Shanghai Time Shipping, a joint-venture firm controlled by state-owned China Huaneng Group, yesterday raised HK$300 million in what participants said was the first time a foreign bank registered a mortgage in the mainland using China-flagged vessels as security. Shanghai Time put up two 1994-built bulk carriers as security for the US$38.4 million mortgage with Norwegian bank DnB Nor. The company did not say what it was raising the money for. Foreign banks' entry into a sector traditionally dominated by domestic banking giants suggests they believe the risk of doing business in the country is dropping. 'We thought the time had come to break the barrier,' said Hans Petter Aas, DnB Nor's head of global shipping, offshore and logistics. 'The sector has probably been viewed as not as well regulated as in the US and Europe.' HSBC's ship finance division 18 months ago arranged a similar deal for Pacific Basin Shipping using dual-flagged vessels as security, said Russell Shields, the head of the division. 'We have done it from offshore before,' he said. DnB Nor said foreign entry into the sector will create another avenue through which mainland shipowners can raise capital and ultimately lower their financing costs. 'We think there is room for more competition in the mainland ship-financing sector, and we think our core focus on shipping will make us different,' general manager Espen Lund said. Mr Lund said the bank will not focus exclusively on the bulk shipping sector, raising the possibility that container firms can also become clients. DnB Nor led the world in ship financing in the first half, when it arranged US4.88 billion in loans.