ECB Reviews Shipping Loans

ECB is conducting an in-depth review of banks’ exposure in shipping amid rising provisions for bad debt in an industry still mired in crisis.

The ECB’s banking supervisor sent an email at the end of last week asking a raft of European banks for details of their shipping loans and the status of their loan loss provisions as an “initial step” in a broader review of lending in the sector, one of the sources quoted the email as saying.

“It is a very extensive request,” the source told Reuters.

The review follows a clash earlier this year between the bank supervisor and HSH Nordbank AG, Germany’s biggest shipping lender with 23 billion-euro ($26 billion) exposure, over loan valuations tied to a restructuring plan to shed 8.2 billion euros in bad debt and sell itself by 2018.

Germany was one of the world's main centers of global ship finance before the 2008 crisis, and the five German banks with the closest links to the shipping industry still have around 80 billion euros ($90 billion) on loan to the sector.