Japanese trading houses offering package deals including ship finance are posing fierce competition to banks, especially traditional ship finance banks, a banker says.
Gust Biesbroeck, general manager of Nedship Bank's Far East representative office in Hong Kong, said the packages often included securing finance for newbuildings and even providing employment for the ships upon delivery.
In dealing with the owner of a large fleet, the Japanese houses would be aggressive in obtaining the order as their bottom line was to keep Japanese shipyards busy, he said.
Mr Biesbroeck said since they were offering a package deal, they were not interested in making a profit on the finance side as they could make a profit on the time charter or obtain commission on the time charter and on the newbuilding order.
'They are not bothered if each individual part of that package is profitable or not,' he said. This put a lot of pressure on traditional ship finance banks such as Nedship Bank.
'We feel, along with many other banks and Hongkong Bank, that the margins we get are not sufficient for the risk we take,' he said.
A report prepared by Hongkong Bank's Wayfoong Shipping Services said Japanese finance houses and leasing companies remained active, often providing more than 100 per cent finance for orders placed at related Japanese shipyards.
