Commerzbank AG has moved closer to shedding its EUR 4.5bn ($5bn) portfolio of distressed shipping loans.
The German lender said it had returned its regulatory license to issue ship Pfandbriefe, according to a regulatory filing.
Pfandbriefe, or German covered bonds, are debt securities backed by long-term assets including ship mortgages.
“ For the last six years now, Commerzbank has not issued any ship Pfandbriefe and does not intend to do so going forward,” the bank said.
The Pfandbriefgesetz (PfandBG), or the German law which regulates the legal basis for the issue of Pfandbriefe, normally requires the cover pool for ship Pfandbriefe has to be phased out, once the licence has expired.
However, regulator Bundesanstalt fur Finanzdienstleistungsaufsicht has granted Commerzbank an exception regarding the statutory limit under the PfandBG for further cover assets in order to give it “additional flexibility for the onward downsizing of its discontinued ship financing business”.
Last month Commerzbank reported loan losses of $212m for the first quarter of 2017 as the slump in the shipping industry continued.
The German lender said loan loss provisions for shipping this year are expected to be between EUR 450m and EUR 600m.
