Finance and Insurance

Watershed year for ship finance as banks up their game

After more than a decade in retreat following damaging exposure to the sector in the wake of the 2008 global financial crisis, banks are increasing their ship finance taps.

Greece’s Petrofin Bank Research has issued its latest annual report looking at the ship finance universe and is calling 2021 a “watershed year”, in which global bank finance will end its long decline and record growth.

“The increase is expected both for the big, as well as the smaller banks, across the world,” Petrofin stated in a release.

The ClarkSea Index is up 105% on the 10-year trend

Banking’s re-embrace of shipping comes as the industry enjoys its best year since the collapse of Lehman Brothers. The ClarkSea Index – a weighted barometer developed by Clarksons covering the main shipping sectors – stands at a robust $39,100 a day, with the average in the year to date up 83% year-on-year and up 105% on the 10-year trend.

The top 40 banks’ lending to shipping fell from $294.4bn in 2019 to $286.9bn in 2020. This minor decrease of 3% comes after the departure of DVB and Nord LB from ship finance and their elimination from Petrofin’s research.

The notable European bank picking up the slack last year was BnP Paribas with a $3.53bn increase in its portfolio during 2020.

Chinese leasing continues its inexorable growth in the shipping field, growing from $59.2bn in 2019 to $66.5bn in 2020.

“The good shipping markets have woken up IPO appetite and an increased support for shipping by the capital markets across all sectors, also for follow-ons and shipping bonds, with 2021 totals expected to be similar to 2020 but with a much bigger number of transactions in the pipeline,” Petrofin stated.

Sam Chambers

Starting out with the Informa Group in 2000 in Hong Kong, Sam Chambers became editor of Maritime Asia magazine as well as East Asia Editor for the world’s oldest newspaper, Lloyd’s List. In 2005 he pursued a freelance career and wrote for a variety of titles including taking on the role of Asia Editor at Seatrade magazine and China correspondent for Supply Chain Asia. His work has also appeared in The Economist, The New York Times, The Sunday Times and The International Herald Tribune.
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