Tight Credit Squeezes Maritime Industry

“Liquidity has come back to some extent,” said Oliver Ebner, Senior Manager, Project and Structured Finance for the National Bank of Abu Dhabi. “However, shipping with its long tenors, falls right into the banks’ funding mismatch of mainly short term deposits versus long term loans.”

Ebner is one of a panel of speakers lined up to address a special session on financing the industry in the global economic slowdown at Middle East Money & Ships, the region’s premier networking event for senior executives from the maritime and finance sectors.

The conference from 7-8 October 2009 at the Grand Hyatt Hotel, Dubai, will also assess the continued appetite for investment in shipping, the likely pattern for recovery, where the money will come from as well as providing a realistic assessment of the current order book.

The Gulf Co-operation Council countries, which control 45% of the world's proven oil deposits, have 35 major seaports, some of which have been undergoing aggressive expansion to cope with previously growing demand. However, the International Monetary Fund said in May world trade in goods and services would contract 11% in 2009 and remain flat next year.

On the tight credit market, Ebner said pure asset risk is proving difficult to get approved. “Structures are getting tighter and must be done at arm’s length,” he added. “Name lending is a thing of the past - at least for the time being.”

Name lending is the practice that banks in the region followed where loans were extended to influential business families in the Gulf simply on the basis of their name. Recent defaults by two Saudi family-owned conglomerates largely heralded the end of the practice.

It is not all bad news, however. “The regional shipping business is blessed with its focus on offshore shipping,” Ebner added. “The supply and demand balance is just better than in most cargo shipping segments and the banks like the shorter tenors.”

Regional banks may also be a better bet for the marine industry in the current global economic climate. “With billions of dollars required for the development of local economies, local banks need to reserve their gunpowder for their home markets, especially since many international banks have reduced their lending activities in the region,” Ebner said.

The special session on financing the industry will be chaired by Marcus Machin, Director of Tufton Oceanic (Middle East), and includes Richard Coxall, Chief Financial Officer, Emirates Ship Investment Company; Ghazali Inam, Head of Corporate Finance, Arab Bank; Dipak Karki, Head of Shipping Coverage, Middle East, Turkey and India, The Royal Bank of Scotland; John Sinders, Senior Executive Officer, Clarkson Investment Services (DIFC) Ltd.; and Geir Sjurseth, Managing Director and Global Head, Offshore Support, DVB Bank.

There will also be a special opening session on the financial challenges and investment opportunities for the industry in which HE Dr Abdullatif A. Sultan, Secretary General of the Organisation of the Islamic Shipowners’ Association, will speak on the objectives of the association and its projects including Bakkah Shipping Company and its protection and indemnity club.

Other speakers include: Ahmed Al Falahi, CEO, Gulf Energy Maritime; Denis Petropoulos, Joint Managing Director, Braemar Seascope and Executive Director, Braemar Shipping Services; Mohamed Sherine El Naggar, Chairman, A. K. Naggar Group; and Fazel A. Fazelbhoy, Chief Executive Officer, Topaz  Energy and Marine.

“These are critical times for the regional maritime industry which cannot entirely escape the volatility which has shaken the global industry,” said Christopher Hayman, Chairman of Seatrade, organisers of Middle East Money & Ships. “The panel of expert speakers lined up for this year’s conference will be exploring where the future lies and where the finance is to come from as well as identifying the continued opportunities for growth and development.”

The 2009 Seatrade Middle East & Indian Subcontinent annual regional awards, recognising maritime safety and environment, ship and port operations and security, plus port and shipping business efficiency, will follow this year’s Money & Ships conference. The award’s Gala Presentation Dinner will be staged at Madinat Jumeirah, Dubai, on the night of Thursday 8 October 2009. The gala event is expected to be attended by around 800 senior executives from the region’s maritime industry.

For more details about the conference, visit: www.moneyandships.com