Deutsche Shipping increases loan commitments in challenging markets by one third in 2011
Deutsche Shipping increased its loan commitments by one third in 2011, despite persisting market difficulties. The management of Deutsche Bank’s shipping finance division announced on Monday that it had approved loans of €1.6 billion in 2011. This compares with €1.2 billion in the previous year. Ralf Bedranowsky and Simon Booth, Global Co-Heads of Deutsche Shipping, pointed out that loan commitments had expanded significantly in 2011, particularly in the growth market of Asia. This region accounted for 18.7% of all loan commitments in 2011, compared to just 7.6% in the previous year.
“We are very satisfied with the way the business developed in 2011, particularly in light of the continuing uncertainty in the three major shipping markets,” said Bedranowsky. “Deutsche Shipping has once again succeeded in achieving a good result in challenging markets,” said Booth. The relative importance of each region to the overall result has also become more balanced. “With our policy of geographical portfolio diversification we are operating within our chosen target corridor,” said Bedranowsky.
In terms of loan utilization, the overall volume in terms of cash or surety loans increased by 11% in 2011, following a 15% rise in 2010. The volume therefore grew by €600 million to €5.8 billion. In addition to these credit exposures, firm loan commitments of €800 million were made, which is lower than in the previous year. This decline is due to the noticeable restraint shown by shipping clients in placing orders for new ships and reduced Sales & Purchase activities in a market characterized by overcapacity. Annemarie Ehrhardt, Global Head of CRM Shipping, outlined the quality of the credit portfolio: “Concentration risks were avoided through active risk management. Generally we manage the loan portfolio according to vessel type, size class and center of operation. In the case of chartered vessels, we also consider indirect risks such as concentration of individual charter counterparties. In addition to the age of the ship, greater focus is being placed on modern tonnage, which caters for the ever stricter environmental requirements.”
According to Bedranowsky and Booth, Deutsche Bank Shipping believes that the shipping crisis will continue to shape the market. In addition, the shipping finance market is also undergoing structural change, shifting towards the more intense use of the capital markets and potential consolidation. Overall, established providers are reducing their portfolios, while new providers are entering the market. “It remains to be seen, whether these new credit institutions will define shipping finance as a core area of their business in the longer term. However, one thing is certain: Deutsche Bank will continue to be a reliable partner for the maritime industry in 2012,” said Bedranowsky and Booth.
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