ECONOMY

Financing of Greek shipping firms keeps attracting strong interest from major banks

The continued confidence in the growth prospects of Greek shipping enterprises among Greek and foreign banks was reflected in a 3 percent rise in the total lending to them in the second half of 2003. According to data in the annual study by Petrofin Bank Research on the «Main Developments in Greek Shipping Finance in 2003,» the total lending to Greek shipping firms rose from $16.525 billion in 2001 to $24.821 billion in June 2003 and $25.554 billion on December 31, 2003. The study divides the banks which finance Greek shipping into three categories: foreign with a presence in Greece, foreign without a presence in Greece and Greek banks. Foreign banks with a presence in Greece maintained their lead in the market, with their total loan portfolio to Greek shipping rising by $685 million, or 7.5 percent, in the second half of 2003 to $10.124 billion. Smaller players pull out By contrast, the number of foreign banks without a presence in Greece which financed Greek shipping fell from 33 to 29 in the same period, and their total lending was 3.15 percent lower on December 31, at $9.787 billion. This decline is interpreted as indicative of broader globalization trends and a review by banks of their role. «Some banks with only a small participation or small shipping portfolios are withdrawing from Greek finance because it does not represent part of their policy,» writes Petrofin Bank Research. The number of Greek banks with shipping portfolios rose from 12 to 15, the newcomers being General, Omega and Aspis, but with a minimal presence. Greek financing of Greek shipping increased 6.75 percent in the second half of 2003 to $5.641 billion. It is worth noting, the study states, that the presence of Greek banks in the sector is being consolidated, mainly as a result of attractive risk and return characteristics. Seven Greek banks are now in the top 25 – National, Alpha, Piraeus, Emporiki, First Business, EFG Eurobank Ergasias and Laiki. According to Petrofin Bank Research, banks are showing an increasing interest in financing Greek shipping firms as a result of two factors. First, their emphasis on new vessels, which have future rather than present borrowing requirements and, second, early repayments of loans as a result of the sale of older vessels which carry high prices. Ships on order are currently estimated at 310, projected for delivery between 2005 and 2008. Banks’ willingness to lend for new ships continues strong, based on the high standards and sound financial position of Greek clients, and the positive prospects of the international economy, trade and shipping. However, because shipbuilding costs have risen considerably and most deliveries are expected in 2007 and 2008, banks are beginning to be more cautious in financing new vessels, the report notes. Looking to the Far East A new feature of the market is the increasing willingness of Far Eastern banks (mainly Korean) to finance Greek shipowners for orders to local shipbuilders. There have also been discussions between Greek shipowners and Chinese banks. The role of Chinese shipbuilders is expected to increase in the future, with ready financial packages supported by local banks as part of efforts to clinch orders. The study notes that spreads of Chinese banks today are at least 0.5 percent lower than Western competitors, which may be an incentive to Greek shipowners to borrow from them.