Report: Two Chinese Banks to Place Bids for Germany’s DVB

Two Chinese banks have expressed their interest in buying the German transport finance specialist DVB Bank, a part of DZ Bank Group, Reuters said citing sources close to the matter.

The interested parties include Bank of China (BOC) and Industrial and Commercial Bank of China (ICBC), among others. The banks’ preliminary proposals, expected to be presented this month, follow a number of Chinese initiatives to acquire assets in Europe.

In December 2017, Reuters reported that Germany’s second largest bank DZ Bank continued with its plans to dispose of DVB as the company suffered large provisions for bad shipping loans.

DVB, which finances ships, aircraft, offshore oil rigs and the rail industry, would be sold either in one part or in segments, however, DZ Bank would give up on the sale if it fails to reach the price it seeks.

The sale of the shipping division is expected to be challenging, while the other segments are expected to find buyers easily, an undisclosed source told Reuters.

DVB reported a consolidated net loss before taxes of EUR 506.3 million in the first six months of 2017, against a net income of EUR 14.1 million seen in the previous year. The net figure was dominated by a significant increase in allowance for credit losses, to EUR 445.3 million, compared to EUR 83.4 million reported a year before, reflecting market developments.

“The increase in allowance for credit losses was largely required for legacy exposures in the Shipping Finance portfolio, and for financings in the Offshore Finance portfolio,” Ralf Bedranowsky, CEO and Chairman of DVB Bank SE’s Board of Managing Directors, said.

Given persistent oil price uncertainty, oil and gas companies have continued to reduce their exploration and production spending, which has further curtailed demand for offshore vessels and equipment, while shipowners remain under pressure from low charter rates and competition for employment.

Due to the persistent crisis in the shipping and offshore sectors, DVB expected risk costs in its Shipping Finance and Offshore Finance portfolios to remain high throughout the financial year 2017.

World Maritime News Staff