Deutsche Bank is to sell at least $1bn of its loans to the shipping industry, in response to mounting pressure from the European Central Bank (ECB), according to reports from Reuters.
“They are looking to lighten their portfolio and this includes toxic debt. It makes commercial sense to try and sell off some of their book,” one finance source told the newswire. “They are not looking to exit shipping.”
Deutsche Bank’s total exposure to the shipping sector is reportedly worth between $5bn to $6bn.
The European Central Bank (ECB) has reportedly contacted banks across Europe to assess the risk of their shipping exposure.
The ECB has asked banks to provide details of their shipping loans and the status of their loan loss provisions as a first step in a broader review of lending in the sector.
Deutsche Bank declined to comment on the sell-off when approached by Reuters.
A number of major banks have reduced their exposure to shipping over the past 12 months, particularly in Germany, but two new lenders have stepped into the breach during the past week alone.
On Monday, Germany’s oldest bank Joh. Berenberg Gossler & Co said it has created a $500m fund with an unnamed private-equity investor to jointly grant loans to about 400 of Berenberg’s shipping clients.
Last week, London-based shipbroker Simpson Spence Young (SSY) announced the formation of SSY Carnegie LLP, a joint venture (JV) with Nordic investment bank Carnegie that will offer shipping-related project finance and investment banking services.
NordLB, the German Landesbank, has said it will slash its shipping loan portfolio, and the Royal Bank of Scotland (RBS) is looking to sell its Greek ship finance business, which is worth around $3bn. Credit Suisse and China Merchants have been named as potential buyers.
HSH Nordbank last week transferred a portfolio of non-performing shipping loans worth €5bn to HSH Portfolio-Management AöR.