The asset sale reduces the volume of non-performing loans at Commerzbank’s Deutsche Schiffsbank ship-finance unit by 6 percent compared with the end of September, the Frankfurt-based lender said in an e-mailed statement today. The “net capital relief effect” of 8 million euros means the sale “doesn’t significantly impact” fourth-quarter earnings, it said.
Commerzbank, which announced its exit from ship financing in 2012, reduced its loan portfolio to the crisis-ridden industry this year by 3 billion euros to 15.7 billion euros as of Sept. 30, Otto said in an interview last month. The German lender is taking over ownership and operation of some ships from clients unable to repay their loans in a bid to salvage some of the debt.
“We will continue with our consistent strategy of value-preserving reduction,” Stefan Otto, head of the Hamburg-based Deutsche Schiffsbank unit that is part of Commerzbank’s non-core assets, said in the statement.
Germany’s top shipping lenders, including Commerzbank and HSH Nordbank AG, face rising credit default risks next year as bad debt from clients struggling to emerge from the industry crisis mounts, Moody’s Investors Service said in a report last week.
Private Investors
Oaktree, Blackstone Group LP (BX), JPMorgan Chase & Co. (JPM) and Tennenbaum Capital Partners LLC are among firms buying new and used German vessels and taking stakes in German shipping companies that need financial backing. They are replacing mostly private investors who for decades participated as limited partners in German ships.
Howard Marks, the chairman and co-founder of Oaktree Capital Group, indicated on Dec. 10 that shipping is one area his company is exploring for further takeovers, at a conference hosted by Goldman Sachs Group Inc. in New York.
“There absolutely is a paucity of bargain-priced distressed opportunities,” he said, according to a transcript of his comments. “Most of the distressed which is out there is in just a few pockets, shipping, power, non-prime real estate and Europe. And there we find opportunities to put money to work.”