Exclusive: ECB reviews banks' lending to troubled shipping industry - sources

Tue Jun 21, 2016 12:09pm EDT
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By Andreas Kröner

FRANKFURT (Reuters) - The European Central Bank has launched a review of banks' lending to the shipping industry, much of which is suffering a deep downturn, five people familiar with the situation told Reuters.

The review by the ECB's banking supervisor has raised concerns among lenders, particularly in Germany, that they may be required to set aside more capital and make higher loss provisions against loans to the industry.

At the end of last week, the supervisor sent an email asking a series 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 ECB declined comment.

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.

State-backed lender NordLB [NDLG.UL] said this month it plans to take full control of subsidiary Bremer Landesbank because of the latter's burgeoning losses in ship finance.

Peers such as HSH Nordbank [HSH.UL] and Commerzbank (CBKG.DE: Quote) have also taken writedowns and boosted capital buffers against the risk of shipping loans turning sour.   Continued...

European Central Bank (ECB) sign is pictured outside its headquarters in Frankfurt, Germany, April 21, 2016. REUTERS/Ralph Orlowski