The return of Greek banks as weighty financiers of their country’s shipping has been a recurring theme in recent years.

Their rise has been relentless. For the first time, four of the world’s five biggest traditional lenders to Greek shipping are home-grown.

This is not just due to Western banks reducing lending or withdrawing from the scene. Greek financiers have been doggedly stepping up net lending — despite a wave of debt repayments by cash-rich shipping companies seeking to escape high interest rates.

“Our teams had to work much more intensively just to maintain our portfolio, let alone to increase it,” Konstantinos Petropoulos, head of shipping & structure finance at Piraeus Bank, told the Naftemporiki shipping conference in May.

According to the latest edition of a long-term survey into Greek ship finance conducted annually by Petrofin Research, the volume of home-grown loans to local owners rose for a seventh consecutive year in 2023 to $15.8bn, up 12% from 2022.

The bulk came from the four big, systemic lenders — Alpha Bank, Eurobank, National Bank of Greece and Piraeus Bank.

On their knees during the national debt crisis, each of these lenders now boasts a credit risk exposure to shipping of between €2.5bn and €3bn ($2.71bn and $3.25bn), according to figures published in their latest annual reports.

However, their portfolios may be higher still, with Petrofin and Greek banking executives citing figures of up to €4bn for each.

Greek lenders have seen their shipping loans skyrocket to levels not seen since 2010, with their share in global traditional bank lending to domestic shipowners reaching a historic high of 31%.

This indicates a significant shift, with nearly one in three dollars borrowed by Hellenic shipowners coming from local lenders last year.

Notably, 2023 marked the first time in Petrofin records that the country’s big four banks ranked among the top five lenders to Greek shipping, reflecting their increasing prominence in the industry. The growing interest from external investors in ship financing underscores the sector’s burgeoning appeal.

Billionaire investor and former Glencore trader Aristotelis (Telis) Mistakidis struck a deal this year to acquire control in Aegean Baltic Bank — small but healthy ABBank has been in the market for 20 years.

Less conspicuously, Greek shipowners Dimitris Bakos and Yiannis Kaimenakis invested €65m through their co-owned venture Thrivest Holding to buy a sizeable stake in Pancreta Bank — a new entrant in the market that has racked up a shipping portfolio of €74m, according to Petrofin.

Hardly any Greek lenders seem to spend any serious thought on serving any other clients than Greeks.

“We’re well covered by the demand coming from Greece,” said Theofanis Moustakatos, head of maritime operations at National Bank.

Within this target group, Greek lenders prioritise small to midsize owners over larger, listed peers who have access to international lenders.

This preference is evident in the annual filings of US-listed Greek shipping firms, which disclose their banking relationships.

In the past year, all four major Greek lenders have extended loans to small to midsize listed owners, including Seanergy, Euroseas, EuroDry, Performance Shipping and Imperial Petroleum.

Bigger companies also maintain ties to Greek lenders, as with a $125m loan agreed last year between National Bank and Petros Pappas-led Star Bulk Carriers.

When it comes to big loans for big clients, however, Hellenic lenders often move as part of an international crowd.

Alpha Bank, for instance, has taken a considerable slice of a mammoth $2.8bn loan that 13 banks extended last year to Peter Livanos-led GasLog.

More recently, it teamed up with Citibank, BNP Paribas and KfW on a $450m loan to John Coustas-led boxship player Danaos.

Economic revival

The resurgence of Greek banks stems from the country’s economic recovery following a substantial European bailout. This aid facilitated debt restructuring for the government and enabled banks to manage and shed billions in non-performing loans.

As their financial stability improved and Greece reclaimed its sovereign investment-grade credit rating last year, Hellenic banks have accelerated their activities once more.

“Loan margins became more competitive and Greek banks experienced a considerable growth in deposits from shipping clients,” Petrofin wrote.

This is not to say that Greek lenders ever completely withdrew from ship financing during the crisis.

On the contrary, the national economy was in such bad shape that lending money to shipowners was one of the few good businesses banks had left.

Shipping loans also generated additional business for banks, helping them cross-sell other products and services to maritime companies and their wealthy owners, such as deposits from vessel hires or some wealth management.

Theofanis Moustakatos, head of maritime operations at National Bank. Photo: Harry Papachristou

Realising this, Greek banking watchdogs never pressured the banks to tighten or reduce their shipping loans.

This is in sharp contrast to several big European banks for which shipping was, in the grand scheme of things, an afterthought that was perceived as fraught with financial and reputational risks.

Some Greek lenders see a comparative advantage there, as part of future Basel IV rules, which could oblige lenders to set aside more capital for each allocated loan.

“Assumption of the funding cost by the shipowner or the bank is something that we will see because it’s coming in 2025 — European banks already have an issue there,” Moustakatos said.

Another less commendable, comparative advantage is that Greek banks seem less concerned about displaying environmental sensibilities to the same extent as Western rivals.

No Greek bank subscribes to the Global Maritime Forum’s Poseidon Principles for sustainable ship lending.

They also do not steer clear of shipping to avoid the potential risk of finding clients embroiled in anti-Russia sanctions.

Instead, Greek banks seek to mitigate that risk by expanding their internal compliance mechanisms.

“My compliance department has become as big as my loans department,” one senior Greek shipping banker told TradeWinds.

As a result, it is no surprise to see Greek banks jumping into the breach left behind by departing European rivals.

In the best-known example, Piraeus Bank swooped in to pick up a chunk of HSBC’s Greek portfolio.

However, Credit Suisse — another significant lender in maritime lending, which was acquired by UBS last year — appears to be scaling back its involvement in shipping.

According to Petrofin figures, the Swiss bank remains the world’s biggest lender to shipping but its shipping loan portfolio shrank last year to $5.1bn from $5.5bn in 2022.

New funding sources

Greek shipowners have also compensated for much of the Western funding shortfall by turning to Chinese and Japanese leasing companies.

Middle Eastern lenders have joined the fray too. Euroseas recently announced striking its first finance deal with the National Bank of Fujairah, based in the United Arab Emirates.

Sale-and-leaseback deals have gained in popularity as well.

“Such providers … offer competitive pricing but most of the time a higher loan-to-value and longer maturities, which Greek owners found attractive,” Petrofin wrote.

Konstantinos Petropoulos, general manager, head of shipping and structured finance at Piraeus Bank (left) speaks next to Greek owner Michael Bodouroglou. Photo: Harry Papachristou

The market used to be dominated by Chinese players, but Japanese leasing deals have come to the fore as well.

US-listed companies find that financing option particularly attractive, seeking to “release capital where appropriate or finance new acquisitions or newbuildings using less of their own capital”, Petrofin wrote.

Perhaps no other company provides a better example than Angeliki Frangou-led Navios Maritime Partners.

The US-listed behemoth’s latest annual report reveals such deals covering 14 of its ships.

In a recent transaction, Navios engaged in a sale-and-leaseback arrangement totalling $16.8m in February. This involved a 13-year-old capesize vessel, set to mature in the first quarter of 2030, bearing interest at the Secured Overnight Financing Rate plus 225 basis points per annum.

Ship leasing has become attractive to some specialist Greek finance players as well.

Neptune Maritime Leasing, a vehicle led by Harris Antoniou and backed by Costamare and the Latsis family, has steadily grown its portfolio to reach 24 ships.

In marked contrast to its compatriots, Neptune is keen to finance non-Greek owners as well, and describes Asia as an especially attractive area for expansion.