Cleaning up Credit Committees

With many banks having had fingers burnt over the past couple of years in the Greek shipping market, there is a general requirement for more transparency of financial information. We believe that in addition to increased financial transparency, if banks lending to the Greek market extend disclosure requirements as well to vessel condition, management efficiency and casualty history, the obvious will occur. Quality companies will enjoy a closer, more trusting relationship with their banks and questionable companies will either clean things up or eventually go out of business.

While the following article focuses on ship financing in the Greek market, we believe that most of what is discussed can be applied in other shipping markets also. We also note up front that it is fair to exclude corporate shipping companies from certain, though not all, of the views expressed below. Such companies produce audited financial accounts and are more transparent than the traditional single purpose structure practised by most Greek ship operating groups, both large and small. To be noted with caution, however, is that many shipping companies use “Cost of Assets less Accumulated Depreciation” on the asset side of their balance sheet.

This is only an excerpt of Cleaning up Credit Committees

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