Bremer Landesbank has estimated its pretax loss for last year at 1.4 billion euros ($1.5 billion) due to soured shipping loans, further deepening the troubles which low charter rates cause for parts of the German banking industry.
Bremer Landesbank Kreditanstalt Oldenburg Girozentrale, as the small lender is officially known, said late Thursday that the loss would probably be wider than the previous estimate in the high hundreds of millions of euros.
“The reason for the higher loss is the further increased risk provisioning in its portfolio of shipping loans in the aggregate amount of now around EUR1.6 billion for 2016,” said the bank.
Bremer Landesbank was acquired by state-backed Norddeutsche Landesbank Girozentrale in January after it became clear last year that its equity would be strained by ship owners’ troubles to pay back debt.
Charter rates for ships have declined in recent years as many newly built merchant ships left the shipyards while demand for shipping services didn’t keep up with the additional supply. As shipowners’ charter income declined, some were no longer able to serve their loans, which hit several German banks with large shipping exposures.
Source: MarketWatchPrevious Next