Despite the world’s merchant fleet growing dramatically in the past decade bank ship finance remains at 2007 levels, according to the latest data from respected Petrofin Research. The new report from the Greek outfit shows that last year alone bank ship lending dropped by $42.5bn, mainly as a result of Commerzbank and Royal Bank of Scotland dropping out of the sector.
“Global bank finance now stands at the 2007 levels. Bank sentiment is still affected by loan losses and high provisions, sales of portfolios to financial institutional funds, international and European restrictions and the still not so bright outlook of shipping, which makes shipping banks quite cautious and seeking safety through known and large clients, higher margins and low finance percentages, as well as stringent terms,” Petrofin noted.
While bank finance is coming down, the global fleet is expanding. Petrofin suggested this implies lower average bank finance per vessel, and new vessels are increasingly being financed by a combination of equity, leasing, funds and private individuals’ equity.
Looking ahead, Petrofin warned: “[S]hipping markets across the board are not supportive to fresh bank lending.”