China banks' loans to foreign shipbuilders surge

Lending increased by more than 10% as banks follow government’s initiative to revitalise shipbuilding industry.

The Chinese government's revitalising plan for the shipbuilding industry promulgated last year encourages financial institutions to provide loans for foreign customers of major homegrown shipbuilders. As a result, Chinese banks are foraying into the global ship financing market.

On 1 February 2010, The Export-Import Bank of China (China Eximbank) inked an agreement with Torm providing the latter with $170 million for six new ships to be built from 2010 to 2012.

Torm says Chinese lenders participated in its financing of 12 new ships. Although the Danish ship owners have plans to obtain loans from banks of other countries, it finds out that offers of the Chinese parties are very lucrative.

Since September 2008, when the financial crisis broke out, Chinese lenders have offered loans of billions of US dollars to ship owners in Europe and the US. Rampant talks say that ship loans provided by Chinese banks have risen by more than 10%.

View the full story in  Trading Markets.