What might have been a mild-mannered bank panel turned in a different direction at Tuesday’s Capital Link New York Maritime Forum when surprise guest Robert Bugbee disrupted things.
Nothing was broken when the Scorpio Tankers president got done, but a few things were badly bruised, including the green-lending protocols known as the Poseidon Principles.
While there once were dire predictions about what might become of tanker owners under the carbon emissions-driven principles, it has not quite worked out that way for companies riding the crest of a years-long market boom that has seen them accelerate repayment of debt.
“We’ve gone from famine to feast: we were second only to offshore as untouchables,” Bugbee said as he sat beside lenders from DNB and First Citizens Bank.
“Now things have changed. They’re trying to touch and feel us all over. Now there’s a surplus of lending to tanker companies”
The traditional lending crowd are virtually stumbling over each other in the race to lend to bigger public companies with fortress balance sheets, he noted.
Bugbee was just getting warmed up. When moderator Anthony Renzi of Vedder Price raised the subject of carbon emissions’ influence on ship finance, it felt like an underhand pitch.
“The banks are talking a great game and they need to talk a great game on the environment,” Bugbee told him.
“But it’s the dollars that matter.Poseidon is fantastic, it’s brilliant. But it’s nothing. If the banks can get away with the talk without paying much for it, that’s brilliant. The banks will lend to those people where they can make money. The only way you’re going to deal with the green thing is with stricter regulation and enforcement.”
The only other shipowning executive on the panel – Doran LPG chief financial officer Ted Young – jumped in at that point, sarcastically noting the “very generous” five basis points reduction his company recently was granted by lenders for achieving carbon-reduction targets.
“It’s really not much. Sorry guys,” Young said, turning to lenders Andrew Shohet of DNB and Evan Cohen of First Citizens.
The DNB head of ocean industries for North America even agreed, at least in part.
“I agree that five basis points isn’t exactly moving the needle. And ultimately I agree with what Robert said. as bankers, we like to make money.”
But he defended his bank’s commitment to the green cause and the Poseidon Principles.
“As a Norwegian bank, it’s something that we take quite seriously,” Shohet said.
