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ECB Said to Conduct Fresh Review of Ship Loans as Crisis Lingers 

June 23, 2016

Nicholas Brautlecht, Bloomberg

The European Central Bank is conducting an in-depth review of banks’ shipping loan books amid rising provisions for bad debt in an industry still mired in crisis, according to four people familiar with the probe.

The ECB may ask lenders to further increase loan-loss provisions and assign more capital against nonperforming debt, according to the people, who asked not to be identified as the probe hasn’t been public. The central bank sent shipping lenders an e-mail on June 15, seeking details on vessels, such as name and age, and internal assessments of loans and borrowers, said one of the people.

The review follows a clash earlier this year between the bank supervisor and HSH Nordbank AG, Germany’s biggest shipping lender with 23 billion-euro ($26 billion) exposure, over loan valuations tied to a restructuring plan to shed 8.2 billion euros in bad debt and sell itself by 2018. In a reflection of the worsening industry outlook, northern German peer Norddeutsche Landesbank is being forced to increase its stake in its Bremer Landesbank unit, injecting fresh capital to backstop losses of half a billion euros on soured shipping loans. Read more

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