Deutsche Bank AG Deutsche Shipping

Transcription

1 Deutsche Bank AG A reliable partner for all time Accessibility to traditional Ship Financing London, November 9th.

2 Introduction Deutsche Bank s activities in the shipping sector Deutsche Bank has been a player in the shipping market for more than a 120 years Main markets: Germany, Nordic Region, Southern Europe, Americas, Asia, other European Countries Significant player in the field of ship financing with integrated commercial and investment banking franchise Europe Hamburg London Oslo Piraeus Americas New York Asia Singapore Hong Kong 1

3 Current Economic and financial environment Macro backdrop Continuing shift of economic activity and consumption patterns to Asia GDP Growth forecast in 2011: China 8.6, India 8.1 Uncertainty about sustainability of recovery in OECD countries GDP Growth forecast in 2011: Euroland 1.0, USA 3.1 Pressure on financial institutions due to: Residual effects of financial crisis, included but not limited to Shipping Tighter capital adequacy requirements (Basel III) Leads to: Fewer banks in the position to lend Diversification of funding sources for shipping companies Flight to quality on the part of shipping banks Importance of developing and maintaining a sustainable business model based on which the future of the company can be secured in an unpredictable environment 2

4 Securing financing in the current economic climate Types of financing Asset / project financing Less prominent after the financial crisis Still most favoured form of financing for some banks Focuses more on asset (i.e. vessel) as well as already contracted employment, although solid sponsor/management background is crucial Important for the offshore industry Capital markets Equity and debt capital markets are a tool for diversification of funding sources in the current environment where bank finance is still scarce In the event of issuance of public equity or debt securities, the added transparency imposed on the company by financial regulators as well as the ratings of rating agencies effectively serve as a credit process for individual investors Share price movements and ratings serve as an indication of creditworthiness of the company Shipowner recourse financing Focuses on track record of shipowner Asset (i.e. collateral) value not the primary source of repayment, but a higher value (and lower gearing) allows the bank to reduce the equity allocated to the loan Long-term contracted revenues appreciated, but rather feasibility of satisfactory employment of vessel (i.e. sufficient to service OPEX and debt and positive market view in the bank s perspective) is important Transparency of the group structure allowing the bank to reassess the creditworthiness of the company continuously The understanding of the varying requirements and diversification of funding sources is key to the continuous sustainable access to financing 3

5 Bank s expectations of the Shipowner The sustainable business model Strategy Employment set for medium- to long-term Access to freight Asset play only small part of overall strategy Financial Strength Sustainable future cashflows sufficient to service OPEX and debt Ability and willingness to accept lower leverage Transparency Clear corporate structure Well established processes Accountability of management Expertise Good management track record and experience Resourcefulness during the whole shipping cycle Operational excellence Reputation Proven long-term commitment to the industry Integrity and managerial quality The adoption of a sustainable business model will result in a successful strategic partnership between bank and shipowner 4

6 The role of export finance Export finance plays an increasingly substantial role as a complement to traditional bank finance Apart from the obvious benefit of providing shipowners with an alternate source of funding, export finance has been used by governments to advance national interests by supporting labor intensive domestic industry Deutsche Bank s experience in working with Export Credit Agencies (ECAs) in Korea, China and Norway have provided us with practical knowledge necessary to guide shipowners through the process of obtaining access to this financing ECAs have preferences for project finance deals, therefore a clear structure supported by commercial bank as well as substantial sponsor support and contracted employment is essential In the times of scarce bank credit, ECAs have been a welcome player in the shipfinance industry, providing funding for capital intensive projects 5