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DVB Bank - It's all about expertise!

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Simone Sacherer

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

It's all ab ut expertise!
Mission Statement
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)

Latest News
At DVB,
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.
The Board of Managing Directors
CEO and Chairman of the Board of Managing Directors


Ralf Bedranowsky
DVB – International organisation
DVB’s
Business model

– focused and international in scope
Business policy

– conservative
Organisation

– transparent structures and swift
decision-making
Human resources

– qualified and experienced
Services

– intensive, industry-specific client service
Asset & Market Research

– extensive and award-winning
Credit portfolio

– diversified by multiple criteria and categories
Refinancing

– granular and maturity-matched
Own funds

– sound capital base
competitive
strengths
Megatrends in shipping
DVB’s business model
Stay in touch:
DVB’s customer lending volume (31 Dec 2017: €19.4 bn)
DVB – Lives diversity
Some

important deals

2017


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





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

2013–2015

2007–2013



2004–2007


1980–2004


Aviation Finance – 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 industry-skilled individuals.

We continually develop our asset-based 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 like to ensure that our distinctive features are fully recognised and valued.

Aviation Finance – Integrated platform solutions
Aviation
Finance portfolio

(31 Dec 2017: €6.1 bn)
Some
important deals
2017
Aviation markets – Outlook 2018
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. 2,150 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 rest of the year remained lackluster, a sudden order “boom” for mainly Airbus A320 family aircraft in December brought the gross order intake unexpectedly high to ca. 2,500. Overall, during 2017 the “book-to-bill-ratio” remained well over 1. The backlog still is very strong and exceeds eight years of production at last years’ level.

Modern single-aisle aircraft values remain firm but certain regional aircraft types and 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. At current fuel cost levels, both the older generation and the new technology aircraft remain competitive. 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 regional aircraft as well as larger twin-aisles such as the Airbus A330 and A380 as
well as the Boeing 777.


Aviation markets – Outlook 2018
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

understanding of the market,
focus,
capacity to execute transactions, and
flexibility,

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.


Some
important deals
2017
Land transport markets – Outlook 2018
Demand perspectives for rail freight transport are positive for Europe, North America and Australia. Transport price, lease rate and utilisation rate increases can be expected. The outlook for the European rail passenger market is positive as well.

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 in 2018. FTR Intel forecasts a rail freight growth of 2.7% in 2018.







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 still doing fine in continental Europe (more import due to mine closures and retreat from nuclear energy in Germany). President Trump’s emphasis on the reliance on coal could stimulate the important coal sector in USA short-term.

Intermodal transport is likely to be positive. The International Union for Road-Rail Combined Transport (UIRR) has a slightly positive business outlook for the period 1 October 2017 to 30 September 2018. Stephens Inc. expects an increase of 5.4% in 2018 intermodal volumes in US.

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. A lack of
truck drivers, almost fully utilised trucking capacity and stricter hours-of-service
recording rules for truckers will provide tailwinds in North America.



Land transport markets – Outlook 2018
Our Shipping Finance portfolio is diversified across sectors and geographic regions.



Land Transport Finance portfolio
(31 Dec 2017: €1.4 bn)
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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 613 persons from 37 different nations as at
31 December 2017; there are 28 different nationalities represented within our core Transport Finance business. 283 employees work in Germany and
330 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 (49.8%), followed by Asia (17.8%) and North America (17.7%).
DVB – Global client base 2017
DVB – Valuable credit portfolio
Our target assets include, amongst others, tankers (crude oil, gas, chemical, product), dry bulk vessels, container vessels and container boxes.


Shipping Finance – In-depth expertise
We analyse and continuously track the vessels financed from the yard to the scrapyard.
Our risk management and research are ingrained in the process and involved throughout the life cycle of a loan.
DVB – Female quota
In accordance with the German Act on Equal Participation of Women and Men in Executive Positions in the Private and the Public Sector, DVB Bank SE – as a company subject to one-third participation as a form of co-determination – laid down the following targets, 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%

Since DVB’s shares were delisted from the Regulated Market at Frankfurt Stock Exchange on 17 August 2017, this law no longer applies to DVB. However, the Supervisory Board has declared itself in favour of pursuing these targets even after the delisting.

As at 31 December 2017, the
Supervisory Board
had two female members. This was in line
with the target quota. However, female representation on the Supervisory Board fell to 11% with
Dr Siersleben’s retirement on 1 January 2018.


DVB's business model is international in every respect. With offices in ten pivotal locations in Europe (Frankfurt/Main, Amsterdam, Athens, Hamburg, London and Oslo), 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 – Sora Airlease

DVB'S SWOT analysis
CURRICULUM VITAE


Since December 2016

1998–2016


1997–1998


1995–1997


1994–1995


1990–1994


1987–1990



1984–1987

Product/service areas
Group Treasury
Transaction and Loan Services

Client areas in business divisions
Aviation Finance
Aviation Financial Consultancy
DVB 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

None





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

2005–2016

2001–2005

1995–2001

1993–1995

1991–1993

1989–1991

1987–1989

1984–1987

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






http://bit.ly/1IV5YW4
http://bit.ly/2ktAToI
The
Board of Managing Directors
currently consists of three members, none of whom is a woman. This is in line with the target quota.

Board members – both for the Board of Managing Directors and the Supervisory Board – are appointed without regard to nationality, sex or religion. It is whether candidates – male or female – have the required knowledge, skills and professional expertise to properly perform their duties and whether they comply with the principles laid down in the company’s Memorandum and Articles of Association, that decides on their appointment.

At 31 December 2017, the
two top management

levels
of DVB Bank SE below the Board of Managing Directors comprised 95 executives, who either reported directly to the Board of Managing Directors or who worked as team leaders. Women held 23, or 24.2%, of these executive positions (previous year: 21, or 24.4%). While the share of female executives on the first management level declined marginally, to 17.9% (previous year: 18.2%), it rose slightly to 28.6% on the second management level (previous year: 28.3%). The overall number of executives on the two top management levels below the Board of Managing Directors increased as a result of restructurings. When filling positions, assuming the same level of qualifications, the Bank is committed to giving preference to internal applicants, and does not regard criteria such as nationality, gender or religion in its decision-making process.







Demand for passenger transport remains robust as global traffic grew 7.7% (year-over-year) for the first eleven months of 2017. Airfreight volumes showed a spectacular growth of 9.7% over the same period. During 2015/2016 passenger yields fell by about 10%, largely as a response to lower fuel cost, but this trend has come to an end with an anticipated drop of only 1.5% 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. During 2016 and 2017 airline results stabilised at a very satisfactory ca. US$35 billion level. Industry projections for 2018 indicate a further strengthening to US$38.4 billion. Fuel cost are expected to increase vs. 2017 and may be partly compensated by improved fuel efficiency. However, cost increases are expected for labour with a projected 1.4% rise of unit labour cost per available tonne kilometre. There are no specific industry reasons to expect a downturn but unexpected economic headwinds, political instability or terrorism could undermine the confidence of consumers in international (air) travel.



CMA CGM S.A. (CMA CGM) is the third-largest container liner group globally with approximately 2.5 million TEU capacity and approximately 12% market share. It has been privately owned since its founding in Marseille in 1978. With the first transaction dating back to 1998, the company is a long-term client of DVB. Despite the challenging conditions in the container market, CMA CGM proved its resilience and has been playing a leading role in the consolidation of the industry.

In 2016, we closed our first bilateral JOLCO transaction for CMA CGM, financing a fleet of container boxes. The competitiveness and efficiency shown during that transaction has been highly valued by the company and resulted in them approaching us for this new JOLCO opportunity regarding a portfolio of new dry container boxes, which closed in May 2017.

The JOLCO was structured and arranged by DVB, whereby we were not only a senior term loan provider, but a lease and equity arranger as well, thanks to the structured leasing expertise developed within our Shipping Finance Asia team. Together with the Tokyo colleagues, the team was able to source the equity to be raised by a Japanese equity house.

By sourcing the equity for this transaction as well as providing the senior debt financing, we were able to offer a 100% finance solution to a long-standing client of the Bank and a key player in the industry.


Shipping Finance - CMA CGM
In July 2017, DVB, in its capacity as Lead Arranger and Sole Underwriter, closed a limited recourse term loan financing a portfolio of 17 aircraft with Sora Airlease (Sora). Sora is a newly-established joint venture between Merx Aviation and Orix Aviation, two well-established and close clients of DVB.

The well-diversified portfolio of mid-life assets, which included stellar lessee names such as Southwest Airlines, British Airways and Alaska Airlines, formed a seed portfolio for the new joint venture and offered the opportunity to build a platform with the flexibility to grow and explore multiple exit opportunities.

The portfolio’s size and mid-life average age represented challenges for some competing banks. By utilising the resources and expertise of the wider DVB Aviation platform, including DVB’s Aviation Asset Management, Aviation Credit and Aviation Research teams, DVB was able to analyse, structure and risk adjust the financing of the portfolio. Furthermore, the execution capabilities of DVB were an added attraction for Sora which was looking to meet a tight closing timetable.

As part of DVB’s goals to provide complete structured financing solutions to our aviation clients, DVB first closed the transaction with Sora and subsequently brought in new lenders to the joint venture, providing financing access to Sora as it continues to grow its fleet to new lenders in Asia, Europe and the USA.

Deal of the year 2017

VTG AG, founded in 1951 and headquartered in Hamburg, is the largest rail car lessor in Europe managing over 80,000 rail cars globally. The company is listed at the Frankfurt Stock Exchange and part of MDAX. Our relationship with VTG has historically been strong and we entered into many on- and off-balance sheet financings over the last 25 years.

Besides its European rail car fleet, VTG is also an active player in the North American rail car market. VTG Rail Inc., a 100% subsidiary of VTG, owns a mid-sized fleet of around 5,250 railcars operating in the US, Canada and Mexico. In addition, the company has 1,000 cars on order to be delivered until mid-2018. The fleet consists mainly of covered hoppers and tank cars on lease to a diversified group of lessees.

Mid 2017, VTG approached its main relationship banks to provide a standalone facility to finance its entire fleet operating in North America. We were eventually mandated as Joint Mandated Lead Arranger to arrange a senior secured term financing as key member of a club deal alongside two other banks.

The main drivers for our mandate were our strong track record in closing complex transactions with VTG Europe as well as our long-standing experience and track record in the North American rail market. Especially the latter was important for the client and led – in an excellent transatlantic co-operation between our New York and Frankfurt teams – to a smooth closing of the transaction.






Land Transport Finance – VTG
Deal of the year 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






© Copyright DVB Bank SE 2018
DVB manages a credit portfolio that is diversified over various criteria and categories:

assets – means of transport such as ships,
aircraft and rolling stock,
sectors & sub-sectors of the asset to be financed,
borrowers & clients,
types of financing,
asset users,
asset manufacturers,
asset employment,
asset vintage, and
geographic exposure.
Corporate Responsibility
https://bit.ly/2vPrpOs
http://bit.ly/2zDHl3H
http://bit.ly/2iuKz6u

http://bit.ly/2jzX4d6
1 As of 1 January 2018 the Offshore Finance division was closed down.

1


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Shipping markets – Outlook 2018

Overcapacity in the existing fleets will continue to represent a challenge for most shipping markets. Nonetheless, it is expected that the recovery path initiated in 2017 for several shipping sectors such as dry bulk and container shipping continues into 2018.

The difficult environment in the shipping sectors is putting pressure on shipyards which continue to propose attractive prices. Further ordering is a major risk to continued recovery.

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

Shipping markets – Outlook 2018

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

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.

Shipping Finance portfolio
(31 Dec 2017: €9.5 bn)
Our Corporate Responsibility (CR) approach

Corporate Responsibility implies acting responsibly, be it in the economical, ecological or social domain.
DVB is well aware of its multiple roles in society and makes a valuable contribution to society.

In November 2017, the Board of Managing Directors mandated Group Corporate Communications to manage
the Bank’s CR activities and, in the medium term, to develop a holistic CR programme that fits the Bank.

Goals of the CR approach:

Combining our economic operations with socially responsible action into a single strategy
Further strengthening existing measure
Identifying new initiatives

Short- to mid-term areas of activity:

Implementing the climate strategy to improve environmental performance and gathering of data
Developing an internal policy for sustainable lending
Expanding the internal policy on selecting suppliers to include social and ecological criteria
Expanding the internal policy on protecting human rights
Issuing a declaration of conformity with the German Sustainability Code and advancing the CR Report

Deal of the year 2017
Full transcript