Chinese bank turns shipowner

The Industrial and Commercial Bank of China (ICBC), the world’s biggest bank by market value and deposits, has taken delivery of the first two ships in a 14-ship order that are part of two deals with Chinese companies.

“The shipping industry is still very new in China but the bank industry wants to use its resources to help heavy industries so that they can grow,” said ICBC Shipping Finance Manager David Lan. “We have maintained the power to support our industry, but perhaps in the overseas market that is not the case. So we are delivering a range of vessels and we are able to continue to support the industry,” he said.

Lan added that lending in China was likely to grow in the long term, “because of the close relationship that is developing between banks and shipowners”. As one of China’s “Big Four” pillar banks, ICBC is said to have originally become involved in ship owning in June 2008 though details of this deal have only surfaced now.

ICBC will wholly own at least 14 vessels through subsidiary ICBC Financial Leasing. The ships are being built by China State Shipbuilding Corp (CSSC) and at other yards. The bank already took delivery earlier this year of the 53,300DWT ?Gong Yin 1? from CSSC’s Chengxi Shipyard. The ships are reported to be going on long-term charters to two Chinese companies that will eventually take over ownership of the vessels.

The major deal is with Huaneng Energy & Communications Holding which is expected to take at least twelve of the vessels worth, $776 million, in what is being described as the largest ship-leasing deal in China that was signed in June 2008.

This comes after China’s Banking Regulation Commission relaxed the laws on permitting banks to establish leasing subsidiaries in 2007.

CSC Shenzhen, a transporter of cars and the ships and a subsidiary of Sinotrans Changjiang Group, is taking two of the ICBC vessels in a second deal worth US$77.6 million. The vessels are pure car/truck carriers (PCTCs). One was delivered last week and the other is expected to arrive in March, both from Jiangsu Jinling Shipyard.

CSC Shenzhen will pay charter fees over twelve years before it takes the vessels into its fleet. The deal was signed with ICBC in December 2008.