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Western EuropeJuly 1 2013

Rough waters threaten Germany's shipping loans business

According to the country's central bank, the shipping loans on banks' balance sheets are posing a considerable risk to the German banking sector, but some German banks are reluctant to deleverage their portfolios at a loss.
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Rough waters threaten Germany's shipping loans business

At a speech in Hamburg in March 2013, Andres Dombret, executive board member at Germany's central bank, Deutsche Bundesbank, identified the €100bn-worth of shipping loans on German bank balance sheets as a substantial regional and sectoral risk in the country's banking system. Bankers are now reporting that their shipping loan portfolios are under a high level of scrutiny from both the Bundesbank and German markets regulator BaFin, which co-operate closely on bank supervision, and that there has been pressure behind the scenes for some banks to increase provisions.

"KPMG has been carrying out audits with a focus on shipping portfolios, and BaFin has received the data formatted in such a way that it can compare one bank's exposure with another, using various parameters," says Christian van Beek, director of financial institutions at Fitch Ratings in Frankfurt.

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