ING Group is continuing to finance ship orders in a market that is being vacated by many banks whose loans to shipowners have been hit by defaults caused by the downturn in the shipping sector.
The largest Dutch financial-services company plans to keep its $7.9 billion shipping portfolio “relatively flat” this year, making new loans “equivalent in size to debt run-off with some allowances for new building commitments,” Rory Hussey, managing director at ING’s shipping finance division, told Bloomberg.
ING is one of a shrinking number of European lenders making loans to an industry hurt by an overcapacity of vessels, slumping freight rates and soaring fuel costs. Banks are also scaling back or exiting ship finance because of stricter capital rules for lenders or as a condition for approval of government bailouts they got during the global financial crisis. That has pushed up the margins on maritime industry loans.
“We have room for more lending and are open for new business, though not as wide open as we were at the beginning of last year,” Hussey said. “The net margins are at this point slightly higher than they were in 2006 and 2007 and the net returns are better. It is still worth making shipping loans.”