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A report published on Sunday by German public broadcaster ARD has suggested that the northern German states of Hamburg and Schleswig-Holstein may have to offer up to 20 billion euros ($21.4 billion) in credit guarantees to prop up banks with bad investments in container shipping.
"Many competitors here have hardly any chance against the new mega-shipping companies in Asia," reporter Heinz-Roger Dohms wrote. "There is so much over-capacity on the world market that they can't afford to send their container ships out at all, or have to do so at charter rates that don't even cover costs."
That's bad new for the banks that underwrite German shipping companies - and German banks maintain around $100 billion in shipping loans, a quarter of the world's total. The financial institutions most affected by the credit squeeze include the HSH Nordbank, the Nord Landesbank and the DVB Bank, all of which specialize in shipping finance. But they're not the only ones.
"Maritime shipping has become one of the biggest problems for German banks and it does not only affect the usual northern, coastal-based suspects like HSH Nordbank and NordLB," wrote the financial newspaper Handelsblatt earlier this month. "Dekabank, for example, trimmed its business outlook for 2016 by a fifth because the bank set aside an unexpectedly large amount for bad ship loans in the first two quarters."
Earlier this week, the state premier of Schleswig-Holstein, Torsten Albig, raised hackles when he suggested that in a worst-case scenario he might have to ask for help from the EU or the federal German government to cover bad shipping loans by HSH Nordbank, 85 percent of which is owned by Schleswig-Holstein and Hamburg.
Critics accused Albig himself of mismanagement and hyperbole, but there is consensus that because of HSH, Schleswig-Holstein will have to take up new lines of credit rather than pay off debts as planned. So how did this crisis come about, and is there any way for banks to abandon ship from a sector that seems to be sinking?
Shipping crisis puts German banks under pressure | Germany | DW.COM | 22.01.2017
And it can only be saved with "government guarantees"?
"Many competitors here have hardly any chance against the new mega-shipping companies in Asia," reporter Heinz-Roger Dohms wrote. "There is so much over-capacity on the world market that they can't afford to send their container ships out at all, or have to do so at charter rates that don't even cover costs."
That's bad new for the banks that underwrite German shipping companies - and German banks maintain around $100 billion in shipping loans, a quarter of the world's total. The financial institutions most affected by the credit squeeze include the HSH Nordbank, the Nord Landesbank and the DVB Bank, all of which specialize in shipping finance. But they're not the only ones.
"Maritime shipping has become one of the biggest problems for German banks and it does not only affect the usual northern, coastal-based suspects like HSH Nordbank and NordLB," wrote the financial newspaper Handelsblatt earlier this month. "Dekabank, for example, trimmed its business outlook for 2016 by a fifth because the bank set aside an unexpectedly large amount for bad ship loans in the first two quarters."
Earlier this week, the state premier of Schleswig-Holstein, Torsten Albig, raised hackles when he suggested that in a worst-case scenario he might have to ask for help from the EU or the federal German government to cover bad shipping loans by HSH Nordbank, 85 percent of which is owned by Schleswig-Holstein and Hamburg.
Critics accused Albig himself of mismanagement and hyperbole, but there is consensus that because of HSH, Schleswig-Holstein will have to take up new lines of credit rather than pay off debts as planned. So how did this crisis come about, and is there any way for banks to abandon ship from a sector that seems to be sinking?
Shipping crisis puts German banks under pressure | Germany | DW.COM | 22.01.2017
And it can only be saved with "government guarantees"?
