Chinese lenders boost local shipping industry

The Chinese banking sector is proving to be a major ally for the Greek shipping industry in 2012, given that the Asian country?s banks are continuing to finance the construction of Greek-owned ships at Chinese shipyards, and on favorable terms to boot.

The presence of Chinese lenders in the field of ship financing has increased in the last few years as a result of the reluctance of their European counterparts, which had previously served as major backers for both the Greek and international shipping industries. According to George Xiradakis, managing director of XRTC Business Consultants, given that China is the world?s shipbuilding leader, the country?s banks have good reason to enter the field of maritime financing. Orders at Chinese shipyards stood at 2,876 vessels in September 2011, a figure that translates into 44 percent of ship construction around the world.

The main tool used in the financing of the Greek merchant shipping industry by Chinese lenders is a recently established 8-10-billion-dollar fund which was set up by Beijing in order to back Greek orders at Chinese shipyards with competitive interest rates and terms.

With a number of Chinese banks already operating in the shipping industry, the sector?s most powerful players are China Development Bank (CDB), Export Import Bank of China (EXIM), Bank of China (BoC) and China Construction Bank (CCB).

Another key tool in the field of funding is leasing, with ICBC Leasing leading the way as it focuses its efforts on the backing of major Greek shipping companies.

According to Xiradakis, while Chinese banks enjoy liquidity, they lag in terms of the speed with which they execute the deals. ?The maximum time observed by Western banks when they grant a loan is only two months, while Chinese banks might take up to six months, sometimes even up to nine months,? said Xiradakis, who added: ?The lack of experience and the bulk of projects undertaken by Chinese banking organizations are the main cause of delays. Things are improving, however, as time goes by.?

It is generally expected that shipping companies will continue to come up against difficulties accessing loans in the international banking system this year, given that the number of freights are expected to continue their overall decline, while the number of new cargo ships expected to enter the market in the near future is set to rise.

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