INTERVIEW-German bank DVB eyes cheap maritime loans amid downturn

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Wed Jan 11, 2012 8:08am GMT

* DVB looking at buying as much as $3.5 bln in loans

* Bank aims to expand shipping portfolio by 5 pct

* Growth seen mainly in offshore, LPG and cruise ships

By Randy Fabi and Harry Suhartono

SINGAPORE, Jan 11 (Reuters) - Germany's DVB Bank SE (DVBG.F), among the world's top 10 shipping financiers, is considering acquiring as much as $3.5 billion in maritime loans from banks looking to raise extra capital, a senior executive said on Wednesday.

DVB, a unit of Germany's main cooperative bank DZ Bank, sees an opportunity to expand its shipping portfolio at discounted rates as its rivals, like Societe General (SOGN.PA), scramble to reduce or unload their maritime assets due to the global economic slowdown.

Europe's banking watchdog last month estimated financial institutions would need 114.7 billion euros ($146.56 billion) of extra capital to make them strong enough to withstand the euro zone debt crisis. [ID:nL5E7N843J]

To meet these requirements, banks are expected to reduce their exposure in areas like shipping finance, project finance, aviation and infrastructure.

"We are definitely doing a few deals where we take participations off another bank. If the pricing is OK and exposure is where we want to have it, we will look at it," Dagfinn Lunde, managing director and a board member of DVB Bank, told Reuters at the company's office in Singapore.

DVB has already purchased around $100 million of shipping loans from banks and was looking at offers totalling more than $3.5 billion, he said.

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European bank rules redraw lending landscape [ID:nL5E7MB2NU]

Ship lending to slide in 2012, downturn bites[ID:nL5E7MA2GL]

Global shipping downturn worse than 2008 [ID:nL4E7M308I]

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French bank Societe General last month said it planned to sell billions of euros of shipping, aircraft and real-estate loans to cope with tougher regulations. [ID:nL5E7N22UO]

DVB's parent company, DZ Bank, is also expected to need about 350 million euros in extra capital, a source familiar with the situation said in late November. [ID:nWEB5675]

However, DZ Bank AG, which provides funding of around 12-14 billion euros to its subsidiary, is not likely to seek the additional capital by selling off or reducing its exposure to DVB because the unit provides profitable returns, Lunde said.

EXPANSION

DVB seeks to expand its $14 billion maritime loan portfolio, representing about 1,500 vessels, by 5 percent this year. That translates into around $700 million, more than double the $300 million increase last year.

The bank, which Lunde says is the holder of either the ninth or tenth biggest shipping loan book, is aiming to extend between $3.2-$3.5 billion in new loans this year. That does not include the loans potentially purchased from other banks.

Lunde sees most of the growth this year in offshore energy transportation and liquefied gas carriers, as well as the cruise and ferry sectors.

"People talk about shipping as a disaster, for us it is not a disaster. More than 50 percent of our portfolio is running beautifully," he said.

Banks and maritime firms with exposure to dry bulk carriers, oil tankers and container vessels have been hit hard due to rock bottom freight rates, high bunker fuel prices and abundant shipping capacity.

Norwegian bank DNB (DNB.OL), the world leader in syndicated loans to shipping, said its loan book to the sector would worsen in 2012. [ID:nL6E7NG1TB]

($1 = 0.7826 euros)

(Editing by Michael Urquhart)

((Randolph.Fabi@thomsonreuters.com)(+65 6870 3803)(Reuters Messaging: randolph.fabi.thomsonreuters.com@reuters.net)) Keywords: SHIPPING DVBBANK/

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