As ship finance becomes more competitive, financial institutions are becoming more innovative and offering more new products to woo customers. The business was no longer about just offering funds needed to purchase vessels, Gust Biesbroeck, general manager of Nedship Bank, said. 'Banks are trying to be more creative and they are trying to offer different financial products,' he said. Nedship Bank is no difference. It is studying the possibility of offering tax-driven structure packages to shipowners in Asia, like those being offered in Norway, Germany and Holland. Basically, a ship investor allows for low depreciation value of the vessel in a few years' time registering a depreciation loss. This enables him to make a book loss in the first few years of transactions and offset his tax bill as an operational loss - reducing his taxes considerably. The laws in the Netherlands allow an investor in a vessel to depreciate the vessel in a short time. Mr Biesbroeck said that this practice had not been taken up in Asia because it was complicated and required a large transaction. Savings may range from 5 to 10 per cent and in a multi-million-dollar business, it could translate into a great deal of money for a shipowner. Another reason why shipowners are slow to accept this package is that the legal fees are high. Mr Biesbroeck said shipping was a traditional industry and people were wary of innovation. Many lacked flexibility and wanted to avoid the hassle to the management, preferring to stick to traditional methods of financing. But Mr Biesbroeck said he was optimistic that eventually the Asian market would get there, although it was a limited sector. He likened taking up a tax-driven structure package to a company listing on the stock exchange. 'When you go public, you have to talk to the public to justify what you are doing and you have to adhere to requirements of high levels of financial disclosure,' Mr Biesbroeck said. Many shipowners were not prepared to go all the way and looked for alternative methods of raising funds, like issuing notes, he added. Mr Biesbroeck said although many looked at innovative ways of raising money, a great majority of them ended up with bank loans as there was so much cheap capital floating around. He said those involved in the ship finance business had to take a long-term view and should continue to stay on when margins became low. 'They have to accept lower returns for better returns in the long term,' he added. Ship finance companies also were increasingly looking at earning fees rather than merely financing projects, Mr Biesbroeck said. Financial institutions preferred to arrange for loan syndications after which they could charge fees for their services. In addition, they did not have to finance the project.