Bespoke financing solutions for shipping companies

The Hellenic Bank Shipping Finance Unit manages a credit portfolio of excellent quality, while its Shipping Business Centre offers a range of sophisticated transaction banking and products

Located in Cyprus, one of the leading global maritime hubs, Hellenic Bank has successfully been serving international companies in the industry for many decades. Hellenic Bank supports its shipping clients with a fully dedicated Shipping Business Centre in Limassol, offering, among others, international and local payments, cash management, LCs and bank guarantees and integrated electronic banking services.

Six years ago, Hellenic Bank launched its Shipping Finance Unit – comprising a team of highly experienced professionals – and has gradually established its presence in the shipping finance sector in both Cyprus and Greece. The Hellenic Bank Shipping Finance Unit provides bespoke financing solutions to first-class quality shipping companies for conventional vessel segments.

Traditional shipping finance has contracted significantly in the last decade, with many lenders exiting or ceasing shipping portfolio expansion, leading owners to seek alternative but more expensive forms of financing. Various factors have contributed to this contraction, such as the strict capital regulations on banks and the serious issues faced by lenders, particularly those that applied a rather loose underwriting credit criteria, resulting in large non-performing exposures.

In addition, the shipping industry’s cyclicality, and potential susceptibility to exogenous shocks such as the pandemic, or more recently, the Russia-Ukraine conflict, have highlighted the need for a more sophisticated approach. While on track for recovery from the pandemic, the outbreak of the Russia-Ukraine conflict affected significant segments of the shipping markets in different ways, shaping a new and stricter operating environment for all participants in the maritime industry as a result of the increasing geopolitical and sanction risk.

At the same time, the sharp increase in interest rates as well as inflationary pressure, have created further headwinds in the shipping and ship finance markets shaping the future strategy and risk appetite of banks.

Hellenic Bank maintains a mindful approach in the loan approval process and, as a result, its shipping portfolio has demonstrated an excellent performance so far, having managed to overcome the challenges of the industry and identify opportunities, with the invaluable help of our clients. Against these odds and guided by a robust credit policy, 2021 and 2022 were the most successful years for the Bank’s Shipping Finance Unit with 2023 also presenting a considerable dynamic despite the uncertainties in both shipping and the financial markets.

The latest developments, especially in the booming tanker market, have confirmed that the Bank’s decision to take a countercyclical approach was correct. The portfolio’s resilience has reaffirmed Hellenic Bank’s commitment to maintaining its presence in the shipping market, aiming to build stronger relationships with high-quality groups.

Hellenic Bank focuses on quality rather than size, in alignment with the philosophies of small/medium size shipowners, who constitute the backbone of the shipping industry in both Cyprus and Greece. The maritime sector in Cyprus is one of the main pillars of national growth, while the Cypriot maritime cluster is becoming an important global player.

The country’s business-friendly environment has attracted some of the biggest names in vessel ship management and shipping-related activities. Hellenic Bank is present to further facilitate the expansion plans of those companies. From a holistic point of view, the shipping industry will continue to maintain its importance in relation to world trade, but it is currently undergoing a significant transformation for various reasons, including increasingly demanding regulatory and environmental requirements as well as the need to follow the technological developments.

Finally, the high level of complexity, combined with the need for continuous adaptation to contemporary market practices, is a feature that makes the shipping industry intriguing to all market participants.