China Exim Flexes Financial Muscle

The global financial crisis has accelerated a dramatic shift eastward in the centre of ship finance as the traditional European banks continue to struggle to put themselves together. European financial institutions have long been important lenders to the international shipping community but with many of them placed under state ownership, banks may be dictated to on how much and to whom they can lend. Market rumours suggest that some lenders are already in talks to sell some chunks of their shipping loan portfolios at a discount so as to boost their capital adequacy ratios.

This stands in sharp contrast to China where shipbuilding has been identified as one of its ten pillar industries. Banks in China are stepping up their lending activities to support the sector currently in doldrums. According to the latest figures released by the People’s Bank of China, new loans extended by Chinese banks across all industries including shipping and shipbuilding grew to RMB 4.58 trillion (USD 670 billion) in the first quarter of this year. This is the third straight month new yuan-denominated loans exceeded RMB 1 trillion.

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