| dc.description.abstract | Traditional bank lending has always been the major source of capital to shipping and offshore.
These industries being some of the most capital intensive, the need for financing is obvious.
However, due to their cyclical nature there is greater risk associated with lending to the
industries. Bank lending as a form of debt financing has evolved during the last 20 years, and
with fluctuating markets the banks applied new strategies to both mitigate risks and align with
new regulatory framework.
After the financial crisis, several banks incurred significant losses due to their high exposure
to the volatile shipping and offshore industries. As a result, many have downsized their
involvement in these sectors, leading to a noticeable contraction in lending. The shipping and
offshore sectors have weathered a challenging period, characterized by low freight rates, asset
values, and oil price. Lower cash flow and revenues have posed challenges for companies
within these sectors, impeding their ability to sustain operations and secure bank financing.
Recent upturn in freight rates and oil price might stimulate investments and the launch of
promising ventures. The latter raises an important question, have banks altered their lending
strategies, or are they continuing to exhibit cyclical lending patterns?
The data used in this thesis is collected from three Nordic banks quarterly reports over the past
20 years. These banks have maintained a substantial presence in the shipping and offshore
sectors, particularly in the Nordic region. Their financial backing and commitment have
played a pivotal role in strengthening these sectors, thereby contributing to the growth of the
region’s energy exports and the development of a modern merchant shipping fleet. Our
methodology involved a mixed-method approach. A quantitative analysis of the banks’
lending portfolios and qualitative interviews with representatives from the banks.
The implications of the findings suggest that banks demonstrate cyclical lending behavior,
which is natural when cash flow and contracts are a key consideration for them. Furthermore,
our research indicates that banks have reformed their asset evaluation processes and are also
placing more emphasis on their relationship with clients. Nevertheless, banks remain receptive
to good investment opportunities, which emerge in a booming market. | en_US |
