* No change to Commerzbank strategy on non-core assets
* Aims to cut portfolio over time without destroying value
* Shipping sector remains under pressure
* Commerzbank share down 2.4 pct, blue chips up 1.7 pct
(Adds context on shipping market, lawyer comment)
FRANKFURT, June 26 Commerzbank on
Wednesday sought to quell market speculation about a fire sale
of its ship portfolio that hurt the lender's share, as the
downturn in shipping intensifies.
Banks and investment funds are looking at the seizure and
forced sale of ships pledged as collateral to recoup some of the
loans owed to them by shipping companies as the sector enters
the fifth year of one of the worst downturns on record.
Traders said worries about Commerzbank's exposure to the
sector were to blame for a more than 4 percent decline in its
stock earlier on Wednesday, making it the biggest decliner on
the German blue-chip DAX index.
"Nothing has changed in regard to our plan to sell non-core
assets. We want to reduce portfolios over time and in a way
which does not destroy value," Commerzbank executive Stefan
Otto, who is in charge of the Deutsche Schiffsbank unit, said in
an e-mailed statement.
"There are no fire sales, this is also true of the shipping
portfolio," he added.
Shares in Germany's second biggest lender pared losses
following the statement to trade down 2.4 percent, while the DAX
rose 1.7 percent by 1201 GMT.
At the end of December, Commerzbank's shipping portfolio was
18.9 billion euros ($247.1 billion).
In its first quarter financial report, Commerzbank showed
that Deutsche Schiffsbank had a default volume of 4.6 billion
euros and a non-performing-loan ratio of 25 percent on its
European banks in particular are lending less to shipping as
they shrink their balance sheets to reduce risk and as tougher
regulation requires them to hold more capital, making loans less
Commerzbank, working to return to health after a government
bailout in the financial crisis, has said it does not expect
shipping markets to recover in 2013.
German financial regulator Bafin earlier this year asked
auditors to scrutinise banks' exposure to shipping loans,
sources told Reuters at the time.
Last week, top global shipping group TMT Group became the
latest casualty of the downturn after it filed for bankruptcy
protection, saying it was unable to restructure its debt as
industry conditions deteriorated.
"The recent reports of bankruptcies and voluntary
liquidation proceedings involving shipping companies have now
reached levels which exceed any in recent memory," said Haco van
der Houven van Oordt, partner with Dutch law firm AKD.
"Creditors are looking to protect their assets and limit
their losses in the most efficient way possible," he added.
($1 = 0.7649 euros)
(Reporting by Alexander Huebner, Edward Taylor, Jonathan Saul
and Jonathan Gould; Editing by Victoria Bryan and David Cowell)