ECB May Take More Conservative Look at Ship Loans, NordLB SaysNicholas Brautlecht
The European Central Bank may take a more conservative approach than national regulators when assessing German banks’ shipping assets, said Oliver Faak, head of ship finance at Norddeutsche Landesbank.
“It is in no way sure that the ECB won’t look at this topic again in a more intense way and that it will transfer the impact of the regulatory calculations to the balance sheets of the banks,” Faak said in a presentation in Hamburg today. The ECB last month took over supervision of the region’s banks.
NordLB along with German shipping banks HSH Nordbank AG and Commerzbank AG passed the ECB health check, which was completed last month and is at the root of the central bank’s effort to rekindle confidence in the region’s banking system. Shipping lenders are struggling to recover from a six-year slump in the container-vessel market as loans to the industry soured.
In its probe, the ECB reclassified 21 percent of the shipping debtors reviewed to non-performing, while provisions rose 25 percent to 7.3 billion euros ($9.2 billion) for all euro-area banks under review, according to the aggregate report on the comprehensive assessment. In Germany, provisions increased by 1.1 billion euros to 5.2 billion euros.
NordLB, which held 16.2 billion euros in loans in the maritime sector at the end of June, plans to dispose of non-performing shipping loans by 2019, Faak said. The Hanover-based bank has a strategy for its distressed loans and isn’t just relying on a recovery of the container-shipping market, he said without giving details.
German shipping lenders saw their assets devalued by as much as 18 percent in the ECB review, a senior executive with knowledge of the procedure said in October.