of bad loans on their balance sheets.

Petropoulos said the exit from shipping of big traditional lenders, like RBS, has created ample opportunities.  “More and more [Greek] shipping groups that had no relationship with the local finance sector realized that it’s strategically sensible to develop one with a local bank,” he said.

The seven Greek banks lending to shipping have a combined portfolio of about $9.5bn out of a total $53bn, and are facing competition from Chinese leasing houses. Bank of China and the Industrial and Commercial Bank of China (ICBC) recently set up branches in Athens to cement their growing relations with the Greek business scene, including shipping.

US-based Houlihan Lokey acted as Piraeus’ strategic and financial adviser in the Orix deal having also advised Piraeus on the sale of the shipping loan portfolio to Davidson Kempner Capital Management.

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