Shipping Banks Face Increased Refinance Risk, Deutsche Bank Says

Shipping banks need to refinance about $35 billion euros in loans in the next two years amid the container industry’s prolonged crisis, according to Deutsche Bank AG. (DBK)

“About 80 percent of that is covered by European banks, of which some may not find it very easy these days to refinance debt,” said Klaus Stoltenberg, global head of shipping at Frankfurt-based Deutsche Bank, at a conference in Hamburg today.

European shipping lenders led by Germany’s HSH Nordbank AG, Commerzbank AG (CBK) and Norddeutsche Landesbank Girozentrale are facing rising losses on their shipping loans. The container industry, which accounts for the biggest share of ship loans among German lenders, has suffered from overcapacity since the global financial crisis triggered a trade slump and the worst decline in charter prices in decades.

The crisis will have a long-term impact on shipping banks, Stoltenberg said. “The history of default will make it hard for shipping lenders to keep the faith in the assets in the same way they did before the crisis.” he said.

HSH Nordbank reported 9 billion euros of bad shipping debt, or about 43 percent of its loans to the industry, in fourth-quarter earnings published last week. Non-performing shipping loans at Commerzbank, Germany’s second-biggest bank, amounted to about 3.9 billion euros at the end of 2013, or 27 percent of the 14 billion euros in total lending, according to the company.

Deutsche Bank, which Stoltenberg joined April 15 from NordLB, had a shipping portfolio of 5.9 billion euros at the end of 2013, including 5.3 billion euros in loans and 600 million euros in commitments, spokesman Frank Hartmann said by phone today. The lender declined to comment on the share of non-performing loans.

The shipping loans have become a focus for the European Central Bank as it probes the finances of Europe’s biggest banks before taking over as their regulator in November.

To contact the reporter on this story: Nicholas Brautlecht in Hamburg at nbrautlecht@bloomberg.net

To contact the editors responsible for this story: Angela Cullen at acullen8@bloomberg.net Frank Connelly, Dylan Griffiths

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