China banks mull ship mortgages to dodge US levies

China’s biggest banks are considering a rare move away from shipping finance, reorienting how the country manages its exposure to the maritime ￰0￱ leasing units of at least two state-owned banks are in very advanced talks with Beijing’s financial regulator about converting long-term vessel leases into mortgage ￰1￱ is a defensive proposal against the US tariff ￰2￱ altering the composition of their shipping portfolios, banks want to shield themselves from steep US port fees first imposed in mid-October and possibly from Chinese ￰3￱ insiders say the timing is key: Some of China’s biggest leasing houses have billions of dollars locked in vessels that often visit American ports, and the overall trade war backdrop can only heighten ￰4￱ National Financial Regulatory Administration (NFRA), China’s top banking watchdog, is closely watching the talks, and people familiar with the matter said the regulator hasn’t made a decision and is considering the financial risks of allowing banks to hold shipping ￰5￱ industry was traditionally seen as too ￰6￱ in the talks say it is a highly sensitive ￰7￱ the one hand, Beijing would like to protect its lenders and shipping companies from Washington’s ￰8￱ the other hand, regulators are wary of exposing banks to new risks when China’s financial system is already under pressure from soft property markets and slower ￰9￱ deliberations underscore the scale of China’s footprint in ￰10￱ nearly $100 billion in shipping assets already on long-term leases to China-backed firms, Chinese banks and leasing companies lead the global ￰11￱ change to the structure of how those assets are funded would reverberate across international shipping and could reshape China’s standing as the world’s largest maritime ￰12￱ lenders explore mortgage model for ships The thought arose in August when leasing companies and the shipowners met with NFRA ￰13￱ China, lessors have been the key players in shipping finance worldwide for over a decade, replacing Western banks that have ￰14￱ a standard leasing contract, the owner buys the vessel and leases it to the operator for over ten years or ￰15￱ legal liability and financial responsibility are reversed if the leases become ￰16￱ ship owner owns the ships, but the bank finances ￰17￱ are generally shorter — around five years — and shift the risk of market downturns and defaults from landlords to operators and their ￰18￱ crossing that line, Chinese banks would be taking an extraordinary ￰19￱ assets have long been considered cyclical and volatile, with values influenced by the ebbs and flows of trade, freight rates, and global ￰20￱ case of default, these banks would have to spend years in court trying to recoup their money.

However, other lenders say the risk could be worth it if mortgages shield their portfolios from US ￰21￱ brace for US penalties The urgency comes from an American plan unveiled in April by President Donald ￰22￱ October 14, Chinese-built and Chinese-operated vessels calling at US ports will be charged fees based on cargo ￰23￱ highest fees are likely imposed on vessels directly owned by Chinese ￰24￱ United States says the duties are intended to revitalize its shipbuilding industry and reduce dependence on Chinese maritime muscle. However, Beijing views this step as a direct challenge to controlling global shipping ￰25￱ of last year, Chinese leasing companies owned about $100 billion worth of shipping assets in total, according to Clarkson Research ￰26￱ makes up as much as 40% of some lessors’ portfolios, underscoring their US policy ￰27￱ sources said some shipowners are already looking for ways around the ￰28￱ the ideas under consideration is raising charter rates on ships that do not call at US ports and overhauling financing for vessels that ￰29￱ are tapping non-Chinese banks for the new money to cut ￰30￱ Bybit now and claim a $50 bonus in minutes