Exclusive Report: Deutsche Bank to Sell $1 Billion in Shipping Debt Amid Overcapacity, ECB Scrutiny

Deutsche Bank plans to purge its books of billions in bad loans from the shipping industry, according to financial sources who spoke with the news agency Reuters. The goal is to get rid of at least $1 billion (€900 million) in loans that are at risk of default. If the sale of the first tranche is successful, Deutsche Bank could move to dump more shipping debt on the market. In total, Deutsche Bank still has between $5 billion and $6 billion in shipping debt on its books, a legacy of the financial crisis. Before 2008, Germany was a global center for shipping finance and institutions there still hold about €80 billion in loans from the industry. The shipping industry currently faces a crisis due to global overcapacity and the economic slowdown in China. In response, the European Central Bank has demanded data from financial institutions about loans to the shipping industry and capital reserves. Financial institutions are concerned that the ECB could ask them to write off shipping debt. “Every bank with a significant amount of shipping loans is evaluating options to sell some of them,” a banking source told Reuters. “The ECB probe has encouraged banks even more to pursue sales.” Picture Source: DPA