European banks account for approximately three-quarters of the world's nearly $475 billion ship financing portfolio. Such exposure could spell crisis for many of these banks—German ones, in particular—as both the struggling shipping industry and its declining asset quality present tanker-sized portfolio problems. Compounding these performance worries, the regulatory and legal frameworks that govern financing agreements and ship mortgages are varied and cover many jurisdictions, making the transfer of troubled loans challenging, though not impossible.
One way to view the looming crisis in the shipping industry is in its similarity to the crisis in the real estate industry last decade, which resulted in many European banks selling distressed, non-performing and non-strategic real estate loan portfolios primarily to international private equity investors. While there are many significant differences between the two situations, the real estate crisis does at least provide some guidance.
Please join Mayer Brown lawyers Simon Grieser, Rick Hyman, Stuart McAlpine and Jörg Wulfken as they discuss the state of global shipping finance, the potential challenges facing banks in this sector, the difficulties and complications lenders and borrowers are faced with in chapter 11 transactions, and possible options for selling shipping loan portfolios to investors.
Mayer Brown’s Global Financial Markets Initiative helps clients deal with the legal and business challenges resulting from the ongoing turbulence in worldwide financial markets. By mobilizing the firm’s global resources from multiple practices and offices, the initiative provides clients with knowledgeable and timely counsel on a broad spectrum of their legal needs.
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