Thursday, November 06, 2008
Tony Gray - Wednesday 5 November 2008
THE nationalisation of banks could lead to a reduction in the availability of ship finance at a time when debt finance is already becoming a scarce commodity.
There is also concern that government intervention could result in distorting competition. Several major commercial banks in Europe have been bailed out by governments or encouraged to merge to save their retail business and support local markets.
Gust Biesbroeck, global head of transportation at Fortis, which has been split between the governments of the Netherlands, Belgium and Luxembourg, told the Lloyd’s Shipping Economist Ship Finance & Investment Conference in London that it was too early to assess the impact of government ownership.
“But obviously the interests of governments are different from those of typcal shareholders.”
The Dutch government had not acquired Fortis Bank Nederland “to make a superior return” but to stabilise the local economy and support local depositors. “This is far away from our reality, which could involve lending funds to an Indonesian shipowner, for example,” Mr Biesbroeck said.
Barry Wingate, a director of HSBC Bank in the UK, said it would be “remiss” to assume governments would be “happy” to see nationalised banks pour money into international shipping portfolios.
These developments could at least pull investment towards local small- and medium-sized enterprises and industry, he said.
He asked how much pressure governments would exert to make sure funds are channelled into the local economy.
On the issue of a “level playing field,” Mr Biesbroeck said government intervention should not enable banks to be more competitive on funding. “As long as the government doesn’t guarantee our commitments, there is no reason to believe we will be able to raise funds more cheaply than other well-rated banks.”
Lloyd’s TSB’s head of ship finance Bart Veldhuizen said the bank’s merger with HBOS was clearly engineered to save the retail side of its new acquisition.
But it had also created the potential for a top five shipping portfolio.
Although the group’s focus would be on the UK, Mr Veldhuizen said it would not be sensible to have “all the eggs in one basket”.
He added: “We will have to diversify our geographical footprint, otherwise we will be too dependent on one economy.”