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bridging asia
2016
German Banking - Financial Solutions by NORD/LB Asia
Peeter Viisimaa
Asia Pacific’s
long-term potential
P 10 Shipping – an interview with Siva Group
P 12 Aviation – over 30 years of experience
P 14 Energy – the structured finance experts
P 16 German Desk – Center of Competence for Corporate Banking
P 18 Markets Division – providing access to Global Financial Markets
P 19 NORD/LB – Corporate Sales
2 / Table of contents
4 / “Our customers are discovering
14 / Energy Overview
Asia’s growth potential” – Interview
The global market for renewables has been growing for the
In our interview Hinrich Holm and Olaf-Alexander
past few years, and more and more Asian countries are now
Wiedemann from NORD/LB discuss the growing impor-
discovering the vast potential of the sector. Our team in
tance of Asia to the global economy, as well as NORD/LB’s
Asia explains how it can help you develop the right solution
strategy and approach for this key market.
for your financing needs.
6 / Meet our team – Team profiles
16 / Introduction to the German Desk
Meet our Aviation, Corporate Sales, Energy, German Desk,
Our Center of Competence for our German Corporate
Shipping and Markets Sales specialists.
Clients Banking in Shanghai and Singapore.
8 / Market overview
18 / Specialists in Financial Solutions
The dip in China’s economy should not lead to the conclusion
Our Markets Division provides financial markets products
that the Asian miracle is over. On the contrary, the region is
and services to our customers and partner banks. The com-
now entering a new stage of growth. Our overview high-
bination of our comprehensive industry know-how and
lights the most important developments for investors.
customer relationships, developed over many years, makes
10 / Shipping – Interview
extensive product offerings and our experienced team, we
us an experienced and a sought-after partner. Through our
“We need proactive investors who understand where money
is made and lost in shipping”: An interview with Saravana
Sivasankaran, President of Siva Group.
12 / Aviation Overview
Airlines in Asia Pacific have enjoyed tremendous growth
since 2003, and the long-term trends are still overwhelmingly positive. Read how NORD/LB helps its clients in the
region successfully navigate the current boom.
endeavor to create value for our customers.
bridging asia / 3
Dear Readers,
Welcome to NORD/LB’s fi rst magazine, insight into some of
our activities in this Asia region. This publication reflects
how important the region has become for us in the last
couple of years.
During the last two decades, we have seen a tremendous
rise in interest in NORD/LB’s solutions in the Asian region,
steering us in a direction of strengthening our activities in Asia. The backdrop to this interest is the fact that
many countries in Asia are reaching a new level of wealth,
making it necessary to rethink their approach to energy,
NORD/LB
logistics, travel and long-term investments – areas that we,
as a bank, have a strong and long tradition in.
Our new magazine reflects our “Northern German” way
of banking: Reliable, Realistic, Solid - all based on our 250
years of expertise. The nucleus of our success is our focus
on Energy, Aviation, Shipping and institutional investors.
Each of our teams is a professional in their area of expertise, capable of providing great insight into how realistic a
project is and having substantial potential to promise real
long-term success. We are not interested in quick fi xes, but
rather look for sustainable results in our work.
In our new issue, we want to demonstrate to you the complexity and multitude of our activities. In our interview
NORD/LB
with Dr. Hinrich Holm, Member of the Board of NORD/
LB, we discuss the bank’s strategy for Asia in light of the
bank’s overall strategic approach. We will also introduce
our German Desk, which we operate out of Shanghai –
where NORD/LB is one of the few fully licensed German
banks in the People’s Republic of China.
This will be followed by an outlook from our economic
department about their expectations of the economic
development of Asia. We have also prepared a section for
each of our core businesses: Energy, Aviation, Shipping,
Markets and Corporate Sales, where you can dive into our
core competencies – a showcase of what we can do for you.
We hope you enjoy this magazine
as much as we enjoyed preparing it!
Sincerely yours,
Asia Pacific Management Team
Olaf-Alexander Wiedemann
Dr. Stephan Popp
T2 Pictures
4 / Interview
“Our customers are discovering
Asia’s growth potential”
A conversation between Dr. Hinrich Holm, Member of the Managing
Board of NORD/LB Groups, and Olaf-Alexander Wiedemann, Regional
CEO of NORD/LB, Asia Pacific, about the growing importance of the market and the bank’s strategy in the region.
for many years. However, other banks
What is NORD/LB’s strate-
Mr. Wiedemann, the bank now has
gy for supporting its custom-
offices in Shanghai and Singapore.
have also discovered this market,
ers in foreign markets?
How do the bank’s competencies
and as a result we are now facing
Holm: As a regional wholesale bank
help your Asian customers?
stronger competition in some areas
than in the past. In the Aircraft sector,
(Landesbank), we have a very big
Wiedemann: We have been working
customer base in Germany. Of course,
for our customers for over 20 years in
the order books of Airbus and Boeing
many of our customers also do
Asia and, due to our long history,
show that in the next few years and
business abroad, and therefore require
understand the Renewable Energies,
decades, the greatest demand
a wide range of professional banking
Ships and Aircraft segments like very
worldwide will be from the Asian
services. At the same time our business
few other banks in this region. Our
region. Renewable energies are also
i­s divided into the very distinct
deep roots in these asset classes, and
booming in Asia, due to changing
segments of Renewable Energies,
the resulting specialist expertise of
attitudes in many countries on this
subject, coupled with the constantly
Infrastructure, Ships, and Aircraft. We
our finance team based in Asia, are
see ourselves as a major niche player in
appreciated by both our German and
increasing demand for energy. As
each of these areas. We support our
Asian customers.
most of the energy produced currently stems from conventional sources
customers as they move into the world
such as gas, coal and nuclear power,
markets – including Asia. Our branch
What trends and develop-
in Singapore acts as a platform where
ments do you see in the mar-
banks do not have strong expertise in
we can analyze customer enquiries
kets and, above all, in Asia?
understanding the financing of solar
from Germany and consider how they
Wiedemann: In our Ships segment we
and wind power in this region, and
can best be carried out in the region.
have seen very strong growth in Asia
we can do very well here.
bridging asia / 5
What else typifies Asia – inso-
Here too we remain true to ourselves
hand, we also have enough experi-
far as this can be generalized?
and only provide finance where this
ence to provide very good quality
Holm: Asia is a very diverse region –
fits in with our positioning. The
regarding contracts. Both elements
some countries are still developing,
niches in which we operate have been
result in our being able to go a little
others are emerging, and others are
a global business for some time now:
further for the third element, the
already fully industrialized. In
a German shipping company orders a
sponsor. That means we are also able
many of these countries a middle
ship in South Korea and rents it to a
to successfully serve customers who
class is forming, which, among
Chinese container line – or an
are still establishing themselves in
other things, wants to know about
Indonesian airline buys an Airbus
the market.
pension systems. This too is a
produced in Europe from a leasing
business for us, because we also
company based in Singapore. This
advise insurance companies and
means that in order to support its
tion in your markets?
pension funds on how to invest
customers in such transactions,
Holm: In our different segments we
their money and offer them attrac-
NORD/LB has to be structured and
are, of course, a niche provider. In the
tive investments due to our exper-
able to act globally to meet their
ships sector, a very big market
tise in this sector. I can see a very
needs. This means that both our
globally, we are among the top 10 in
How do you see your posi-
interesting market here in the next
German and Asian customers
the world, and in the aviation sector
few years in which Asia can grow.
appreciate our global network,
we are within the top five. But size
specialist expertise in our sectors,
alone cannot be our goal. Our aim is
You have had offices in Asia for some
and regional Asian expertise, all
to provide top-quality assets and
time. How has the business of NORD/
coupled with our North German
work in these niches for customers
LB and its customers developed?
pragmatism and reliability. Our
who expect this. And this is also the
Wiedemann: In the last 10 years
regional customers know that we
reason why we are very successful in
NORD/LB has focused increasingly
only come on board if the proposed
these sectors.
on our niches, where we have a clear
financing also fits in with our
competitive advantage over many
expertise. It is for this reason that
Let’s talk about energy. There is
other financers due to our specialist
they know they can count on us. For
great interest in German technology
expertise. At the same time Asia has
us, that is the point of our focused
and know-how. How much interest
become one of the most lucrative
business model. This is the case in
is there in finance from Germany?
growth markets worldwide in these
Asia, just the same as in Germany,
Holm: Germany is, so to speak, the
sectors for many of our customers.
Europe or America.
cradle of this technology and, due to
Our Asian strategy over recent years
the high quality of the products it
has taken this into account. Among
What would you describe as
provides, there is very strong
other things, it foresees the establish-
NORD/LB’s special strengths?
demand abroad, in particular in Asia.
ment of a local Aircraft team, in
Holm: We are very good in the
However, there are also providers
addition to the Ship team that has
financing of collateral that is tangible
from other European countries, the
been operating successfully for years.
in the truest sense of the word. And
USA and Asia, that are interested in
We have also increased the number of
we will remain true to this principle.
our experience in the financing of
staff in the Renewable Energies
Here our strength lies in our wanting
such investments. In some target
segment by recruiting experienced
to provide good-quality collateral
countries in Asia that are not invest-
specialists from the region in a
without insisting that the operators
ment grade, we have had good
targeted manner. What is more, we
come from Germany. Our strength
experience with state export credit
now have specialists in interest and
lies in judging what is good collateral
insurers, which greatly reduce risks
currency hedges based in Asia, and
that we can perhaps finance when an
that we could not bear alone. The
also support NORD/LB’s Asian
operator is not so experienced. What
purpose of such institutions is to
investors with a specific team. Our
also makes us strong in Asia is the
support German, European and
customers are delighted with the
fact that we know the different
American exports to Asia. Both our
ever-widening range of expertise
players and customers in each
export-oriented customers and local
which they get from us for the whole
market very well.
Asian buyers appreciate our knowl-
Asia-Pacific region.
edge and our experience in structurHow does your business work?
ing transactions in order to deliver a
What is your relationship like
Holm: Our business model consists of
project that is wanted by all sides,
with non-German customers?
three elements: the asset, the contract
while spreading the risk fairly.
How has your business with cus-
that documents everything, and the
tomers from Asia developed?
operator or sponsor. As a bank, we
The solar industry is most active in
Wiedemann: Obviously we also
focus exclusively on top-quality
Japan, China and South Korea. How
support non-German customers.
assets. As a financer, on the other
do things look in this market?
6 / Interview
Wiedemann: There are now, in fact,
in Shanghai and Singapore who
Shanghai branch then develops
hardly any manufacturers left in
support our German corporate
solutions for such cases. As our
Germany. But there are many develop-
customers with their expertise in the
customers in China and the ASEAN
ers who have a lot of experience in
region. Contact is normally estab-
countries are seeing more and more
building solar parks. Internationally,
lished by our corporate customer
potential for expansion, the number
this knowledge is in high demand in
advisers in Germany, who discuss
of enquiries to the German Desk is
countries that are currently creating
with customers their requirements in
increasing rapidly.
such facilities. In fact, we can do very
Asia. This may, for example, be a
well here as a German provider with a
subsidiary in China that is not yet
lot of knowledge in an area that is not
established enough in the market to
so highly developed in this region.
work with the local banks, or an
established company that would like
You operate the so-called Ger-
to draw on our proven product
man Desk in Asia. What is it?
knowledge. Together with our
Holm: The German Desk is first and
Corporate Finance colleagues in
foremost manned by our colleagues
Hanover, the German Desk in our
Meet our teams
Banking is all about trust and people.
Meet our teams and specialists.
Corporate Sales
Stephen Au, Christian Krebs, Ranjan Sharma, Niels Jakemann
T2 Pictures
T2 Pictures
Energy
Sebastian Heddergott
bridging asia / 7
Markets Sales
Jasper Tan, Nadine Limburg, Chng Wan Li, Jeremy Ong
Christian Nolting, Rosemary Goh, Aaron Sen, Niu Wen Jue, William Leow
Jefferson Ko
German Desk
Green Studio
T2 Pictures
Shipping
T2 Pictures
T2 Pictures
Aviation
Kelly Qin, Lisa Zhou
8 / Asia Pacific Special
Asia Pacific’s long-term potential
will drive global growth
The dip in China’s economy should not lead to the conclusion that the Asian
miracle is over. To the contrary: Asia is now entering a new stage of growth.
Although Asia Pacific is prone to higher fluctuations,
both in terms of real economic activity and its financial
markets, long-term growth has proven to be reliable
and stable. Even after the Asian crisis in the late 1990s,
economies managed to recover quickly. There are multiple growth drivers, for example in sectors such as
infrastructure or renewable energy, combined with
transformational factors including a growing middle
Frederik Kunze
NORD/LB
NORD/LB
class. This means that current challenges must not be
seen as insurmountable obstacles to long-term growth.
Dr. Stefan Grosse
Overall, Asia Pacific remains a region with large growth
Continued economic development ahead
potential, for both domestic and foreign investors. When
Hence, the current global pressures and the headwinds
looking at the region, the sheer diversity of Asian econo-
coming from China should not lead to the wrong conclu-
mies – both industrialized and emerging – is a vital factor
sion – that the Asian miracle is over. Instead they demon-
when judging strengths and weaknesses. For example,
strate the need to differentiate between the strengths
in the light of recent developments in the US, the Euro-
and weaknesses (opportunities and threats) in each
zone, and global commodity markets, immediate growth
single economy when compared to drivers for growth. For
prospects are likely to vary widely. On the one hand, for
example, the country matrix below shows that there is a
Indonesia and Malaysia, falling commodity prices inev-
wide variety of business climates and country compet-
itably have to be seen as a challenge. On the other, open
itiveness within Asia. Some economies clearly have the
economies such as Singapore and South Korea might feel
advantage of low labor costs. This is especially true for
exposed to the headwinds of softer world trade. Addi-
countries such as Vietnam. On the other hand, Singapore
tionally, the rebalancing of the Chinese economy will
is far from being a cheap-labor country, but comes with the
not only impact commodity exporters, but also major
advantages of being highly competitive and having a good
(non-commodity) trade partners such as Thailand.
business environment. Furthermore, some economies (for
bridging asia / 9
example, Thailand and Indonesia) do focus much more on
knowledge and experience in manufacturing, infra-
infrastructure-driven growth and have the clear aim of
structure and clean energy projects. At the same time the
upgrading their economies. For example, the government
German business and service sectors are currently in
in Bangkok just renewed its long-term strategy with its
the middle of an upgrading process themselves, through
“Industrie 4.0”, which offers huge potential for future
Indonesia’s Ministry of Economics set up the “Masterplan
growth. Therefore, cooperation between industrialized
for Acceleration and Expansion of Indonesia’s Economic
countries such as Germany and the emerging Asian
Development 2011–2015”. This focuses heavily on the
hemisphere offers long-term business opportunities.
energy sector, but also on transportation equipment and
This is not only the case for Germany, but also for other
shipping. Such major plans for economic restructuring,
countries. Unsurprisingly, this means the attractiveness
development or transformation underline government
of Asian economies for Foreign Direct Investment (FDI)
focus on long-term sustainability. Of course, every country
is still increasing. On the other hand, as is the case for
is concentrating on different main-growth areas, depend-
Singapore, China and Japan, their investments outside
ing on its geographical and socio-economic preconditions,
Asia will play a more vital role globally, which should also
but the emphasis on energy (especially renewables),
have a positive impact on worldwide economic activity.
telecommunications, infrastructure, and the maritime
Building on the successes of the past years and decades, in
business seems to be a common factor across the region.
which Asia managed to lift millions of people and house-
Besides growth initiatives in these segments, economic
holds through the poverty line, the challenges for both
transformation and future growth drivers are also im-
emerging and developed economies are not insurmount-
pacting every single country. A much smaller fraction of
able. Bearing in mind the long-term growth objectives
the population is living below the poverty line, shrinking
of most Asian governments, investment projects, with
from roughly 27 percent in South Asia in 1981 to just 3.1
lengthier durations, might well pay off in the future.
percent in 2012, according to the World Bank’s criteria
of income of purchasing power parity (PPP) of $1.25. In
East Asia and Pacific countries it has changed even more
dramatically, falling from 59.3 percent to below 1.29
percent in 2012. At the same time, Asia is seeing a rising
95
90
85
middle class. These developments not only contribute to
80
the emergence of a huge demand for goods and services,
75
but will also prove to be the foundation for long-term
growth in the region. For example, the ASEAN population
totals 625 million, while China and India each have 1.3
billion people. This provides a huge market, combined
with a widespread desire to improve living conditions,
and a willingness to work hard to achieve that goal.
70
65
55
Singapore
South Korea
Malaysia
ASEAN (av.)
Cambodia
4
Australia
Japan
Germany
Thailand
Vietnam
60
50
Foreign Direct Investment on the rise
Doing Business Index
fzant
“Alternative Energy Development Plan (AEDP) 2015–2036”.
China
Indonesia
Brunei
The Philippines & India
4,5
5
5,5
Global Competitiveness Index
The transformation of these huge markets to modern –
more industrialized – economies will not be accomplished by Asia alone. There is therefore major potential
for European countries, and especially for Germany, to
become involved. German companies already have deep
China – Fears of a Hard Landing?
Recent events in Chinese financial markets have been
point for a new Asian (or global) crisis. Although this
challenging for Beijing. However, the stock market crash,
conclusion might be correct, these fears are overblown.
as well as depreciation pressure on the Chinese currency,
In the context of the new China growth model, which
should not be mistaken for harbingers of a hard landing
will be less export (investment) dependent and more
in the country. Defined as a sudden and significant drop
dominated by private consumption, slower growth is
of the real growth rate below 5% year-on-year, a hard
more likely. However, ongoing urbanization, entre-
landing would be likely to lead to high unemployment,
preneurship, and the rise of the Chinese middle class
drastically lower domestic demand, and severe deteriora-
will be drivers for long-term growth. With regard to
tion of asset quality in large parts of the economy.
the short term, Beijing still has substantial room to act,
Since the Asian economies are increasingly interconnect-
with regard to both monetary and fiscal stimulus to
ed, a hard landing in China could also be the starting
calm fears of a hard landing.
Daniel Barnes
10 / Shipping
“We need proactive investors who
understand where money is made
and lost in shipping”
An interview with Saravana Sivasankaran, President of Siva Group.
NORD/LB – the Ship Finance Experts
Asia Pacific – the growing shipping power
Shipping represents one of the core pillars of NORD/LB's
With about 35% of the world shipping fleet owned by
business model. NORD/LB group’s ship finance portfolio
ship owners from the Asia Pacific region and growing, it
comprises about 1,500 ships sailing and trading all over
is logical for NORD/LB to offer its ship finance solutions
the world. For over 45 years, NORD/LB has developed
directly on the ground. As one of the key shipping hubs
specific asset and industry expertise to structure flexible
in Asia and the world, NORD/LB has set up a shipping
solutions for its clients. Our team of ship finance experts
desk in Singapore. The ship finance team in Singapore
work out of four locations: Hanover, Hamburg, Singapore
comprises more than 10 employees and follows a coun-
and New York (soon to come). The relationship manage-
try-driven approach to cover the various important
ment teams assist ship owners globally in financing all
shipping locations in Asia Pacific. The relationship
kinds of floating assets – from tug boats to cruise ships.
managers and their support teams each assist clients
in specific countries. This allows the relationship managers to visit their clients regularly in the different
countries, as personal relationships and on-the-ground
expertise are key to winning our clients’ trust. A new
long-term shipping strategy has been approved by the
Board this year, in which Asia Pacific plays a vital role.
bridging asia / 11
Tug Supply vessel (AHTS), three
How is the global shipping mar-
Asian growth will outpace Europe's
ket currently developing?
in the near future. However, Europe
stainless steel chemical tankers and
As we all know, shipping is a cyclical in-
remains the main source of capital
one ethylene gas carrier, which is in
dustry – and it has been that way for de-
for many of Asia’s projects. European
the process of being financed. All of
cades. Globally, we are seeing massive
banks that have proactively focused
these ships are modern assets, built in
ripple effects in shipping due to the
their attention on Asia have done well.
high-quality yards, and chartered out
slowdown of China, a low oil price, and
I am bullish on the Euro and I think
to good counterparts.
a slowly reviving US economy. Private
the worst is over for the Eurozone.
equity has played an instrumental role
What struck you as different from
in shipping in the last few years, but it
What do you see as the main
conventional approaches in the work
remains to be seen whether it is suited
challenges in shipping over
with the shipping team from NORD/LB?
to shipping’s volatile ups and downs.
the next couple of years?
While there are many banks that
At Siva Shipping, we have exposure to
We need intelligent capital in shipping.
will queue up to finance a Very Large
a variety of sectors, including crude,
The industry has evolved in the last
Crude Carrier (VLCC) in today’s hot
chemical, offshore and dry bulk.
decade to a point where the barrier
market, not many banks have the in-
to own and operate a ship has been
depth knowledge and insight to eval-
What role does Asia play in
substantially reduced. This has led
uate niche markets, such as stainless
the shipping market?
many new investors to put capital to
steel chemical tankers and ethylene
Asia has always played a pivotal role
work without proper due diligence on
gas carriers. We were impressed by
in shipping. China’s growth is vital
the market or its participants. What
how well NORD/LB was able to assess
for pretty much any sector within
we need at this stage is recognition
the risk and quickly turn around a
the shipping market. With China’s
that it takes more than mere capital to
compelling proposal to finance our
slowdown, a lot of focus has been on
succeed in shipping. We need owners
recent acquisitions. Singapore is a
India (a market that we are particularly
who work with cargo movers directly
highly competitive financial center,
strong in), which has been ramping
and know what their ships carry. We
with many financial service provid-
up its coal imports. Indonesia is one
need proactive investors who under-
ers competing for the same deals.
of the largest producers of coal, which
stand where money is made and lost in
NORD/LB’s client-centered approach
fuels the dry bulk market. Together
shipping – rather than investors mere-
led them to invest a considerable
with Malaysia, Indonesia is also the
ly betting on a macro-cyclical change.
amount of time in learning about
Siva Shipping, its track record and
main producer of palm oil, which is
carried in chemical tankers to markets
Having said that, the current situation
history. I believe this has helped the
as far away as Rotterdam. Chinese,
requires massive de-leveraging as
bank sharpen its ability to evaluate
clients, allowing them to differentiate
Korean and Japanese yards almost
loan-to-value covenants kick in on lega-
exclusively provide the market’s total
cy loans. Banks will have to become
between good and bad credit risks. We
shipyard capacity. The rise of Singa-
more selective in who they back, and
have an outstanding relationship with
pore and Hong Kong as active global
will play a key role in consolidation, es-
the NORD/LB team in Singapore, and
financial centers has also helped
pecially in industries such as dry bulk.
we hope to do much more business
What projects have you cooper-
of our fleet in the coming years.
with them as we plan the growth
fundraising for shipping projects.
Europe is still licking its wounds
ated on with NORD/LB so far?
from the Eurocrisis – will it be
We have worked with NORD/LB on
further outpaced by Asia?
the financing of an Anchor Handling
Mr. Saravana Sivasankaran
Mr. Saravana Sivasankaran spearheads Siva Group’s operations in
palm oil, shipping and commodities trading. Saravana is an Honors
Graduate in Electrical and Computer
Science Engineering from Carnegie
Mellon University and an MBA gradu-
Saravana
ate from Harvard Business School.
12 / Aviation
Aviation – over 30
years of experience
wong yu liang
Airlines in Asia Pacific have enjoyed tremendous growth since 2003, and
the long-term fundamentals in the area are still good. This is how NORD/LB
is helping its clients in the region steer through the current boom.
bridging asia / 13
Back in 1985 NORD/LB concluded the first commercial
of the opportunities and to understand the threats than to
aircraft transaction for an Airbus A300-600R with Ameri-
utilize NORD/LB’s branch in Singapore? Having an avia-
can Airlines. Thirty years later, NORD/LB Aviation now has
tion team based in Singapore allows us to be closer to our
a commercial loan book in excess of EUR7 billion and is
clients, to know them better, and to give them the chance to
currently meeting the financing requirements of over 100
know us better. In doing so we can build stronger relation-
clients and covering more than 650 aircraft, along with close
ships that enable us to take advantage of all opportunities.
to 30 spare engines. This easily puts us in the top five global
Through proximity to clients, their management, and the
aviation banks. The real value and strengths of NORD/LB
countries and competitive landscape they are in, we are
Aviation are the client relationships, industry knowledge
able to better pick up early warning signals and assess and
and expertise that we have built up over the last 30 years. It
manage the threats that come with the cyclical nature of the
is also the ability to adapt and adjust our business model in
business. Essentially, this extends the key strengths that
an ever-changing world and industry – a key strength that
our Hanover team has developed over the last 25 years.
has enabled us to grow the business steadily and organi-
Being part of a global aviation team, the products we will
cally over the last 25 years. The same strength has ensured
offer to our clients in Asia are no different from those we
that our business survived the downturns of the last three
offer to Europe and America, with senior loans remain-
decades, including major global and regional shocks such
ing the bread and butter of our business. However, by
as the Gulf War, September 11, SARS, and the Great Finan-
better understanding our clients and the region we can
cial Crisis (GFC). Obviously, mistakes were made along the
increase the quantity and quality of the deals we do, work-
way, and like with every other bank, September 11 took a
ing with a wider and more diversified range of clients.
toll on our aviation business. But while other banks exited
A big part of our financing is for aircraft lessors. The
the market, NORD/LB stood firm, managed the challenges
advantage of having a team here in Asia is we are
and learned to adjust our business model for the future. This
closer to Asian airlines, thereby enabling us to better
gave us the ability to grow our aviation business even during
support and add value to our European and Amer-
the GFC, when, yet again, a lot of banks exited the sector.
ican lessor clients when negotiating on operating
lease financing with Asian lessees, and vice versa.
Overview of Asian airline market
Since the Asian Financial Crisis in the late 1990s and SARS
Current climate for aircraft financing
in 2003, airlines in Asia Pacific have enjoyed tremendous
Years of quantitative easing (resulting in cheap liquidity/
growth. The emergence of low-cost carriers in South East Asia
funding) combined with strong growth in air traffic numbers
has significantly stimulated demand for air travel, and the
has resulted in an extended period of stable growth in the
rising middle-income segment of the population in India and
aviation sector. Airlines are enjoying strong support from
China is further increasing demand for air travel. However,
banks, lessors and capital markets, and the fall in the fuel
the combination of supply (capacity) factors, as shown by
price has proven to be the icing on the cake. Investors who
record orders from Asian airlines and lessors, with a high fuel
can no longer stomach low bond yields and who are over-
price, began to hurt carriers in some regions, especially in
weight on property are starved of alternative investments.
2013/14. The subsequent drop in the fuel price provided a nice
As a result, aviation is the flavor of the month, and anyone
lift for airlines in 2015, but the potential end to quantitative
who has money wants to invest or lend into aircraft assets.
easing in the US, combined with slowing growth in Asia’s
Having learned from the lessons of the past, NORD/LB
big economies, is sending shivers down the spines of the
is not rushing to do record volumes of new deals. We
credit committees of most banks. Some economists are even
are staying true to the strengths we have built up over
talking of another Asian crisis in the works. This is where
the last 25 years. We work with new and existing clients
we need to take a step back and look at things in perspective.
who know that we will be there for the long term, offer-
These countries are in much better shape compared to their
ing financing structures and with asset/airline combi-
positions of the mid/late 1990s. The long-term fundamental
nations that work both for them and for NORD/LB.
demand for air travel is still strong, and countries with big
In the spirit of adaptability, we are also working with
populations such as China, Indonesia, Vietnam and India
investors who want to finance aircraft assets and
have yet to reach their full potential. If a shock presents
loans, but want the added comfort of co-lending with
itself, demand will reduce for some years and some airlines
a bank such as ourselves. If you can’t beat them, lead
will suffer losses. But that is the nature of a cyclical indus-
them! We like to think that our strengths do make us a
try such as aviation and should not come as a surprise.
suitable leader, but we are happy to let our clients and
co-lending partners be the judges of our suitability.
Overview of NORD/LB’s Asian strategy
It is clear that Asia is a region that presents both opportunities
(with huge aircraft deliveries) and threats (the slowdown in
developing economies). What better way to take advantage
14 / Energy
NORD/LB – the Structured
Finance Experts
chinaface
The global market for renewables has been picking up for quite some
time, and more and more Asian countries are discovering the vast potential. Here is how our team in Asia can help you develop the right solution.
bridging asia / 15
Our team of structured finance experts works from four
course financing for the first of a group of solar farms
locations: Hanover, London, Singapore and New York. We
in Japan. This came with the challenge of working with
are a niche financier for the energy industry with a strong
our Japanese counterparts, who are very experienced in
focus on financing energy (primarily renewables and
non-recourse financing outside of the country, but not so
gas), social infrastructure (such as schools and hospitals)
familiar with the concept inside their domestic market.
and transportation (railway rolling stock). Across the four
locations more than 50 members of our team have a focus on
financing wind and solar projects, based on over 20 years of
The added value our services bring
experience. We have been involved in wind and solar proj-
As we say in German, “Good business brings more business.”
ects that generate more than 10 gigawatts (GW) of capacity.
In fact, we are now at the mandating stage for an approximately 30 mega watt peak (MWp) solar park. Due to our strategy of targeting niches we cannot operate on the ground in
Singapore and Shanghai –
a strong presence in Asia
all Asia Pacific countries, but must be selective. Therefore, we
Our team in Singapore, covering the Asia Pacific region, has
this local knowledge. Of course, we learn along the way how
more than 10 employees. The team is focused on energy, along
to tackle challenges such as local laws, account holding, local
sometimes partner with a local institution that can provide
with working with the shipping team in related areas such as
securities, understanding of local approval and permit pro-
small-scale floating offshore platforms for oil and gas. As a spe-
cedures, and sometimes even the language. We have already
cialized financier we don’t follow a country-by-country strate-
applied this approach successfully in the Philippines and
gy, but work to support the strategies of our individual clients.
Bangladesh, among other countries. In the example of the
This means that we move with existing clients into new
solar park mentioned above, our partner is SuMi Trust, the
geographical areas as and when they develop. Clients range
well-known Japanese bank, which already has some experi-
from equity providers and developers to manufacturers, op-
ence in renewables. The combination of NORD/LB’s expertise
erators, off-takers (such as utilities and large energy consum-
in sector and international standard non-recourse financing,
ers), and organizations that are a combination of the above.
and the local knowledge of the partner bank, provides our
client with a solution that delivers the best of both worlds.
Our strengths in the energy sector
The advantage of working with NORD/LB lies in our
The details of the deal
understanding of the needs of the energy industry
In the case of the solar park we expect that the long-term
and its participants, as well as knowledge of niche
financing of approximately 90 billion Japanese Yen (equal-
construction risks. This also includes understanding
ing 80% of the total financing) will need to be split some-
of international standard documentation and non-re-
where between 50/50 and 60/40 between NORD/LB and
course usances. In practice, this means that the same
the partner bank. Different equity partners have different
developer can expect basically the same kind of inter-
needs, which is why we are very happy to provide long-term
national standard documentation and product, whether
lending, sometimes together with funding programs from
in England, Mexico or Japan. We are very proud of the
DIFs (Development Infrastructure Funding) or multilater-
fact that about 80% of our business is repeat business.
als, as this further reduces funding costs. However, we are
equally familiar with acting as a senior lender for portfolio
financing of the construction phase of projects (through
Case example: Getting a foothold
in renewables after Fukushima
Yen. This will include interest rate hedges through fixed-
After the Fukushima disaster in 2011 Japan introduced
rate loans or swaps. Our well-established contacts with
a new market for solar PV and, to a lesser degree, wind,
multilaterals, as well as with export credit agencies,
revolving type loans) in US dollars, Euros or Japanese
through a feed-in tariff. Since then the interest in renew-
enable us to work in countries with more difficult credit
able projects in Japan has risen considerably. Based on
ratings. This, again, shows our client-centric approach,
our experience in this field we were approached by an
which focuses on their needs, rather than the needs of
international solar developer that was looking for non-re-
the individual countries they are looking to operate in.
“Through our structural knowledge and understanding of
the energy sector and its participants, we aim to act as a reliable financing partner, looking to find bankable structures for our clients, whichever market they are operating in.”
16 / Center of Competence
NORD/LB’s
German Desk
Our Center of Competence for China Banking in China – Made by NORD/LB
Throughout the more than 250 years of NORD/LB’s
existence the basis of our success has been building close
relationships with our clients and having thorough
understanding of their needs. This approach is universal,
and is not only valid in our home market, but of strategic
importance when servicing our export-oriented customers in markets as different and distinct as China.
While China is currently undergoing a transition period as it
moves from a quantitative to a focused qualitative growth
model, it will continue to be a key market for the German
economy as a whole, and for German corporates in particular.
NORD/LB identified China’s market potential at an early
stage, and therefore established a fully fledged operating
branch in the dynamic economic center of Shanghai in early
ispyfriend
2004. With some 20-plus staff, NORD/LB’s Shanghai branch
provides comprehensive financing and banking services for
German corporates in China, ranging from account services
to remittances, from financing for working capital to
thereby ensuring local success for our corporate clients.
financing for customers’ asset investments, and from money
All decision-making is centered in our Hanover Head
market to foreign exchange dealings.
Office, where the relevant NORD/LB account manager
Our financing experts in Shanghai are not only multilin-
acts as a single point of contact, thereby ensuring a
gual, but are able to go beyond and “translate” the
comprehensive, integrated business and communication
challenges of this highly regulated environment with its
approach with the German corporate’s parent company
abundant “Chinese characteristics” when doing business,
and its affiliate in China.
“Very good partnership-style support”
An interview with Guido Prüssing, Credit Risk Man-
working capital finance. NORD/LB also handles the
ager at Cremer Holding in Hamburg. Working in co-
payment transactions and currency hedging for our
operation with NORD/LB, he was responsible for the
Chinese company. We took out some of the loans in
financing of a project for Cremer Holding in China.
Germany, and some locally in China. We have arranged
the finance in a partnership arrangement, through
Which areas does CREMER operate in within China?
a structure in which we have at our side a long-term
We operate in the retail and oleo-chemistry sectors
customer that we want to continue to work with in the
in China. We opened a plant this year in Wuxi, where
future. NORD/LB created the environment for this.
we produce a washing fragrance. We already produce
this for the same customer, a global corporation in
How was the cooperation with NORD/LB?
the USA, under the same OEM-type arrangement.
We went to China without any finance experience and did
How did the construction of the plant in Wuvxi come
very pleased with our work together with the bank. NORD/
not have detailed knowledge of the environment, so we are
about, and how did you organize the finance?
LB has a lot of know-how and expertise concerning the
We followed our customer to China. We financed the
Chinese market – and it can also translate this know-how
construction of our plant, which is located around two
into concrete deals. Its strong local presence is a help here.
and a half hours’ drive from Shanghai, with NORD/
The bank has given us very good partnership-style support.
LB. This covered both the long-term loan and the
bridging asia / 17
“As a strong partner, NORD/LB
has a local presence in China”
Dennis Wallenda, Head of Working Capital Solutions at NORD/LB in Hanover
From Hanover you manage
What are day-to-day issues customers come to you with?
your relationships with
Often, issues are related to financing practices, as these
clients in China. What is
are frequently different from those in Germany and,
that like in terms of
indeed, they take some getting used to and can require a
day-to-day business?
lot of explaining. Furthermore, as financial and capital
Not all that different from
markets in China have liberalized, our customers see an
how we carry out every day
increasing number of business opportunities presenting
business in Germany. The
themselves to them. However, we have to check how
focus is on our customers
feasible these are on a case-by-case basis. Frequently here,
and meeting their require-
too, the “devil is in the detail”.
NORD/LB
ments. We translate the
agreements that have been
How has the Chinese business developed in the last few years?
made between our custom-
Gratifyingly well. In the light of our corporate customer
ers and NORD/LB into
drive, the China business has grown considerably,
transactions. These need to
particularly in the last 12 months. In terms of new
be adapted to Chinese requirements, created locally, and
customer acquisition, too, we strongly believe that China
then harmonized between all the parties involved, includ-
is a market that our customers are aware of, and that
ing our customers’ head offices and the NORD/LB head-
there is large-scale interest in bringing NORD/LB, as a
quarters in Hanover. Due to the time difference between
strong local partner, on board.
Hanover and Shanghai, as well as our close working
relationship, we are able to provide our customers with
What are your expectations for the coming years, particularly
nearly two full working days in terms of hours. All in all,
in view of the signs of a cool-down in the Chinese economy?
this means that fast implementation is our key strength.
I expect our business to keep growing. Our corporate
customer drive continues, and I believe that we will be able
What are the challenges facing this business?
to interest many customers in the Chinese market, espe-
In particular, challenges lie in the significantly higher
cially those from our latest/newest locations in Munich and
rate at which new or updated rules and implementation
Stuttgart. I expect the combination of our corporate
requirements are published, as well as the need to
customer business philosophy and our infrastructure in
understand the verbal provisions stated by the numerous
Shanghai to generate even more business for us.
different authorities within China. As a result, there is a
greater need to communicate with both locally based
customers and their head offices in Germany. This is
especially true given that the interpretation of these
regulations can differ from province to province.
About NORD/LB
// We are a universal bank with more than 250 years of
history in the market.
// W
e are the market leader in Northern Germany in our business units of private, commercial and corporate customers.
// We have excellent knowledge in renewable energy and
infrastructure projects, and we have a strong focus on medium-sized “Mittelstand” clients.
18 / Markets
Markets Division – providing
access to Global Financial Markets
r.nagy
Our Markets Division provides financial markets products and services to
our customers and partner banks. The combination of our comprehensive industry know-how and customer relationships developed over many
years makes us an experienced and a sought-after partner. Through our
extensive product offerings and our experienced team, we endeavor to
create value for our customers.
NORD/LB Capital Markets
In addition to traditional banking products such as foreign
ers to achieve their business goals. Together with our
exchange, loans, interest rate and currency hedging, NORD/
product specialists, we develop holistic, customized and
LB offers its customers a wide range of capital markets prod-
competitive solutions for our clients. NORD/LB's stable
ucts and services. We are a leading arranger for the placement
and sustainable business model has proven over the years
of covered bonds, financials, and supranational, sub-sover-
that we are a reliable and consistent business partner.
eign and agency (SSA) papers in the primary market. We are
a market-maker for jumbo covered bonds, European government bonds and corporate bonds, providing secondary
NORD/LB’s Markets Sales Team in Asia
markets for fixed-income products to our partner banks and
The Markets Division is pursuing a customer-focused
institutional customers. In the area of structured products,
expansion strategy. Through our newly formed Markets
our customers benefit from our many years of experience
Sales team based in Singapore, we endeavor to deepen
and our capabilities as an arranger and a regular issuer
existing customer relationships and the systematic
under own Programme for the Issuance of Debt Instruments.
acquisition of new customers (banks, insurance companies, asset managers, etc.). We aim to increase the
participation of our Asian customers in our Capital
Research
Markets activities by taking advantage of the flow of
With our extensive and informative research compris-
information between our European and Asian offices.
ing current market assessments and fundamental and
technical analyses, we keep an eye on opportunities and
risks in the markets. Our fixed-income research team
provides extensive information on covered bonds, issuer-related studies and yield analyses for term structures
and spreads. We provide weekly and monthly publications on capital market issues and portfolio strategies.
Specialist in Financial Solutions
We offer a fulfilling customer experience with our capital
market expertise. We endeavor to address our customers’
specific needs and challenges in order for our custom-
bridging asia / 19
NORD/LB – Corporate Sales
Delivering financial market insight
and risk management solutions.
Providing clients in Asia Pacific with financial market insight
As transparency is a paramount goal in our daily efforts,
and risk management solutions, our Corporate Sales approach
NORD/LB Corporate Sales provides regular mark-to-mar-
is closely linked to our origination teams.Ranging from
ket valuations to allow for fair assessment of hedging
money market and asset solutions to foreign exchange and
strategies and to enable us to closely watch market
interest-rate hedging, we aim to establish long-term relation-
developments, as well as their impact on existing client
ships with our clients. We offer tailor-made solutions to reflect
positions, closely. Where necessary or appropriate, we
the clients’ cash-flow stability needs as well as essential
advise our clients of potential adjustments of existing
flexibility to react to current and future market developments.
strategies. A close and long-term client relationship, again,
With trading capabilities in our head office and in
is key for us to improve our understanding of the specific
Singapore, we are able to offer direct communication in
needs and to advise accordingly.
both market areas in order to act in time, as market moves
may not allow any delay.
Imprint
Bridging Asia
German Banking – Financial
Solutions by NORD/LB Asia
Publisher
NORD/LB Norddeutsche
Landesbank Girozentrale
6 Shenton W OUE Downt. 2
06880 Singapore
Responsible for
the editorial content
Olaf-Alexander Wiedemann
Dr. Stephan Popp
Concept & editing
Westend Medien GmbH
Wagnerstraße 26
40212 Dusseldorf
Dr. Michael Siemer
Picture editing & graphics
Sebastian Michailidis
This magazine has been printed
on paper that has been certified in
accordance with the criteria of the
Forest Stewardship Council® (FSC®).
Disclaimer
The content of this magazine has
been researched and collated
with the utmost care. However,
NORD/LB accepts no liability for
the correctness, completeness
and topicality of the information
supplied by Bridging Asia. The
mere use of the content of this
magazine shall not give rise to
any contractual relationship
between the user and NORD/
LB. The statements made in
the magazine are no substitute
for advice on a specific case.