An unfolding global banking scare should not pose a further threat to ship mortgage financing but has cast a cloud over activity in capital markets, financiers said on Monday at a New York money conference.
While the upheaval already has claimed two US regional banks and Swiss lender Credit Suisse, the biggest lender to Greek shipping, a panel of debt providers at Capital Link’s annual international shipping forum said the wider industry fallout should be minimal.
The old normal
“I don’t think it really has any impact on shipping,” said Michael Parker, chairman for global shipping, logistics and offshore for Citibank.
Overall there have been few casualties among shipping banks over the course of his decades-long career, Parker noted, with the notable exception of a handful of German lenders who were caught out following the last global financial crisis in 2007 and 2008.
“Shipping is a relatively small part of most banks’ portfolios,” Parker noted, while chalking up the current issues to “some areas of regulation that were not addressed after the last financial crisis”.
Parker, who is also chairman of the Poseidon Principles green-lending protocols, added: “We got used to cheap money.
“With interest rates rising, it’s not the new normal, it’s back to the old normal. We’re getting back into the real world where money is no longer free or cheap. I hope this will be the end of what’s been a reaction to that.”
Fellow panellists representing New York’s CIT Bank and Norway’s DNB said the turmoil had not in any way touched their normal run of business.
DNB senior vice president Andrew Shohet concurred with CIT managing director Evan Cohen that there had been no impact.
“It’s very much business as usual for us as well,” Shohet said. “It’s still quite fresh and moving quite quickly. But for the syndication market, my view is that it’s unimpacted. I can tell you that we closed a syndication last week in the middle of all this.”
Changing tone
The tone was a little different, however, on a succeeding investment bankers panel.
Citibank head of maritime investment banking Christa Volpicelli and Maxim Group co-head of investment banking Larry Glassberg said their view of capital markets had shifted over the past fortnight.
“If you’d asked me two weeks ago, I’d say the capital markets feel like they’re starting to function more normally as people started to get some consensus around when interest rates will peak, some consensus on recession and the chances for a soft landing,” Volpicelli said.
“Over the past couple of weeks, there are questions and concerns. But with governments and other banks stepping in to inject capital, markets are up today.
Investors feel there’s some level of support. I think there’s a hopefulness that this can stay contained.”
Glassberg agreed that the landscape had changed.
“The last weeks have been one of the more difficult times I’ve seen in the last seven to 10 years,” he said. “The market is going to remain volatile.”
The Dow Jones Industrial Average had gained more than 1% by lunchtime in New York as investors reacted to the Swiss government’s rescue of Credit Suisse through a takeover by UBS.
They also weighed whether the banking crisis is likely to derail plans by the US Federal Reserve for an aggressive 50 basis points hike in interest rates at its scheduled meeting on Wednesday.
