Banks Need to Act to Underpin Ship Finance

European banks need to increase their provisions for bad shipping loans by 25%, to EUR 7.3 billion (USD 9.25bn), according to the European Central Bank’s (ECB) year-long examination of the resilience and positions of the 130 largest banks in the Euro area as of 31 December 2013. In the report the ECB said that it ”placed particular emphasis on the treatment of shipping exposure across the SSM (Single Supervisory Mechanism) given the divergent practices observed across banks and NCAs (national competent authorities).” The ECB found that ”following the credit file review, a total of 21.3% of the shipping debtors reviewed were reclassified to non-performing, and the total amount of provisions increased from €5.9 billion to €7.3 billion (+25%).”

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