1. Slide 1 Hamburg, 13 June 2015 Sources of Shipping Finance CASS Business School Event at Peter Döhle Schiffahrts-KG Ralf Bedranowsky Member of the Board of Managing Directors, DVB Bank SE

2. Slide 2 Agenda 2 Industry Attractiveness Client Selection 4 1 MACRO - Shipping Environment Pre & Post Delivery Finance CASS Business School Event at Peter Döhle Schiffahrts-KG Traditional Bank Debt Equity and Debt Capital Markets 6 5 3

3. Slide 3 Seaborne trade is growing with CAGR of 4.0% from 2000 to 2013 Demand: Increasing Global Seaborne Trade With a Focus in Asia * Source: DVB Shipping and Offshore Research, IHS Global Insight Development of International Seaborne Trade Selective Seaborne Trades Mn Tonnes Average Growth Rate 1 MACRO - Shipping Environment CASS Business School Event at Peter Döhle Schiffahrts-KG The remarkable increase in Asian seaborne trade is mainly driven by China, which had an average volume growth of 15% over the period. The Chinese economy, however, grew 7.4% in 2014, the slowest since 1990, and down from 7.7% in 2013. Decrease in the North American Tanker trade volume is primarily attributed by the US becoming more self-sufficient.

4. Slide 4 Supply:Global Development by Sectors * Source: DVB Shipping and Offshore Research, MSI Global excess supply across shipping sectors Orderbook as % of the fleet in terms of capacity 1 MACRO - Shipping Environment CASS Business School Event at Peter Döhle Schiffahrts-KG Supply and Demand imbalance across shipping sectors. The Dry Bulk and LNG space experienced an excess supply CAGR of 7,8% in recent years, as opposed to the other sectors showing a steady decline in excess supply. Significant Orderbook for all shipping sectors, especially for the Gas Carriers, the latter with an average volume growth of 25% over the period.

5. Slide 5 What are the risks and rewards associated with each sector? What are the sectors we should be increasing our exposure to? What type of assets should we finance? Continued close analysis of demand fundamentals, utilization rates, seasonal spikes, vessel values and freight rates is key. Need to closely monitor what the optimal solutions are for shipping companies that have over-stretched their balance sheet by committing significant capital expenditure by placing too many orders. Exposure must ideally be backed by fixed charter contracts to charterers with high credit worthiness and / or to operators who have demonstrated outperformance compared to the spot market. Selectively financing owners that have strong technical and commercial management skills and have capability to honor financial obligations in case of market downturn. Target vessels that provide the best commercial opportunities. Quality Shipyards should be preferred as vessel values will be better preserved, even for older tonnage. A lot of focus has been on modern eco-design vessels that are younger than 5 years of age. Some of the modern tonnage as young as five years needs to be avoided as these vessels are equipped with large engines which are not desirable in the event high bunker prices prevail. 2 Industry Attractiveness CASS Business School Event at Peter Döhle Schiffahrts-KG

6. Slide 6 Key Features – “Incorporating the 6 C’s” Client Attributes  Credibility  Good track record in good and less favourable times  Close relationship and strategic dialogue with Lenders  Transparency, reliable/corporate family structure  Sustainability (resilience)  Compelling investment story  Type of Assets / Vessels  Charter Coverage  Liquidity (enough cash)  Character  Capacity  Capital  Company  Conditions  Collateral CASS Business School Event at Peter Döhle Schiffahrts-KG Client Selection 3 All comes down to the 6’s

7. Slide 7 CASS Business School Event at Peter Döhle Schiffahrts-KG  Term Loans  Club Deals  Syndicated Facilities  Bullet / non amortizing  Revolving Credit Facilities  Bridge Loans  Letters of Credit  Warehouse Facilities  Public Debt  ECA Financing  Derivatives, IR Hedging  Subordinated Debt Traditional Bank Debt 4  More opportunistic lending towards first tier Shipping companies following several years with reduced competition.  Flight to quality on part of Shipping Banks remains.  Downward pressure on pricing and softening of key covenants.  Strong interest for ECA structured transactions especially with a project focus.  Lending remains Sector dependent i.e. tougher market conditions for Offshore (in light of falling oil prices) and Drybulk, leading to reduced Lending. Anticipate restructuring will take place in second half 2015.  Some banks are more focused on cashflow and terms rather than asset.  Majority of banks targeting strong relationship clients due to corporate focus (with recourse). Employment is key.  Expectation for less volume in new business in 2015. Focus on existing clients.  Banks less willing to underwrite. Deal size likely to be smaller with more club deals. Bank Debt / Facility structures - requiring use of Balance Sheet Current Market Trends for Bank Debt

8. Slide 8 Banks by Type of Focus for Bank Debt Large proportion of banks targeting top tier clients due to corporate focus and especially projects with employment. Increased interest and appetite has resulted in downward pressure on pricing and softening of transaction terms. Higher visibility/interest for ECA structured transactions and number of larger syndicated deals are increasing especially in energy related sectors. Maritime (Shipping and Offshore) syndicated bank debt lending and bond issuance is increasing totalling US$109b (US$94b bank debt, US$15b bonds) in 2013 with US$82b in H1 2014 (US$73b bank debt, US$9b bonds). CASS Business School Event at Peter Döhle Schiffahrts-KG Traditional Bank Debt 4

9. Slide 9 5 Pre & Post Delivery Finance Post Delivery Debt  Drawdown on delivery of vessels  Secured with mortgage on the vessel, corporate guarantees, cash and potentially secured employment  Risk for Lender is reduced Pre Delivery Debt  Drawdown on yard instalment milestones  Banks are highly selective and quality of shipyard is key  Mainly for Tier One Clients with strong balance sheets  Secured in NB contract, unencumbered assets, corporate guarantees, cash and potential for step into future employment  Higher Risk for Lender  Difficult to achieve in current market environment Alternatives to Pre Delivery Debt  Equity  Bonds  IPO’s / Share Issues  Mezzanine  Bank debt  Combination of the above CASS Business School Event at Peter Döhle Schiffahrts-KG

10. Slide 10 CASS Business School Event at Peter Döhle Schiffahrts-KG  Term Loan B  Investment Grade Bonds  Sub Investment Grade Bonds  Norwegian High Yield Bonds  US Baby Bonds  Medium Term Notes  Commercial Paper  Convertible Debt  Warrants  IPO, Ordinary Shares, Secondary Offerings, Preference Shares etc.  Perpetual Debt  Equity Investments Equity and Debt Capital Markets 6 Equity Investors, Private Investors, Institutional Investors Traditional Capital Market products  Equity and Debt Capital Markets are a tool for diversification of funding sources but are arguably only open for good names in the current market environment.  Bond Market remains closed for now but for how long?  Term Loan B market is taking a breather but expected to return.  Large refinancing & restructuring requirements for Offshore Bond market expected in 2015.  Follow on share issues and some IPO’s taking place over the last 10 months for select names (i.e. Diana, Navios, Star Bulkers, Dryships, Euronav, Double Hull Tankers, Hafnia Tankers, Hoegh, Golar, Topships, Polarcus etc.) – some with significant negative impacts on share price.  Challenging Market Conditions for new IPO’s for most Sectors at present but window of opportunity could open soon for sophisticated Shipping Companies with the right tonnage and the right truly compelling investment story.  Investor preference so far in 2015 is for higher rated Bonds compared to 2014. Current Market Trends for Shipping Capital Markets

11. Slide 11 Lending Focus Investment Banking Focus Generalist Asset Specialist Credit- Seller Lender with Cross-Selling IB- Service Provider with distribution without distribution Source: zeb (1) Source: Tufton Oceanic, “Too Much Equity, Not Enough Debt?”, 2014. Generalist Boutique Lenders with Distribution Exclusive Lenders  Strong growth in DCM & ECM (27%, 16 %, respectively) 2006-2013 ‒High yield bonds 85% of 2013 global DCM revenues  Fragmented market in DCM & ECM top 10 banks capture c. 40% of deal volume  New York & Oslo are key capital markets for shipping issuances  Share of unfunded orders increased to US$ 60 billion in 2014, leading to growing funding needs (1)  Balance sheet constraints of traditional lenders due to Basel-III capital  Capital markets an important alternative source of funding ‒More familiarity with shipping & offshore in recent years ‒Increased receptivity to new & repeat issuers 6 Equity and Debt Capital Markets CASS Business School Event at Peter Döhle Schiffahrts-KG Investment Banks by Type of Focus 4 business model clusters in market: generalist investment banks, specialised investment boutiques, specialist lenders with distribution and exclusive lenders

12. Slide 12 CASS Business School Event at Peter Döhle Schiffahrts-KG Thank you for your attention and kind hospitality