German financial services company Commerzbank has returned its regulatory licence to conduct business concerning ship Pfandbriefe as part of its plan to dispose of bad shipping loans.
Namely, in an effort to get rid of a portfolio of EUR 4.5 billion of shipping loans, the bank returned the licence with effect from May 31, 2017.
Commerzbank said it has not issued any ship Pfandbriefe, securities backed by shipping mortgages, for the last six years, and does not intend to do so going forward.
According to § 2 para 3 Pfandbriefgesetz (PfandBG), the cover pool for ship Pfandbriefe has to be phased out, once the licence has expired. In this context, the Federal Financial Supervisory Authority (Bundesanstalt für Finanzdienstleistungsaufsicht) granted Commerzbank AG an exception regarding the statutory limit under the PfandBG for further cover assets “in order to allow Commerzbank additional flexibility for the onward downsizing of its discontinued ship financing business.”
From June 1, 2017, ship Pfandbriefe issued by Commerzbank can be completely secured by such further cover assets used for public Pfandbriefe.
In the light of the ongoing reduction of its ship financing portfolio, Commerzbank will make use of the exceptional permission and intends to replace all ship finance loans collateralized by ship mortgages in the cover pool by such further cover assets used for public Pfandbriefe in the course of this year.