Greek Ocean Going Shipping Debt Finance & Greek Banks

Slides:



Advertisements
Similar presentations
Jennifer Marshall Senior Financial Analyst Property/Casualty Division February 12, 2009 Treatment of Investments in the A.M. Best Rating Process NYIA Educational.
Advertisements

Development of a Mongolian MBS Market Workshop on Housing Finance 28th June 2011 Presented by Jim France.
Report on Financial Stability Vonnák Balázs director 1 12th November 2014.
Chapter Ten Financial Crisis. Introduction From 2007 to mid-2009, global financial markets and systems have been in the grip of the worst financial crisis.
Private Fixed Income Securities An Overview Rick Long – Drake University March 27, 2012.
2-1 CHAPTER 2 AN OVERVIEW OF FINANCIAL INSTITUTIONS.
EC102: Class 9 LT Christina Ammon.
Michipicoten Settlement Trust Trustee Investing September 21, 2012 Heather Richardson, Executive Trust Officer.
COPYRIGHT Wachovia CONFIDENTIAL Surviving the Credit Crunch October 22 nd 2008.
Chapter Six: Credit Risk Management. Business Risk Operational Risk Financial Risk Technology and operations outsourcing Derivatives documentation and.
EC102: Class 10 LT Christina Ammon.
Chapter Fifteen Finance: Balancing Risk and Return to Increase Profitability © 2007 The McGraw-Hill Companies, Inc., All Rights Reserved. McGraw-Hill/Irwin.
Chapter 8 Transaction Exposure.
CHAPTER 8 A framework for interpretation
... are the markets in the economy that help to match one person’s saving with another person’s investment. ... move the economy’s scarce resources.
New Venture Financials and Business Valuation One Asset Management Limited.
Bank Performance Banking & Finance. Bellringer Chapter 13 Online Pretest.
SESSION 19A: PRIVATE COMPANY VALUATION Aswath Damodaran 1.
1 Deregulation and the Hong Kong Banking Sector David Carse Hong Kong Monetary Authority 31 August 2001.
MSE608C – Engineering and Financial Cost Analysis
This week its Accounting Theory
Weiss Ratings, Inc. A View of the Life and Health Insurance Industry.
Ness, Risan & Partners KS Financing This document is for the use of the intended recipient only and should not be copied or distributed to any other person.
Finance & Cash Flow Management Presented by: Sahar El Damati.
TEXT Economic Crisis Ends Years of High Growth Asian countries achieved outstanding economic performance for several decades before the economic crisis.
Chapter 24 International Banking McGraw-Hill/Irwin Money and Capital Markets, 9/e © 2006 The McGraw-Hill Companies, Inc., All Rights Reserved.
Investment Basics Clench Fraud Trust Investment Workshop October 24, 2011 Jeff Frketich, CFA.
1 Navigating Today's Lending Market Tom Detienne David Woida Investors Community Bank NorthMarq Capital 860 N. Rapids Road 325 N. Corporate Drive, # 180.
Module The relationship between savings and investment spending 2. The purpose of the 5 principal types of financial assets: stocks, bonds, loans,
Surety Basics 2013 Construction Opportunities Conference
Session 8. The volatility of private capital flows in developing countries and the potential role of BRICS development bank to counter pro-cyclicality.
presented by Ted Petropoulos HEAD PETROFIN RESEARCH
Current experiences, opportunities and innovations of municipal financing in Ho Chi Minh City, Vietnam Presentation to International Conference on Financing.
Ship Finance ‘Opportunities and Challenges’
HOTEL INDUSTRY RUSSIA 2010 FINANCING REFINANCING A. Bourdin 2/12/10.
15-1 CHAPTER 15 INTERNATIONAL BANKING American International Banking l International banking dates back to the rise of international trade. l Great.
Which cost of funds measurement should a bank use ? -The historical average cost of funds is useful in assessing past performance. -The marginal cost specific.
Selecting a Minimum Attractive Rate of Return Chapter 15 Mechanical Engineering 431 Engineering Economics.
1 ©2006 MDM Bank – Strategic Planning Department IBLF Improving financial literacy and responsible lending: the MDM experience Michelangelo Mazzarelli.
January 2006, Budapest Additionality of Guarantee Schemes for Agricultural and Rural Development: Lithuanian Experience Danguolė Čukauskienė Director,
© 2012 Cengage Learning. Residential Mortgage Lending: Principles and Practices, 6e Chapter 3 Role of Residential Mortgage Lending in the Economy.
Portfolio Management Unit – II Session No. 16 Topic: Managing Portfolios by Insurance Industry Unit – II Session No. 16 Topic: Managing Portfolios by Insurance.
Chapter 16 Financial Statement Analysis. Topics to be Discussed Introduction Why Analyze Financial Statements Horizontal Analysis Vertical Analysis Comparison.
Salaar - Finance Capital Markets Spring Semester 2011 Lahore School of Economics Salaar farooq – Assistant Professor.
BANKING.  Banking is a combination of businesses designed to deliver the services  Pool the savings of and making loans  Diversification  Access to.
© 2013 Cengage Learning. All Rights Reserved. May not be scanned, copied, or duplicated, or posted to a publicly accessible website, in whole or in part.
Analyzing Financial Statements
PowerPoint Presentation by Charlie Cook Copyright © 2004 South-Western. All rights reserved. Chapter 13 Depository Institution Management and Performance.
Financial Markets & Institutions
Multinational Cost of Capital & Capital Structure.
Chapter 1 Why Study Money, Banking, and Financial Markets?
ALIGNING LOCAL BANKS TO FUND MINING ACTIVITIES IN ZIMBABWE Presented By Robert Thomas Zawaira Presented By Robert Thomas Zawaira.
How Banks Work CHAPTER TWO. The Role of Banks A bank is a financial intermediary that accepts deposits from savers and makes loans to borrowers. By making.
Basic principles of financing. Advances are the major revenue generating activity carried out by the banks. Therefore, this activity demands adequate.
The Investment Function in Banking
for institutional investors. Insurance companies.
1 Subir Lall International Monetary Fund Global Issues Seminar Series October 25, 2006.
1 MCF 304: Bank Management Lecture 3.1 Bank’s Capital Management.
Risks of New Global Downturn: Impact on Asia and Response  Lim Mah Hui (Michael)  State of the Global Economy, and Reflections on Recent Multilateral.
Finance (Basic) Ludek Benada Department of Finance Office 533
Credit Rating Strategies in India Presented By: Cauvery Sharma (82008) Chetna Malhotra (82009) Kavya M. Chandra (82017) Neha Tandon (82026) Neha Malhotra.
1 Chapter 20 Bank Performance Financial Markets and Institutions, 7e, Jeff Madura Copyright ©2006 by South-Western, a division of Thomson Learning. All.
THE MARKET FOR LOANABLE FUNDS. FINANCIAL MARKETS... are the markets in the economy that help to match one person’s saving with another person’s investment....
Chapter 1 Investments: Background and Issues Copyright © 2010 by The McGraw-Hill Companies, Inc. All rights reserved.McGraw-Hill/Irwin.
SHIPPING COMPANY EONOMICS Financing ships and shipping companies Marina Zanne, M.Sc.
Ratio Analysis…. Types of ratios…  Performance Ratios: Return on capital employed. (Income Statement and Balance Sheet) Gross profit margin (Income Statement)
Chapter 2 Learning Objectives
How are BOP statistics used?
Lecture 2 Chapter 2 Outline The Financing Decision
South African Savings Initiative
Presentation transcript:

Greek Ocean Going Shipping Debt Finance & Greek Banks Challenges and Prospects 12/12/2013 Krikor Tzanikian  

Current Situation The overall sentiment that shipping is on a verge of a long-awaited rebound, coupled with historically attractive ship prices, has propelled a counter-cyclical investment mood amongst Greek shipowners. In theory, ship lending should be closely related, among others, to the patterns of the shipping markets and to the investment appetite of the ship owning community. Greek banks, maybe for the first time since their involvement in ship lending, have, so far, diverged from this theory. Ship lending from Greek banks, in absolute numbers, is contracting every year for the past 5 years. This paradigm shift is a result of the continuing banking crisis/consolidation in Greece and is not attributed to fundamental changes in how Greek banks perceive shipping risk.

Traditional/Historical Ship Lending Terms/Criteria Since the late 90s, and especially during the 2000s, Greek banks rapidly invested in shipping projects. The aggregate loan portfolio increased c. 200% in a decade (2002-2012). Even so, the shipping portfolio of the major Greek banks represented only a small percentage of their overall balance sheet, usually between 1% and 5%. Name lending has been key; Lending based on vessel’s cash flow generation and debt repayment capacity; Vessel’s estimated remaining working life, not to exceed 25 years; For lending to privately held groups, guarantees or similar support from the principals were usually required; Financing up to 70% of current vessel value. Larger percentage financing has been observed, mainly in relation to young tonnage; All facilities included a Minimum Value Clause (MVC), usually 120%/125%; First Preferred Mortgages with an assignment of Freight revenues and Insurance policies, covering at least Hull and Machinery, War Risks, Protection & Indemnity and MII/MAP.

Emphasis shift Credit criteria have remained unchanged, but emphasis has now shifted away from building up balance sheet. Preservation of capital (debt run-off, restructurings) Enhancement of profitability (spread increases, cross-selling) Liquidity constraints (focus lies on widening depositary base)

New banking environment in Greece In 2011 there were 13 Greek banks financing Greek shipping. Today this number has dropped to 5, of which 4 hold more than 97% of total outstandings. Amongst these 4 only a few are sill active in new shipping business. It comes to prove right all those voices which, in the past, advocated the establishment of banking relationships with more than one bank! The consolidation in Greek banking is expected to set the tone for the future of Greek shipping finance. We expect the emphasis shift of Greek banks to continue, at least until we see a normalization of the Greek economy and a stabilization of the banks’ fundamentals.

Impact on Greek Shipping and Future Sources of Finance Greek banks account for c. 19% of the total lending to Greek Shipping (as at end 2012), less if we exclude lending to coastal/passenger shipping companies. Accordingly more than 81% is attributed to foreign banks. Foreign banks also face difficulties, mainly attributed to past overlending, which limit their current activities. Therefore, in aggregate, traditional banks (both domestic and international) lending to Greek shipping are contracting their lending exposure. On the other hand, we notice a continuing investment surge from Greek owners in both newbuildings or second-hand units. It is interesting to note that during 2012, more vessels were sold than during 2011 and almost the same as during 2010. However the overall money spent was 40% less than during 2010 and 25% less than during 2011.

Impact on Greek Shipping and Future Sources of Finance (2) Even if we account for the drop in vessel values, where does the money come from? Some bank lending (mainly provided to listed companies and large private shipping groups); Non-traditional lending channels (non-traditional banks, bonds, mezzanine financing, hedge funds); Equity funds; Burning of accumulated “fat”.

Opportunities and Challenges for Greek Banks Greek banks can and will play a key role to Greek Shipping finance, however not in the short term: The recent bank consolidation has not been concluded operationally; It is possible that the consolidation of the various shipping portfolios may affect the lending capabilities to certain shipowners (“one obligor” rule); The new portfolio review exercise (Blackrock II) was submitted on Tuesday and we are in anticipation of its assessment by the regulatory authorities. Opportunities for Greek banks do exist: Leading position of Greek shipping in the industry, Low point of the cycle in most segments, Lack of competition (both domestic and international), Possibility for sizeable profits, Diversification of domestic portfolio, Substantial room for ancillary business.

Thank You Eurobank Ergasias SA - Shipping 19 years of presence in shipping. Loan portfolio close to a billion USD. Exclusive portfolio of Greek shipping companies. Mostly medium-sized companies. Portfolio is self-funded. Consistently profitable operation. Thank You