European banks positioning themselves to capitalise on Chinese leasing exits
European banks are writing credit proposals to extract clients from Chinese leasing arrangements amid nerves over potentially punitive US fees
While Chinese leasing houses insist the fallout from US ports fees will be minimal, European banks are receiving a growing volume of calls from nervous owners looking to line up potential exit strategies
SEVERAL major European banks are actively pursuing shipowners looking to exit Chinese leasing arrangements amid growing concern that punitive US port fees could present a risk.
While the US is yet to clarify whether China-leased ships would be deemed China-owned, and thus subject to charges under current plans, the uncertainty surrounding the association with Chinese lessors has been sufficient to prompt a growing volume of calls to banks.
“There are real concerns over Chinese leasing and this is absolutely an opportunity for us,” said Emile Jos Karsten, head of shipping coverage nordics, at ABN Amro bank.
“We are actively writing credit proposals now to take out these financing arrangements and replace them with bank loans,” he told Lloyd’s List on the sidelines of the Marine Money ship finance conference in Oslo on Wednesday.
Representatives of several other ship finance banks confirmed that they have been receiving an increasing volume of calls from owners looking to review their options and sound out potential deals in the event that they exercise the early purchase options.
After years of cut-throat competition from Chinese lessors, “the sun is finally shining and we have an opportunity here”, said Karsten.
Lloyd’s List understands that at least one other bank has bolstered its presence in Asia offices with senior figures now pursuing clients off the back of incoming enquiries.
So far, however, there is little evidence that owners are ready to jump.
“We don’t really see a massive unwinding of Chinese leasing at the moment,” said Joachim Jaeger Skorge, head of Asia-Pacific investment banking at DNB Carnegie.
“People are definitely exploring their options though, and they’re trying to figure out the consequences of US policy decisions. If you have a lot of US exposure then it’s more relevant to look at this and there are alternatives to Chinese leasing that are attractive right now.”
Jaeger Skorge also pointed to the potential for Chinese leasing houses to rapidly adapt their business model by offering traditional lending.
Lloyd’s List reported on Monday that some Chinese leasing houses are urgently requesting Beijing’s approval to provide mortgage lending in a bid to withstand escalating fallout from US-China tensions.
Lessors are asking regulators to permit the provision of ship loans, allowing the companies to retain business even if Washington charges punitive port fees on ships they would otherwise own.
“It’s very much a dynamic picture and I think there’s been some pressure on some companies to unwind structures already, but most of the clients we are talking to are still at the stage of just exploring at this point. Basically everyone is waiting for more guidance from the US, but they are also very carefully considering the next steps.”
Rumours of an attempted exodus of owners seeking to exercise the early purchase options, or sounding out Japanese alternatives, have been a consistent topic of conversation at this year’s Nor-Shipping events.
According to Chinese leasing giant ICBC, however, the concerns have been overblown.
But the official line from the Chinese lessors has been that there is nothing to see here.
According to Sharon Guo, who heads up Europe and the US for ICBC Financial Leasing, while some enquiries may have been made in light of the current geopolitical tensions, “very little” had happened so far.
“Some owners are taking a wait-and-see approach before making any decisions,” she told Lloyd’s List, but stressed that the client relationships would last beyond any immediate geopolitical tension.
“We see the relationship with our clients as a long-term relationship. It’s never been a one deal relationship,” she said.
