1. Ship Finance ‘Opportunities and Challenges’
Efficient Shipping Finance;
The Seminar
24th June 2015
Ship Finance ‘Opportunities and Challenges’
Andy Georgiou Head of Global Shipping Coverage

2. RBS Shipping What we do: Who we are:
Unique 'one-stop' service to the shipping industry, providing banking products and services to owners, charterers, P&I and insurance brokers
We provide primarily:
Ship finance
Operational banking
Shipping risk management
Wider banking opportunities
Who we are:
History in Shipping related finance for over 250 years.
Banker to c100 of the world’s largest shipping companies, c.75% of which are private.
Shipping bank with a portfolio in excess of cUS$13bn with secured on modern high quality vessels (85% under 10 years of age).
Efficient Shipping Finance 2

3. Approach to Ship Finance
What approach do commercial banks that lend in the Shipping sector take?
Transactional Banking
Relationship Banking
Big ticket deals
Long term
Maximise loan return
Volatile market - risk / reward relationship
Capital intensive
Value behind the assets
Economies of scale
Ancillary business to enhance transaction returns e.g. treasury products
Short term gain
Operational banking
Private banking
Both approaches can lead to capital Market opportunities
Efficient Shipping Finance 3

4. The Relevance of Ship Finance Today
Commercial Bank
Mortgage Finance
Mezzanine Finance
Top-up finance (Substitute for equity)
Bond Markets
Debt Capital Markets (Corporate/Convertible Bonds)
Equity Markets
IPOs, Follow-on Equity Offerings
Private Equity
A growing trend of medium term investments into shipping
Leasing
Tax efficient structure
Insurance Market
Historical involvement in tanker industry, e.g. RV insurance
ECA
Government-supported financing to clients of local exporters (shipyards)
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5. Trends in Ship Finance Sources
Source: Dealogic
2008
2013
Bulk of financing to the Shipping industry was provided by banks (82%)
Total value of deals (across all transaction types) amounted to US$104.8 bn
Bank debt has dropped to 60% of financing provided to Shipping
Total value of deals (across all transaction types) amounted to US$66.2 bn
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6. Ship Finance – Banking Portfolios Across Time (1)
Source: Marine Money International, April/May 2015
Market – Figures
US$380 bn of bank debt made available to Shipping by 27 Banks
Aggregate shipping exposure of top 5 Banks amounts to US$190 bn
Market – Comments
2008 was the last year before shipping banks’ portfolios were affected by the global financial crisis (post Lehman bankruptcy)
This is evidenced by some of the large exposure to Shipping some of the banks above reported proportionate to their aggregate balance sheet
Industry – Comments
The size of the respective shipping loan portfolios was also inflated to a degree by the continuous y-o-y increases in vessel values and booming conditions for Shipping between (Shipping super cycle)
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7. Ship Finance – Banking portfolios Across Time (2)
Source: Marine Money International, April/May 2015
Market – Figures
US$380bn of bank debt made available to Shipping by 39 Banks
Aggregate shipping exposure of top 5 Banks amounts to US$107 bn
Market – Comments
Traditional banks have decreased their exposure to Shipping
Changes in banking landscape (mergers, rebrandings)
Non-core divisions have been set up (balance sheet treatment differs)
RBS Shipping
Provider of finance during all markets.
#1 lender to Greek Shipping (Petrofin Research).
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8. Average Ship Finance Loan Pricing
Source: Marine Money Bankers Survey 2015
Efficient Shipping Finance