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DVB Bank - It's all about expertise!

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Simone Sacherer

on 1 December 2017

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Transcript of DVB Bank - It's all about expertise!

It's all ab ut expertise!
Mission Statement
Unique Expertise
Competitive Strenghts
Business Model
About Us
The specialist
in international
transport finance
Shipping Finance – In-depth expertise
Our mission statement: „To create sustainable risk-adjusted income through providing bespoke financial solutions to our diversified client base, leveraging our unique global position in the shipping industry”

2. Tanker Group
Our dedicated approach and our commitment to the shipping industry bring us closer to our clients.

3. Dry Bulk Group

(dry cargo, combination and bulk carriers)

Shipping Finance portfolio
(30 Jun 2017: €11.0 bn)
Latest News
we make
deals work
The specialist
in international
transport finance
... to constantly and thoroughly research and study our industry. Often, this leads us to challenge conventional wisdom when offering our focused range of financing services.
We go the
extra mile...

This means striving to seek and develop intelligent and appropriate solutions that meet and even exceed our clients’ needs and expectations.
We are well aware
of the opportunities and risks presented by the cyclical transport markets –
both regionally and internationally.
We are familiar ...
with the challenging business issues faced by our clients.
The Board of Managing Directors
CEO and Chairman of the Board of Managing Directors

Ralf Bedranowsky
DVB – International organisation
DVB’s 10
1. Business model

– clearly focused, distinctively
specialised, diversified in many aspects, cycle-
neutral and international in scope
2. Business policy

– conservative and
3. Organisation

– transparent structures,
swift information flow and prompt decision-making
4. Human resources

– highly qualified and
5. Products & services

– customised and
beyond the typical scope of banking
6. Asset & Market Research

– sophisticated,
renowned and award-winning
7. Credit portfolio

– diversified by multiple
criteria and categories
8. Risk management

– consistent and
9. Funding

– granular and maturity-matched
10. Own funds

– sound capital base
Annual General Meeting 2017
DVB’s unique business model
Stay in touch:
DVB’s customer lending volume (30 Jun 2017: €22.5 bn)
DVB – Lives diversity
We understand ...
the technical and commercial details of the assets we finance.


important deals


These persistent market distortions further burdened shipping clients’ liquidity cushions. This has in turn affected lenders to a higher extent than before.

Major regulatory changes are on the way. However, although the Ballast Water Treatment was due to become effective in September 2017, the International Maritime Organization has granted a two-year extension. As this new regulation translates into additional investments, it was expected to accelerate the phasing out of older units (especially larger ones for which ballast water treatment installations are most expensive). The extension will postpone the phasing out of these units.

Outlook 2017 – Shipping markets
Overcapacity in the existing fleets will continue to represent a challenge in the shipping markets.

The difficult environment in the shipping and offshore sectors is putting pressure on shipyards.

The lack of private equity activity and bank financing in the second-hand market will continue to stress market values especially for older tonnage.

Defaults and consolidation have occurred amongst shipowners and charterers and these are expected to continue.

Asset & Market

Outlook 2017 – Shipping markets
Product/service areas
Business Process Support
Group Audit
Group Compliance Office
Group Controlling
Group Corporate Communications
Group Finance
Group Human Resources
Group Legal
Information Technology

Client areas in affiliates
ITF International Transport Finance Suisse AG
LogPay Financial Services GmbH

Chairman of the Supervisory Board
DVB Bank America N.V., Willemstad, Curaçao

Chairman of the Board of Directors
DVB Holding (US) Inc., New York, USA
DVB Group Merchant Bank (Asia) Ltd, Singapore
ITF International Transport Finance Suisse AG, Zurich, Switzerland

Member of the Board of Directors
DVB Capital Markets LLC, New York, USA

Member of the Advisory Board
Hellmann Worldwide Logistics GmbH & Co KG, Osnabrück, Germany

DVB Bank SE, CEO and Chairman of the Board of Managing Directors

DVB Bank SE, Member of the Board of Managing Directors

Deutsche Bank AG, Global Head Deutsche Shipping, global
responsibility for the business development and coverage of the
shipping clients in ship financing and investment banking

Landesbank Hessen Thüringen, Member of the Board
of Managing Directors

Deutsche Bank AG, from 2001 to 2004 Member of the Regional
Management Board for Northern and Eastern Germany and Deputy
Chairman of the Supervisory Board of Schiffshypothekenbank zu
Lübeck AG

Since July 2015





Aviation Finance strategy – Integrated platform solutions
Our mission statement: As a hybrid institution, we provide our customers with the most efficient blend of capital and services at any period in time and at any point along the industry cycle.
We feature a unique platform of Aviation Finance services and products employing specifically skilled individuals.

We continually develop our asset-oriented lending practice to profitably expand our business.

We are willing to assume residual value risks – based on in-depth research and market/asset knowledge.

We take a proactive approach to maintaining and growing our portfolio.

We increase our efficiency further to stay ahead of our competitors.

We like to ensure that our distinctive features are fully recognised and valued.

Aviation Finance – Integrated platform solutions
Finance portfolio

(30 Jun 2017: €7.2 bn)
important deals
Outlook 2017 – Aviation markets
Commercial jet order activity peaked around 3,500 p.a. in 2013 and 2014 pushing the aircraft backlog to about ten years of production at prevailing production levels. As expected, during 2015 and 2016 orders dropped to ca. 2,200 p.a. During the important Paris Air Show in June 2017, a significant volume of new orders and other commitments was recorded ‒ mostly for the new Boeing 737 version (the MAX 10) launched during the air show. While the competing Airbus A320 family was also sold in significant numbers, order volumes for larger twin-aisle aircraft models remained depressed. A relatively high share of orders came from leasing companies. Overall, the backlog still is very strong and exceeds eight years of production.

Modern single-aisle aircraft values remain firm but select larger twin-aisle jets are showing clear weakness. Values of aircraft on lease remain very strong as investors compete with each other for any opportunity to expand their portfolios. In general, there is ample commercial financing available for new and increasingly also for used aircraft, especially if sold with a lease attached. There is no reason to expect a sharp downturn in the short term for modern single-aisles such as the Airbus A320/321 and the Boeing 737, but there are concerns about the values of select larger twin-aisles such as the Airbus A330 and A380 as well as the Boeing 777.

Offshore Finance – Highly specialised industry
The offshore industry is highly specialised – so is DVB’s Offshore Finance division. The team facilitates a unique industry focus and specialisation model which has earned us a high market reputation.  

Offshore Finance provides debt financing and financial solutions to our clients. We have been mandated to structure offshore transactions and we often act as agent on many syndicated loans to the offshore industry. As we maintain strategic relations with most our clients, we are able to discuss company-specific strategic alternatives with them, offering added-value services like Advisory and M&A.

Our clients within the industry range from owners/operators of offshore vessels to experienced financial investors within the offshore sphere, the majority of which is concentrated in the offshore hubs of Europe, the Americas, and Asia/Pacific.

Clients and prospective clients are serviced from three different locations: Singapore, New York and Oslo.
Finance portfolio
(30 Jun 2017: €2.1 bn)
Outlook 2017 – Offshore markets
Continued oil price uncertainty is leading to further cuts in exploration and production (E&P) spending as oil and gas majors not only implement cost-cutting programmes, but also delay investments. It is expected that offshore E&P spending will decrease by another 8% in 2017, with capital expenditures being more affected than operational expenditures.

Demand for most offshore asset types is expected to further decline. Demand in regions with comparatively higher oil price breakevens – such as the North Sea, West Africa or Brazil – continued to be more affected than lower-cost production regions such as the Middle East.

On the supply side, the number of units on order remains large for most asset types. Rig owners and shipowners are expected to continue to take measures to reduce supply growth as much as possible, by delaying deliveries and scrapping older units.

In the short term, the initiatives for supply adjustment measures will not be sufficient to make up for the lost demand. Hence, fleet utilisation is still expected to decline. As a consequence, the number of stacked units is likely to continue to grow as shipowners and rig owners strive to preserve cash.

As the market continues to remain difficult, cash reserves amongst rig owners and shipowners are gradually becoming depleted. Hence, we expect restructurings, distressed sales and bankruptcies to continue to be major topics during 2017.

Outlook 2017 – Aviation markets
important deals
Outlook 2017 – Offshore markets
Land Transport Finance – Consistent client franchise
We have a clear mission statement: We highly value our client relationships. The goal is to increase our client franchise as the leading rail asset financing partner in our core regions. Based on our

unique understanding of the market,
capacity to execute transactions, and

we offer added value by

advising on intelligent asset finance solutions, and
taking appropriate risk positions that capitalise on the cyclical nature of the underlying sectors.

important deals
Outlook 2017 –
Land Transport markets
Demand perspectives for freight transport are positive in Australia and North America and neutral for Europe. The outlook for the European rail passenger market is positive. Transport price, lease rate and utilisation rate increases can be expected in Australia and North America, whereas the picture is flat for Europe.

In its reference scenario, the European Commission expects an annual 1.6% increase of European logistics and freight transport activity between 2010 and 2030. SCI Verkehr forecasts a 1.4% rail freight performance (tonne-km) growth p.a. in Europe, 1% growth p.a. for new locomotives and new freight cars as well as 4% p.a. for new urban rail equipment worldwide between 2016 and 2020.

The U.S. Department of Transportation’s Bureau of Transportation Statistics and Federal Highway Administration projected a compound annual growth rate of +0.8% in rail freight for the period 2016‒2045. Moody’s projects a 1.25% to 2.0% rail freight carload volume growth scenario for North America for the coming year.

Coal markets are still depressed in the United States (tighter emission regulations) and the United Kingdom (doubling of the carbon tax and closure of some coal-powered stations), subdued in Australia (lower growth in demand from Asia, but the China-Australia Free Trade Agreement lifts many import duties), but doing fine in continental Europe (more import due to mine closures). President Trump’s emphasis on the reliance on coal could stimulate the important coal sector in USA.

Intermodal transport is likely to be positive.

Locomotive and freight car demand is weak, since current fleets must be better utilised first. Asset prices are stable or increasing outside energy sectors (coal, oil and sand).
Leasing companies continue to gain market share in Europe and also in the freight car sector in North America.

The lack of train drivers gives railroad companies firm headwinds in Europe.

Outlook 2017 –
Land Transport markets
Our Shipping Finance portfolio is strongly diversified across sectors and geographic regions.

Land Transport Finance portfolio
(30 Jun 2017: €1.5 bn)


The people who work with us are just as international; our employees belong to a wide variety of cultural circles, and come from many different nations. We employed 643 persons from 40 different nations as at
30 June 2017; there are 29 different nationalities represented within our core Transport Finance business. 295 employees work in Germany and
348 in our international locations.
DVB – Diversity of staff
Internationality is also reflected in our business divisions' client base: the majority or our globally active clients are domiciled in Europe (50.4%), followed by North America (18.4%) and Asia (18.4%).
DVB – Global client base 2016
DVB – Valuable credit portfolio
DVB – Diversified funding (30 Jun 2017: €23.5 bn)
Our target assets include, amongst others, tankers (crude oil, gas, chemical, product), dry bulk vessels, container vessels, container boxes, car carriers and ferries.

Shipping Finance strategy – In-depth expertise
We thoroughly analyse and continuously track the vessels financed from the yard to the scrapyard.
We further ingrained risk management in the process, supported by the complete involvement of research and risk management throughout the life cycle of a loan.
DVB – Gender quota
In accordance with the Act for Equal Participation of Woman and Men in Executive Positions in the Private and Public Sector,
DVB Bank SE – exchanged-listed company and subject to what is called ‚one third co-determination‘ – laid down the following targets1 valid until 31 December 2021:

Supervisory Board – Female quota of 22%
Board of Managing Directors – Female quota of 0%
First management level – Female quota of 16.2%
Second management level – Female quota of 23.3%

In its current composition the
Supervisory Board
of DVB Bank SE consists of two women. This is in line with the target quota. Members of the Supervisory Board are appointed without regard to nationality, gender or religion.

DVB's business model is international in every respect. With offices in eleven pivotal locations in Europe (Frankfurt/Main, Amsterdam, Athens, Hamburg, London, Oslo and Zurich), in the Americas (New York and Curaçao), as well as in Asia (Singapore and Tokyo), our business divisions have a worldwide presence in the transport markets and their various segments.

Women in management positions
Aviation Finance – KDAC

DVB'S SWOT analysis
Our mission statement: „To create sustainable risk-adjusted income through providing bespoke financial solutions to our diversified client base, leveraging
our unique global position in the offshore industry”


Since December 2016








Product/service areas
Group Treasury
Transaction and Loan Services

Client areas in business divisions
Aviation Finance
Aviation Financial Consultancy
Corporate Finance
Financial Institutions and Syndications
Investment Management
Land Transport Finance
Shipping Finance

Client areas in affiliates
DVB Capital Markets LLC

DVB Transport Finance Ltd

Member of the Board of Managing Directors

Christian Hagemeyer


DVB Bank SE, Member of the Board of Managing Directors

Landesbank Hessen Thüringen, Head of Credit Risk Management

Deutsche Bank AG, Senior Credit Officer

Deutsche Bank AG, Head of Credit Large Caps

Deutsche Bank de Bary N.V., Group Head Risk Management Commodity Trade Finance

Deutsche Bank de Bary N.V., Relationship Manager Commodity Trade Finance

Deutsche Bank de Bary N.V., Relationship Manager German Desk

Deutsche Bank AG, Traineeship – Focused on corporate lending

University of Hamburg, M.A. Business Administration

Since January 2017









Product/service areas
Aviation Credit
Aviation Research
Credit and Asset Solution Group
Group Risk Management
Land Transport Credit
Land Transport Research
Shipping Credit
Shipping Research

Board of Managing Directors
of DVB Bank SE currently consists of four members, none of whom is a woman. This is in line with the target quota. Members of the Board of Managing Directors are appointed without regard to nationality, gender or religion. It is whether a candidate – male or female – has the required knowledge, skills and professional expertise necessary to properly perform their duties and whether he or she complies with the principles laid down in the Company's Memorandum and Articles of Association that decides on their appointment.

At 30 June 2017, the
two top management levels
below the Board of Managing Directors comprised 97 executives, who either reported directly to the Board of Managing Directors or who worked as team leaders. Women held 21 (21.6%; 31 December 2016: 24.4%) of these executive positions. The share of female executives on the first management level decreased slightly to 16.2% (31 December 2016: 18.2%), as well as on the second management level (25.0%; 31 December 2016: 28.3%) – due to restructuring measures and minor fluctuations in some parts of the Bank. When filling positions, assuming the same level of qualifications, the Bank is committed to give preference to internal applicants and does not regard criteria such as nationality, gender or religion in its decision-making process.

Deal of the year 2016
Demand for passenger transport remains robust as global traffic grew 7.9% (year-over-year) for the first five months of 2017. Airfreight volumes showed a spectacular growth of 10.2% over the same period. During 2015/2016 passenger yields fell by about –10%, largely as a response to lower fuel cost, but this trend will probably come to an end with an anticipated drop of only –2% this year.

Global airline results (net profits) jumped between 2014 and 2015 from US$13.7 billion to US$35.9 billion, thanks to the low oil price and high load factors. Preliminary figures for 2016 show a virtual stabilisation at US$34.8 billion. Industry projections for 2017 only see a minimal softening to US$31.4 billion. Fuel cost are expected to increase vs. 2016 and may be partly compensated by improved fuel efficiency. Significant cost increases are expected for labour with a projected 2.8% rise of unit labour cost per available tonne kilometre. There are no industry reasons to expect a dramatic downturn, but political instability, terrorism, the airport hassle-factor and populist/protectionist rhetoric could undermine the confidence of consumers in international (air) travel.

In 2016, DVB closed a deal with IVS Bulk Pte Ltd (IVS Bulk), a subsidiary of Grindrod Shipping Pte Ltd established in 2013. On the back of our marketing efforts since 2008, we have established an active and engaging relationship with Grindrod Shipping since our first ship finance deal for a fleet of tanker and dry bulk vessels in 2011. We closed our first deal with IVS Bulk in 2014 for six of the twelve newbuildings. With the lowest dry bulk markets, the follow-on deal with existing club banks for the remaining six newbuildings did not materialise at that time.

Given the relationship established with Grindrod over the years and our commitment to support the company’s shipping ventures, we were asked to assist in structuring a deal for their remaining Supramax and Handysize vessels. Together with the client, we arranged a conservatively structured finance package as back-stop finance for the state-of-the-art newbuildings. The deal was syndicated in close cooperation with our Financial Institutions and Syndications team. Despite challenging markets, DVB was able to successfully syndicate the remaining commitment to a European and Japanese lender.

Grindrod Shipping was very appreciative of our continuous support, providing structured services at times when other lenders were withdrawing from dry bulk deals – even for their relationship customers.

Shipping Finance - IVS Bulk
Wholly-owned by the Great Eastern Shipping Company, the Greatship Group started operations in 2006. Today, the company owns a fleet of four jack-up drilling rigs and more than 20 offshore support vessels.
Greatship entered the contract drilling business in 2009 after it took delivery of two Keppel FELS jack-up drilling rigs (Mod V-B design). Two newbuildings from Lamprell (LeTourneau Super 116E design) were added to the fleet in 2013 and 2015. These four units are on charter to Oil and Natural Gas Corp (ONGC) in India and are the most established designs for modern, non-harsh environment jack-ups. They have been enhanced to meet the operating challenges of the Indian continental shelf, and also to drill high-pressure/high-temperature wells.

Having continually banked the offshore business of the Great Eastern Shipping Group for over 15 years, we were invited into the senior secured facility for the refinancing of Greatship’s four modern high-spec jack-up rigs. The client approached us due to our longstanding relationship, and our ability to assess the viability of the project despite the challenges in the offshore sector. The modern assets with long-term ONGC contracts, and Greatship’s financial strength attracted heavy competition. In this transaction we partnered with four more financial institutions, each taking equal stakes.

Offshore Finance – Greatship
Deal of the year 2016
In April 2016, Aviation Investment Management (AIM), in its capacity as consultant to the Deucalion Aviation Funds, signed a sale agreement with one of DVB’s long-standing partners, AerCap, for the purchase of a portfolio of 37 aircraft.
The well-diversified portfolio of mid-life assets formed the basis for a new joint venture ‒ called KDAC ‒ between Deucalion Limited and one of its investment firm partners. The subject deal, with its substantial size, offered the opportunity to build a platform with the flexibility to grow and explore multiple exit opportunities.
The portfolio’s size, equity requirement, and average age of ten years represented challenges for some competing bidders. By utilising the resources and expertise of our wider Aviation platform, AIM was able to identify value in the portfolio where others had been unable to do so. Furthermore, the execution capabilities of AIM were an added attraction for the seller which was looking to meet a tight closing timetable.

Our Aviation Asset Management team was appointed servicer of the portfolio and our structured lending team joined the senior debt facility as a co-underwriter with BNP Paribas (lead arranger) and Citibank (co-underwriter). The transaction reinforced our position as a market leader when it comes to managing experienced third-party equity in large mid-life aircraft deals.
Deal of the year 2016

ELL European Locomotive Leasing (ELL), Vienna, Austria, is a young but already leading lessor in the European locomotive full-service leasing market. Set up in 2014, the company developed swiftly into a prominent position by leasing out the most modern Siemens Vectron electric locomotives, offering the best market prospects in the European rail sector.

ELL approached us and other lenders early 2016 with the request for an extended refinancing facility that would allow optimising the existing facility; provide debt for the future investments in 30 additional state-of-the-art electric locomotives; and support an even further growth potential. In June 2016, the new eight-year term loan and revolving facility for ELL was signed. The security package comprised typical asset-based elements. We acted as Hedging Bank as well as Facility and Security Agent for an international club of six banks, and took the largest debt share.

This transaction improved ELL’s financing structure and pushed its range of operational possibilities. We were pivotal for the closing of this important deal and was again fully recognised as leading lender and reference bank in this landmark transaction.

Land Transport Finance – ELL European Locomotive Leasing
Deal of the year 2016
(1) The targets match the gender quotas DVB Bank SE achieved as at 31 March 2017.

Member of the Board of Managing Directors

David Goring-Thomas

DVB Bank SE, Member of the Board of Managing Directors

DVB Bank SE London Branch, Deputy General Manager of London Branch,
Managing Director and Global Head of Aviation Finance

The Long-Term Credit Bank of Japan Ltd, London Branch, Deputy General Manager
and Head of Aviation Finance – Europe, Middle East & Africa

LTCB Merchant Bank (Singapore) Ltd/The Long-Term Credit Bank of Japan Ltd,
Singapore Branch, Senior Vice President, Head of Aviation Finance – Asia

The Long-Term Credit Bank of Japan Ltd, London Branch, Manager/
Senior Manager, Aviation Group

Swiss Bank Corporation, London, Merchant Banking, Assistant Manager/
Manager in the Aviation Finance Group, and Manager Corporate Finance

National Westminster Bank, International Banking Division, London,
Graduate Trainee, Account Officer in Transportation (Aerospace) and
Assistance Manager (Personnel)  

University of Manchester, B.A. Economics Honours

Chairman of the Board of Directors
DVB Transport Finance Ltd, London,
United Kingdom

Member of the Board of Directors
DVB Capital Markets LLC, New York, USA
DVB Holding (US) Inc., New York, USA

© Copyright DVB Bank SE 2017
Diversification – A major pillar of success
Our valuable credit portfolio is diversified over various criteria and categories:

assets – means of transport such as ships, aircraft, offshore support vessels and platforms
as well as rolling stock
sectors & subsectors of the asset to be financed
borrowers & clients
types of financings
asset users
asset manufacturers
asset employment
asset vintage
geographic exposure
Developing a sustainability programme

To act sustainably is to act responsibly – on economic, environmental, social and
governance criteria.

DVB is well aware of its multiple roles in society and makes a valuable contribution
to society.

To further align this performance contribution with ethical, social and environmental
values and to support sustainable business development, the Board of Managing
Directors has initiated a sustainability project.

A dedicated project team comprises members from various disciplines in the Bank.
It is presently working on various sustainability aspects.

In pursuit of this goal, we look to the German Sustainability Code to develop a
customised, holistic sustainability programme.

Full transcript