Greek ship finance continues its year-on-year contracting, first registered in 2009. At the dawn of 2016 bank loans to Greek shipping companies stood at $62.711bn, a decrease of 2.04% from $64.019bn, though more banks are lending to Greek owners.
And longtime top lender Royal Bank of Scotland (RBS) has been toppled with Credit Suisse taking its mantle. RBS has been the largest lender to Greek owners on aggregate for the past two decades but is cutting its shipping book, which is mainly Greek.
These are among the main points of the annual Petrofin Bank Research, the 15th overview of bank lending to Greek shipping. However, reflecting the high level of Greek ship purchase activity, and the standing of the order book, the author of the analysis, Ted Petropoulos, points out that while drawn loans are down by 3.25%, commitments are up by 9.62%.
“The extreme falls, in the preceding period, of the dry bulk, offshore and container sectors severely tested both owners and banks. For banks, it was a traumatic experience, as numerous clients experienced negative cash flows and were forced to consider scrapping or lay up. Loan payments were often delayed and / or stopped altogether, whilst falling asset values created enormous security shortfalls in the banks’ loan portfolios,” said Petropoulos.
Most banks confirm their books to Petrofin, but the Swiss giant is among those, which Petrofin has estimated. This puts Credit Suisse with a total book of $6.72bn compared to RBS’ $5.2bn. Credit Suisse lifted its portfolio by 13.53% while RBS’ book fell 13.58%. However, a point of interest is the fact the Swiss bank has some $1.14bn “committed but undrawn” while RBS has none, indicating what lies in the future.
Other features pulled out by Petropoulos are: The number of banks involved in Greek ship finance has risen to 51, from 49; All five Greek banks are down with the overall Greek bank exposure down 15.22% and the share of Greek banks in Greek ship finance has fallen from 16.9% to 14.63%; International banks with a Greek presence continue to reduce their exposure, in 2015, by 7.94%, compared to a reduction of 4.23% in 2014, 9.35% in 2013 and 3.9% in 2012; and International banks without a Greek presence, continue their rise, at a year-on-year rate of 11.26%, albeit at a more modest pace than last year’s 17.23%.
The top 10 Greek ship financing banks have again reduced their portfolios, collectively by 8.56%, compared to reduction of 4% last year while the market share of this top group was reduced to 53.43% ($33.5bn), compared to a market share of 57.24% ($36.6bn) in 2014 and 62.38% in 2013 ($38.3bn).
Continuing the recent trend, the next 10 banks have increased their market share by 7.22% ($18.23bn), compared to 3.05% last year ($17bn).
Petropoulos said that although Greek ship finance is not directly affected by the Greek crisis, it is nevertheless indirectly affected via the reduced lending ability of Greek banks. Further, he said: “The possible departure of Greek owners to other more welcoming shipping centers, may well signify their evolution away from the traditional Greek ownership model.”
The overall fall in loan volumes for the Greek-owned fleet was “not surprising”, said the researcher, adding, given tough shipping market conditions and the adoption by a number of banks of a harder policy of “zero tolerance”, although not all banks took the same line.
Petrofin, was surprised by the “low rate of decline, taking into account the problems faced by the ship finance industry and the difficulty of new loans meeting the ever-demanding bank requirements. “We suspect the decline will continue and may, perhaps, accelerate in 2016, as banks adopt a harder line across both existing and new lending.”
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