The ongoing crisis of the shipping industry is a huge problem for the German public banks, especially the ones from northern Germany. The potential provision by the governments of Hamburg and Schleswig-Holstein is up to 20 billion EUR, which are in need of support due to the large volume of loans granted to container carriers. The extreme overcapacity on the global market, led the German container shipping companies lay-off their vessels of to work at loss. The German banks own about a quarter of loans to shipping companies, amounting about 100 billion USD. Among the banks hardest hit by the crisis are HSH Nordbank, Nord Landesbank and DVB Bank.
Earlier this week Schleswig-Holstein reported that unfavorable development of the situation may require the EU or the federal German government to support the bank HSH Nordbank, which is 85% owned by the governments of Hamburg and Schleswig-Holstein.
The shipping industry was engulfed by the global economic crisis of 2007-08. Then the global economic downturn has led to a sharp reduction in demand for international container traffic and left considerable untapped capacity share. However, instead of reducing fleet, the shipping companies have decided to invest in even larger vessels using an unprecedented low interest rates on loans in order to reduce costs.
The situation has worsened with the opened new locks of the Panama Canal, which allowed passage of larger vessels.
In recent years, many of the major shipping companies suffered losses. The first victim of the crisis was a major South Korean carrier Hanjin Shipping. The expert suggested that for the Korean company may be followed by others, including some banks.
Last month, the Oetker Group announced the sale of its shipping company Hamburg Sud to Maersk Line. This decision was interpreted by many analysts as a way of an asset in the toxic sector of the economy.
Many banks are trying to sell their issued loans as soon as possible. For example, Commerzbank has reduced the size of its loan portfolio in this segment, from 18 billion EUR to 5 billion EUR.
Meanwhile, the experts predict that the situation in the global shipping industry will continue to deteriorate. According to estimates, this year the global container capacity will grow by 6-7%. Taking into account the disposal of an increase of 5.5%, despite the fact that the demand will increase by only 3-4%.