Hellas: Shipping financiers stay calm, looking to support ship owners.
?Banks should continue their efforts to untangle the Hellenic shipping industry from the hooks of the crisis? said Mr. Alexandros Tourkolias, during his traditional speech in the annual meeting of the Union of Banking and Finance Executives of Hellenic Shipping, which took place late last week. During the relative period of last year, all banks active in the shipping industry were working under the impact of the psychological shock that the collapse of the financial system has brought into a global scale since the autumn of 2008 said Mr. Tourkolias, adding that ?after a demanding and hard work, shipping banks managed to maintain their composure and with the expected maturity coped with the crisis in the best way possible, looking to preserve their loan portfolios without incurring losses, while helping out their customers. This year, the prospects of the world shipping industry are undoubtedly more optimistic, but this doesn"t mean that the crisis is over? said Mr. Tourkolias. He concluded his speech by stressing out, that things will be steadily improving thanks, in part, to the strong ties between the Union"s members and Hellenic ship owners.
Meanwhile, the Union"s Secretary General, Mr. George Xiradakis briefed the members on the Union"s activities during 2009, such as the organization of the Shipping Finance Day, the support of important events with regards to financing, as well as the continuous effort of the Board towards the international expansion of the Union and the creation of a European Union of Shipping and Finance Maritime Executives.
In an earlier report, it was pointed out that a series of factors like newbuilding cancellations which eliminated bank commitments led to a significant reduction of the global shipping loan portoflio, which is estimated to have ended 2009 at approximately $410-420 billion, down from about $450 billion a year ago. Meanwhile, Hellenic ship lending (draw and undrawn) by the end of 2009 is expected to have fallen to approximately $65bn, from $73.2 billion at the end of 2008, according to a research note by Petrofin Research.
Still, the dry bulk sector"s recovery during 2009 has supported banks" conciliatory approach. ?However, the large fall in tanker vessel values and earnings is of growing concern. Greek bank exposure to the container market is limited
Widespread belief in the shipping industry that banks" attitude to waivers, restructures and non-performing loans shall harden in 2010? warns Petrofin. In other words, the banking sector is expected to play a more than crucial role in the future course that the shipping industry will chart. At the same, banks, especially those in Hellas, have been presented with a unique opportunity to further enhance their presence within the shipping market, which will provide them with increased profits in mid-term.
For the time being, it is estimated that the world"s 32 biggest shipping banks controlled 90.5% of total loans by the end of 2008, or $407.4 billion. Banks from Asia and the Middle East aren"t taken into account, as they don"t publish their relevant figures.
One of the most pressing concerns for banks is the global orderbook, new building deliveries and ship breaking activity. These factors will determine future tonnage supply, which could either turn things around for the shipping market, or be the reason of doom for ship owners. In the short term (i.e. the next couple of years), the market should be negatively influenced by lower ship values and earnings. At the same time demand for financing will continue to outpace supply, as banks will keep emerging from the recent crisis. But in the mid-term (3-5 years) ship values are expected to pick up, the orderbook will be significantly reduced and banks will enjoy a safer shipping loan portfolio with lower provisions, not to mention the general improvement of the banking sector as a whole.