One of the most famous names in European ship finance is exiting the sector after its parent failed to find a buyer for its portfolio.
DVB Bank, owned by Germany’s DZ Bank, once a top five name in global ship finance, is to wind down its shipping exposure, having also recently exited the land transport and aviation sectors. DZ Bank had been trying to find a buyer for DVB since mid-2017 with no takers stepping forward.
“We will remain servicing our existing clients, but no more new business or balloon refinancings,” Frans van de Bospoort, managing director of DVB’s Singapore shipping finance division told Splash today. Van de Bospoort added that there would be no sale of loans or portfolios and he anticipated that DVB would maintain a presence in Singapore for the next “few years”.
Latest ship finance rankings for 2018 from Athens-based Petrofin Rankings put DVB in 11th place globally with a $7.5bn strong shipping book. Notably, DVB also ranked second in the important Greek market last year.
In the coming months DVB will close offices in New York, Hamburg, Oslo and Athens while the headcount at offices in Frankfurt, Amsterdam, London and Singapore will be reduced.
Commenting on the news, Splash finance columnist Dagfinn Lunde, who headed the bank’s shipping division for a number of years, said he was sad to hear of DVB’s decision.
“One of the most professional transportation banks ever is leaving the field,” Lunde said.
Another ship finance veteran, Tobias Koenig, managing director at Hamburg’s Lexington Maritime, commented: “We have been talking about DVB’s futile efforts to find a buyer and I think that it cannot be a surprise to see them exiting ship financing. After all, their ships aren’t really different from the others and the market has been loss-making for over a decade now. There are too many ships and we need to stop building new ones until we know how to reach new low emission standards. Shipping might be the next coal miners. Who wants to invest in an industry, whose current assets might be totally obsolete and worthless in less than a decade?”
Banks offering ship finance were already at their lowest levels this century, according to research published by Petrofin in October ahead of DVB’s exit.
Speaking during the ship finance session at the Maritime CEO Forum at the Monaco Yacht Club in October, Lunde, founder of eshipfinance.com, noted how globally the volumes of ship finance from banks have shrunk by 35% since the onset of the global financial crisis in 2008, and yet the world’s merchant fleet has grown by 60% in this timeframe.
“Don’t get your hopes up that the shrinking of the banks market will end anytime soon,” warned Greg Belonogoff, a partner at CarVal Investors, at the same event. Banks will continue to sell off their shipping portfolios, Belonogoff predicted with the implications from Basel 4 already on the horizon where regulators are driving more capital onto balance sheets.