Investors Set Up Shipping Bank to Counter Funding Retreat
A group of Norwegian investors and Henning Oldendorff, chairman of the largest charterer of dry-bulk vessels, are forming a shipping bank that will start next year to fill a funding gap in the shipping industry.
Maritime & Merchant AS will be based in Oslo and offer secured lending and syndications and will apply for a banking license later this year, according to a presentation yesterday. It’s seeking to start operations in the second quarter and will raise about $300 million in equity to fund operations and satisfy regulatory requirements on ownership, it said.
It’s seeking to fill a funding gap in the shipping industry as tighter capital standards have squeezed financing, according to Chief Executive Officer Halvor Sveen.
“For the huge continental banks it will probably have consequences that shipping would not necessarily be their priority because they have to concentrate on their core business,” Sveen said in an interview in Oslo yesterday.
The shipping industry, now in its fifth year of crisis, has suffered from slumping demand and overcapacity in the wake of Europe’s debt crisis and from low freight rates, high fuel prices and slumping asset values.
Commerzbank decided in 2012 to wind down its shipping portfolio to stem the losses. Lloyds Banking Group Plc (LLOY) and Societe Generale SA have also exited ship finance as the industry struggles, new banking regulation require lenders to increase capital buffers and reduce risk.
Maritime & Merchant Bank is targeting small and medium-sized shipping companies that have seen funding shrink and are perceived as riskier.
“Risk is an element with many faces,” Sveen said. “We have seen over the past years that huge is not necessarily correspondent with lower risk.”
Shipping rates will gradually “come back on track and then the values will improve but it will take time,” Sveen said. “If we get a protracted recovery of the world economy and that industrial production will recover in the most important areas for seaborne trade, we will have a much more balanced and better exchange ratio in seaborne trade between the continents.”
The bank’s largest shareholders are Henning Oldendorff, chairman of Oldendorff Carriers GmbH, and Spencer Trading Inc., controlled by Norwegian investor Arne Blystad.
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