FRANKFURT May 14 Commerzbank, Germany's second-biggest lender, said it is considering launching a platform to operate ships in a bid to recover higher values from the vessels that it seizes after shipowners fail to service their loans.
The goal of such a project would be to run the ships together with partners for a limited time, Commerzbank said in the prospectus of its capital increase published on Tuesday.
The shipping industry is facing difficult times because of the economic downturn and a glut of new ships, which were ordered during the boom years before 2008. Charter rates have fallen below breakeven levels. The tough conditions have already bankrupted several shipping firms and forced others to restructure.
Commerzbank would follow in the footsteps of German shipowners Rickmers, F. Laeisz and H. Schuldt, which earlier this year founded the firm Frachtschiff Kontor to specialise in operating ships whose income does not suffice to service debt.
Frachtschiff Kontor currently operates four ships and aims to minimise losses for owners and lenders by letting shipowners avoid fire sales at times of depressed ship prices.
In a different move to recover higher value, Commerzbank peer HSH Nordbank last month transferred ownership of some vessels to U.S.-listed shipping company Navios, receiving cash as well as participating loans that give HSH the opportunity to recover the original amount if the markets improve.
Commerzbank, which according to trade journal Marine Money currently is the world's second-largest ship financier after DNB , last week said it expected provisions for bad ship loans to remain stable this year at the high levels seen over the last four quarters.
It does not expect the shipping industry to rebound before the second half of 2014, Chief Financial Officer Stephan Engels said when presenting first-quarter results.
Commerzbank unit Deutsche Schiffsbank has ship loans worth 18.3 billion euros ($23.8 billion) on its books, 25 percent of which are classified as non-performing.
First-quarter loan loss provisions of Deutsche Schiffsbank stood at 138 million euros, up from 114 million in the year-earlier period.
Such a platform would take Commerzbank's approach to dealing with bad ship loans a step further. Until now the lender has in a few cases mandated shipping firms to run vessels for the bank, with the purpose of getting them into service again so that they can earn money and pay down loans.
($1 = 0.7703 euros) (Reporting by Arno Schuetze; editing by Jane Baird)