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2017
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German Banking – Financial Solutions by NORD/LB Asia
OBOR Special
Plus: Australia
P 4 OBOR: One Belt, One Road
P 10 How airlines profit from OBOR
P 11 Interview with Duravit China
P 12 Renewables: fast growth in Australia
P 17 Economic Viewpoint Australia
P 18 Panamax: creative solutions
2 / Table of contents
4 / “One Belt, One Road” – Connecting Asia Pacific
14 / “Australia has become one of the most promising
With the OBOR initiative the Chinese government is seek-
markets in the region for project finance”
ing new growth while connecting the world economy. Our
Sebastian Heddergott from NORD/LB Singapore is an expert
report gives you an update on current developments.
on Australia and its connection to Asia. In our interview he
discusses the potential this market still holds for investors.
8 / “OBOR offers great business opportunities to the shipping industry”
16 / “Australia should be leading the way in solar and storage”
An interview with David Beaves, Senior Partner and Head
With the Lakeland solar-storage project NORD/LB was
of our Hong Kong Office
involved in one of the most forward-thinking renewables
In our interview Asia-Pacific specialist David Beaves
projects in Australia. In our interview Alexander Lenz of
gives us an update on the implications of OBOR and what
its owner, Conergy, provides the story behind it.
it will mean for the world economy.
17 / Economic Viewpoint Australia
10 / “Most airlines support and will profit from OBOR”
The Australian economy has grown strongly over the long
NORD/LB Aircraft Finance Asia Pacific specialist Wenyu
term, and its fundamentals still look positive. An analysis
Ting shares her view on the positive developments that
by NORD/LB research.
OBOR will bring for airlines and carriers.
18 / Panamax: Creative solutions for challenging changes
11 / “Now is the time to continue our investment in China”
Slow steaming has changed global shipping. In an in-
The German bath equipment supplier Duravit has just
novative project NORD/LB helped high-speed Panamax
opened a production site in China. Our interview with
container ships cope with decreasing demand.
Peter Bromberger, Duravit’s General Manager in China,
gives more details on this exciting project.
12 / Fast-growing Australian renewables sector
NORD/LB has gained a foothold in the booming Australian renewables market, and is benefiting from the unique
learning opportunity of being involved in the world’s first
utility-scale solar-storage facility.
20 / Splitter news
bridging asia / 3
Dear Readers,
Welcome to Bridging Asia – NORD/LB’s magazine covering
our activities within Asia. We had fantastic feedback from
readers after we launched our fi rst issue last year – thank
you very much for your support and comments. We will
continue to bring you interesting, informative content
from the region moving forward.
In this issue we focus on two main topics. The first is
OBOR – the Chinese government’s One Belt, One Road initiative, which aims to significantly improve the shipping,
air cargo and land transport routes to and from China. This
NORD/LB
is the second-biggest infrastructure investment project
ever, after the post-World War II Marshall Plan, and is an
important pillar of the industrial giant’s export strategy.
We also have a feature highlighting Australia, in which
we are excited to share our experiences of a recent deal
completed by our energy team. The fi fth continent is
closely connected and interlinked with Asia and plays an
important role in the region. In our article we look at the
rising interest in investing in the Australian renewable
energies market, which NORD/LB has been monitoring
for a number of years. A collection of attractive incentives,
based on political support for a new renewable energy
target, has made Australia one of the most promising
NORD/LB
renewable energy prospects in the Asia-Pacific region.
Thank you for picking this up, and happy reading.
Yours sincerely,
Asia Pacific Management Team
Olaf-Alexander Wiedemann
Dr. Stephan Popp
4 / Feature Story: OBOR
“One Belt, One Road” –
Connecting Asia Pacific
A special feature on China's ambitious initiative to link the world economy
and improve world trade, by Torsten Windels (Chief Economist NORD/LB)
and Frederik Kunze (Research NORD/LB)
Russia
Poland
Kazakhstan
Belgium
France
Italy
Uzbekistan
Greece
Kyrgyzstan
Turkey
China
Iran
Pakistan
Vietnam
Malaysia
Kenya
Sri Lanka
Indonesia
Source: NORD/LB
Silk Road Economic Belt
21st Century Maritime Silk Road
Silk Road Economic Belt (SREB)
21st Maritime Silk Road (MSR)
// Links China with Central Asia, Eastern and Western
// The maritime route goes down China’s east coast,
Europe via a land route
// Eventually Beijing also plans to connect China with the
through the South China Sea and the Indian Ocean,
as well as to Africa.
Persian Gulf, the Middle East, the Mediterranean Sea
// The MSR also focuses on ASEAN countries
and South/South-East Asia
// It connects ports and builds a new maritime infra-
// Besides trade routes the aim is to build economic
corridors along “The Belt”
structure
// Besides trade routes the aim is to build economic
corridors along “The Road”
bridging asia / 5
Even eight years after the beginning of the global fi nan-
Chart 1 The world economy in the slow lane
cial crisis the world economy still seems to be asleep,
with the growth rates of many industrialized economies
remaining below their potential. The European Union, for
Source: NORD/LB
example, is still dealing with the aftermath of the fi nancial, banking and sovereign debt crisis, and faces many
structural challenges. Furthermore, current economic
activity has to be helped by abundant market liquidity. In
this uncertain environment small and medium enterprises, large corporates and multinationals are all shunning
investment and also seem to be refraining from innovation. Additionally, commodity exporters – especially
in emerging markets – have to deal with the end of the
prices. One major reason for this is the observable slow-
Asia Pacific: Driven by middle-class
growth, education and technology
down in growth in the world’s second-largest economy,
As already mentioned, the economic potential and risks with-
“commodity supercycle” and consequent low commodity
China. Beijing has started the process of rebuilding its
in the Asia Pacific region are driven by a range of fundamen-
business model, seeking to become a producer of high-
tal trends. As well as demographic change and geopolitical
technology products and a more domestic, consumption-
issues, the rise of the middle class, and the emergence of India,
driven economy with a growing service sector. Over the
are also trends to watch. Although the characteristics of these
long term the Chinese mainland’s demand for resources
might be different in each country the macro picture seems
is therefore expected to shrink substantially. In this
to be quite similar. The most important driver of growth in
context intra-Asia dynamics are also losing momentum.
the coming decades will be the rise of the middle class and the
emergence of consumer markets in Asia. Associated with the
Drivers of growth wanted
rising middle class, ongoing industrialization and urbanization will drive economic activity. Additionally, the demand
As a consequence both trade and industrial production
for better-paid jobs will make it necessary for countries to
are today growing at a much slower pace than before the
climb up the value chain. Furthermore, people living in Asia
global fi nancial crisis (see Chart 1).
This global environment inevitably raises the question
will look for a wider variety of products and services from
abroad. Taken together the Asia Pacific region, especially
of what the new drivers of growth will be and which will
the ASEAN countries, has the potential to become the largest
be the growth regions over coming decades. As some of
consumer market in the world, and therefore a driver of glob-
the once-promising BRICS economies have shown, new
al economic activity. Today, the ASEAN members form the
regions delivering sustainable growth are hard to fi nd. In
third-largest Asian economy and the seventh largest in the
this context one major drawback has been that the BRIC
world, with a total economic performance of USD 2.6 trillion
countries were not a single economic region. You could
in 2014. But this development is just the start. Direct invest-
also say that a lack of interconnectedness has been a block
ment of USD 136 billion in 2014 shows the region’s attractive-
on the BRICS economies benefiting from each other.
ness for current and future business, while GDP per capita has
However, promising growth areas do exist. One good
example is the ASEAN region, made up of ten countries that
increased by 76% in the seven years between 2007 and 2014.
All of this points to a growing middle class in these countries.
are focusing on greater economic cooperation. Based on this,
a lot of Asian economies might prosper from similar megatrends. Additionally, fears of a hard landing in China have
been exaggerated. In fact, one Chinese initiative could even
Background: One Belt & One Road
(OBOR) – The revival of the Silk Road
become a cornerstone for the economic success of the Asia Pa-
In 2013 the Chinese president, Xi Jinping, fi rst intro-
cific region and beyond. With its huge “One Belt, One Road” (一
duced the idea of OBOR during a visit to Kazakhstan,
带 一路 or “OBOR”) project, China aims to build an infrastruc-
mentioning the need for a “New Silk Road Economic
ture network that connects China to Europe and Africa. At a
Belt” (One Belt). Later the same year in Indonesia, he
minimum, these new connections have the potential to act as
outlined the “21st Maritime Silk Road.” (One Road). Two
a catalyst for economic activity in the roughly 60 countries in-
years later Beijing’s plan has met major milestones, with
volved, with benefits extending far beyond Asia. What might
projects in various countries along the belt and the road
be even more important than the China-dominated OBOR
having begun. These projects range from the acquisi-
project is the fact that numerous economies besides China
tion of ports in Europe and building new railroads in
also plan to accelerate infrastructure projects to support their
Eastern Europe to the construction of highways, gas
ambitious growth agendas. To sum up: building connectivity
pipelines and even nuclear power plants. Around 60
is key for success in emerging Asia, hence OBOR is far more
countries will be impacted by Beijing’s initiative.
than an attempt by China to export production over capacity.
Macro
Micro
Strengths
Weaknesses
Opportunities
Threats
China’s vision, political willingness and
resources
Corruption and unstable political situation in
some of the countries
involved
Demand for infrastructure investments in underdeveloped countries
Geopolitical risks, e.g.
border conflicts, environmental damage
Political support from
other countries involved
Coordination among
different countries
New markets for sales
Conflicts of interest
with Japan and USA
Young and dynamic
population in many
countries
Time lag due to administrative processes and
uncertainties
Faster transport of
goods and commodities
Conflicts about property rights
Dependence on creditors
Job creation
Financial risks
Catch-up effects for underdeveloped countries
Political dependence
of underdeveloped
countries
Technological development and knowledge
of companies involved,
such as those from
Germany
Uncertainty about outcomes
Business opportunities
for different asset classes (including Shipping,
Aviation, Renewables,
Infrastructure)
Bureaucracy & corruption
Productivity enhancement through competition
Risk for companies
(credit risk, imitation,
political risk)
Projects can generate
additional income for
households (higher per
capita income)
Competitive disadvantage of smaller
companies
Positive spillover effects
on companies
Unsurprisingly, the growing economic and political
comparative advantages. These might be, for example,
influence of China does also have critics. Additionally,
lower labor costs, natural resources or their geographic
many countries along the Belt and the Road lag behind
position. Also, many doubt that OBOR is solely focused on
when it comes to economic and political freedoms. Fur-
economic activity. Especially within its maritime proj-
thermore, potential conflicts with big political and/or
ects, China aims to expand strategic bases in countries
economic players such as the US, Russia, India, Japan and
such as Sri Lanka and Saudi Arabia, which were once
the European Union should not be underestimated. These
supported by countries including the USA and India.
aspects need to be included when assessing the impact of
Beijing’s strategy (see SWOT analysis). China has comthree infrastructure funds – the Central Asia-focused
OBOR – Consequences for
the shipping sector
mitted a total of about USD 100 billion to OBOR, through
Silk Road Fund (USD 40 billion), the new Asian Infra-
Since China’s mammoth OBOR project also includes a mari-
structure Investment Bank (AIIB) (USD 50 billion), and
time component, it may also reshape the global shipping sec-
the BRICS-led New Development Bank (USD 10 billion).
tor. Looking at the map above, the Maritime Silk Road (MSR)
The modern and efficient infrastructure networks that
the OBOR project aims to create will have large economic
is designed to connect China’s coast to Europe through the
South China Sea and the Indian Ocean. As part of this strat-
impact and positive wider consequences. Currently, the
egy major sea ports along the Belt and the Road should be
majority of the countries involved have underdeveloped
connected. Obviously, China is not only focused on trade and
infrastructures, low investment rates and, therefore, low
expanding production. However, today the sales opportuni-
per capita incomes. However, boosting economic activ-
ties within the maritime part of the OBOR project seem to be
ity with the support of Chinese-financed investment
more attractive than the land route. There are a greater num-
projects focused on infrastructure such as railroads,
ber of countries along the shipping route compared to the
highways and pipelines may only create short-term
land connection. It also incorporates the already fast-grow-
effects. For OBOR to be a success for those countries
ing ASEAN economies. In the light of the growth slowdown
involved, efforts also have to focus on domestic activity
and its different model, Beijing has to find new markets for
beyond infrastructure. Decision makers in the coun-
products that are “Made in China”. Recently central govern-
tries along the Belt and the Road have to focus on their
ment decision makers have begun several strategic initia-
Source: NORD/LB
6 / Interview
bridging asia / 7
tives related to the maritime industry: China is now involved
and its interconnections with China, Malaysia could
in ports and terminals (such as Port Said in Egypt). Recently
be one of the main beneficiaries of the OBOR project
Chinese shipping company COSCO bought a 67% stake in
within ASEAN. The 21st Century Maritime Silk Road
the Greek port of Piraeus. The Port of Singapore Authority
is a particular focus for Malaysian decision makers.
(PSA) is already a well-known player in European northrange ports. In Pakistan the Gwadar deep-sea port was built
• With its National Comprehensive Development Plan
2011-2030, Myanmar aims to attract investments in
by Chinese investors. Beyond these projects, Australia will
labor-intensive industries and infrastructure proj-
also benefit from the MSR as a huge amount of raw materials
ects. Myanmar is one crucial partner for China’s
will be needed to build all of the infrastructure and produc-
OBOR project because Beijing wants to access the
tion projects along the route. That is why the MSR initiative
Indian Ocean from Yunnan. Hence, it does not come
could drive growth momentum for the global shipping in-
as surprise that a lot of the OBOR-related projects
dustry, which is now suffering from nearly a decade of crisis.
already under way are in Myanmar. One example is
However, the container sector, which currently has a huge
overcapacity problem, will only benefit from OBOR over the
the building of a deep-sea port on the Bay of Bengal.
• Vietnam’s Masterplan on Economic Restructuring
long term. The bulker market could be the first to see poten-
(2013-20) mainly focuses on privatizing state-owned
tial rising demand as well as project carriers in the multipur-
companies. However, Vietnam is also following its
pose sector. Investments in terminal equipment and the use
Master Plan for Vietnam seaport system development,
of capital goods may also benefit this niche. Looking globally
which runs until 2020 and aims to improve the infra-
at the MSR project, the goal is ultimately to raise China’s
structure of its ports. Additionally, the country plans
stake in global trade and profits for Chinese companies. Chi-
to invest in its airports. With government approval
na recently merged two liner companies to create COSCOCS.
for the Hon Khoai deepwater port, Vietnam is aim-
As part of this, a new dry bulk giant has been launched, in-
ing to create an important strategic port, which also
tegrating the relevant shipping assets of both partners. Ad-
has the potential to attract overseas investment.
ditionally, a Chinese consortium has placed orders for mega
• Recently, India announced the “Blue Economy Strat-
bulkers, which will be delivered in 2018. Once there are
egy”, in which Delhi is focusing on cooperation with
more details on the impact of the MSR, other shipping-mar-
small Indian Ocean states (such as the Maldives,
ket participants will be able to plan, and current market
Seychelles and Mauritius). India is offering these
leaders may be willing to support the project. For example,
smaller countries development assistance, while
COSCOCS will be part of a new liner alliance from 2017 on.
also trying to strengthen links to ASEAN economies.
However, compared to China India seems to lack
Not only China – Cooperation in
Asia is the key for success!
substantial capital, infrastructure and technologies.
• Thailand holds a strategic position within the OBOR
project because it will be ultimately linked to China,
Besides the legitimate queries around China’s domi-
both through the SREB (via railroad) and the MSR
nance of the project, it is also important to question the
(such as via the port of Laem Chabang). Furthermore,
ability to accomplish the huge task of connecting more
the Thai Canal – or Kra Canal – which plans to create
than a continent solely through OBOR. In this context, it
a shipping route between the Indian Ocean and the
is important to note that it is not only Beijing that has
South China Sea, is a project with large potential.
big plans. Within ASEAN countries, for example, there
are also a variety of infrastructure investment projects
aiming to improve trade and economic cooperation links.
Outlook – Breaking the
bottleneck for growth?
• Indonesia’s Masterplan for Acceleration and Expansion
Combining the OBOR project with country-specific
of Indonesia (MAEI) focuses on transport, telecommu-
initiatives and Asian megatrends, it can be said that the
nication and energy. One major goal is the development
bottleneck stopping higher, sustainable growth may
of so-called economic growth centers via industrial
be broken. Despite the risks associated with such a big
clusters and special economic zones. Within this subcat-
project and the diversity of the countries involved, the
egory the planners aim to connect centers of economic
economic potential of emerging Asia might be enlarged
growth via roads, ports and airports. Indonesia has also
significantly. For this to happen it is vital to build inter-
recognized the advantages of international trade logis-
connectedness between the economies involved. This
tics and aims to establish international hubs by opening
could do more than help the global shipping industry.
up to international partners. One very important goal
Despite other political, more nationally oriented discus-
is further integration with the various ASEAN markets.
sions in the US and several European countries, they
• Already in 2010, Malaysia launched its Economic
are all waiting for a growth stimulus from the global
Transformation Programme (ETP), aiming to achieve
market. Although some caution is warranted, rising
the status of a high-income economy by 2020. With its
economic activity in the countries along the Belt and the
open economy focused on trade, especially exports,
Road could also prove to be a catalyst for global growth.
8 / Markets
“OBOR offers great business
opportunities to the shipping industry”
Ince & co
An economic view on OBOR by David Beaves, Senior Partner and Head of
the Hong Kong Office of Ince & Co.
One Belt, One Road (OBOR) has been
Peninsula Corridor; the China-Paki-
described as the biggest economic
stan Corridor; and the Bangla-
potentially provide a cheaper, faster
event of the 21st century. What is it all
desh-China-India-Myanmar Corridor.
method of transport compared with
traditional shipping.
about and what are the implications
for the world economy in general, and
shipping industry, as they can
From your perspective what is most
the shipping industry in particular?
important when looking at OBOR?
How can the world economy profit
OBOR was introduced with five major
Four major sectors should benefit
from this significant project?
goals: to achieve policy coordination
from the initiative: infrastructure,
As previously mentioned, OBOR
across the OBOR countries; to
financial, and professional services;
should not be looked at as a single
increase trade flows; to improve
advanced manufacturing; and
entity. Rather, it comprises many
investment flows; to promote
transport and logistics. However, we
significant infrastructure, technology
financial integration; and to foster
must be careful not to look at OBOR in
and financial projects. Each has the
better relations between those living
a vacuum. It did not simply begin in
potential to benefit the world economy.
in the OBOR nations. The OBOR
2013 – instead, it is a concept that
Apart from immediate financial
initiative covers over 60 countries,
builds on previous Chinese efforts to
returns, we should also bear in mind
which account for 60% of the world’s
connect with the world. As the OBOR
that such projects can substantially
population and have a collective GDP
initiative involves a lot of infrastruc-
raise local living standards, which in
that is equivalent to 33% of the world
ture construction, many of the
turn benefits the economy.
economy. To deliver the policy, the
necessary raw materials for these
OBOR initiative plans six economic
projects will be transported via ships,
corridors outside China: the New
leading to a direct impact on the
have already begun to support the
Eurasian Land Bridge; the Chi-
shipping industry. However, the
maritime part of OBOR?
Which specific infrastructure projects
na-Mongolia-Russia Corridor; the
multiple railway networks currently
China has financed many ports that
China-Central Asia-West Asia
being built in the various corridors
provide the capacity to support the
Corridor; the China-Indochina
might provide competition for the
Maritime Silk Road. One key example
bridging asia / 9
that demonstrates the effect of the
around 200 vessels a day (60,000 per
unlock economic growth. There will
definitely be more emphasis on
infrastructure projects is Pakistan’s
year) pass through the Malacca
Gwadar port. This helps the China-Pa-
Straits, making it extremely congest-
previously internally focused
kistan Economic Corridor and aims
ed. At the same time, the building of
countries such as the Philippines and
to link northern Pakistan and
the Thai Canal may potentially
Indonesia. The OBOR initiative will
western China to a deep-water
disrupt Singapore’s maritime trade
also increase existing trade between
seaport. The expanded port will be
dominance. On an economic level, the
China, Southeast Asia and Europe.
made a free-trade area, and overall
Kra Canal would open up new
this special economic zone is
opportunities for the countries
Would there be any implication on
expected to employ approximately
located close to the new route,
specific shipping-asset classes?
40,000 people, with construction
including Myanmar and Vietnam.
We anticipate larger ships passing
beginning in June 2016. Another is
from Europe to East Asia, especially
the transfer of a 67% stake in the
Focusing now on the shipping
after the completion of the Thai
Greek port of Piraeus to COSCO. The
industry, what are the implications
Canal, which permits much larger
plan is to make Piraeus the biggest
and opportunities, based on the
ships than the existing Malacca
transit port in the Mediterranean,
industry’s current situation?
Straits, where the size of vessels is
given its proximity to the Suez Canal,
Without a doubt, OBOR offers great
limited to a maximum length of
with COSCO looking to use Piraeus as
business opportunities for the
400m, beam 59m and draught 14.5m.
a transshipment hub for Asian
shipping industry. The sector will
exports to Europe that arrive on
generally benefit from better port
container vessels from China.
and inland infrastructure in Asia, as
implemented successfully – which
well as seeing economic development
shipping-asset class do you think will
Finally – assuming that OBOR will be
One specific project often mentioned
spread more evenly across the
benefit the most from the project and
is the Thai Canal. What is the current
non-OECD countries, leading to
therefore be a worthwhile long-term
status of the project and what would
improved transport services. Compa-
investment?
be the consequences – for instance
nies can take advantage of new routes
I would hedge my bets and say dry
what would be the impact for the
to market to sell products and
bulk carriers, especially given the
Strait of Malacca?
services more cheaply and efficiently
amount of money being spent on
So far, no official announcement has
to other economies due to shorter
constructing gas pipelines and other
been made on the creation of the Thai
routes. For example, the Chongqing to
energy projects involving renewable
Canal, also known as the Kra Isthmus
Duisburg freight railway has cut
energy, coal and LNG. Given that the
Canal. Previously Chinese leaders
transport times down from five
trend in the industry is towards
have come to view the Straits, espe-
weeks to 12-13 days. Further, with
larger vessels, I would not anticipate
cially the Malacca Strait, as a strategic
more investment in infrastructure,
that small bulk vessels would be best
vulnerability ,with former President
such as the enormous US$3 billion
placed to take advantage of this
Hu Jintao articulated this anxiety in
coal-fired power plants in Pakistan,
increasing volume. Multipurpose
what he called the “Malacca Dilemma”.
increased coal imports from South
vessels could also have a significant
There are now signs that plans to
Africa and Indonesia will eventually
role to play. Additionally, given the
build the Thai Canal are being
be required, which in turn means
huge amount of infrastructure
resurrected. An MOU was reportedly
new opportunities for shipping.
development envisaged by the
maritime road, semi-submersible ves-
signed between China and the
Thailand Infrastructure Investment
Do you foresee any changes to
sels would also be in demand for
Development Company, which stated
current trade patterns and the
construction support and heavy
that construction of the canal would
structure of the shipping industries
lifting. That said, all these plans have
cost US$20 billion and take 10 years.
in Asia and around the world?
to crystalize and, thankfully, I’m not
The impact of such a project would be
Trade patterns will definitely change.
advising my clients on where to put
far reaching. It was reported that it
For countries that have previously
their money.
would not substitute for the Strait of
seen their trade capacity constrained
Malacca, but rather complement it,
by a lack of infrastructure, invest-
based on the fact that currently
ments in ports have the potential to
10 / Feature Story
“Most airlines support
and will profit from OBOR”
An interview with Wenyu Ting, Aircraft Finance Asia Pacific specialist at
NORD/LB.
One Belt, One Road (OBOR) is mostly
What projects do you expect that
discussed in relation to shipping and
NORD/LB will be involved in?
rail freight, with rail predicted to be
Overall, OBOR is a project that aims to
key to Chinese connections with
stimulate the economy. Germany will
Russia and Europe. What role does
therefore benefit from the increased
aviation cargo play here?
demand for high-tech industrial goods.
OBOR comprises the historical Land
That’s why Germany is regarded as an
Silk Route, starting in western China,
important trading partner for China.
and the Maritime Silk Road, which
From this perspective, NORD/LB will,
began in southern China and reached
as an active regional wholesale bank
Europe by sea. However, we are now in
in China, continue to support its
the 21st century and transportation is
German customers in every sector.
no longer solely by car, train or ship.
Additionally, NORD/LB also finances
Aviation supplements rail and shipping,
Chinese entities, normally around
with air cargo providing a fast method
assets that are located outside of China.
of transporting fragile goods or food.
construction projects planned for
2015, 51 strategic projects (totaling
NORD/LB
Some people call OBOR the second
Of the 193 Chinese civil aviation
USD$32 billion of investment),
directly relate to the OBOR initiative.
Marshall plan. What do you think
about this? How can they be compared given the fact that OBOR is also a
massive stimulus program for the
this aims to reduce the pressure of
Chinese economy?
Is this massive spend going to
production overcapacity in China,
Both projects are massive investments
increase even further?
such as in the steel and the cement
and serve the interests of the coun-
We all know that the Chinese aviation
industries. OBOR is the key strategy to
tries behind them. The USA needed a
market has the strongest growth in
help export Chinese goods. It is being
recovered Europe on its side against
the world. According to IATA’s forecast,
supported by the “Made in China 2025”
the USSR, and China needs to export
China will have 758 million new
project, under which the government
its over-capacity of goods to its
passengers by 2034, bringing its total
intends to upgrade standards within
neighbors. However, at the end of
to 1.2 billion. This massive investment
Chinese industry, moving away from
Marshall plan, Europe became a free-
includes 15 newly built airports and
labor-intensive industries, as China is
trade area – a development that later
26 airport reconstructions along the
no longer a cheap place for production.
led to the European Union. As to OBOR,
I don’t see any sign from China that it
OBOR route, all seen as necessary for
will remove trade barriers. China and
further growth. As China’s huge rural
What role does the Chinese airline
area is still underdeveloped, the
industry play in this strategy? Will it
its neighboring countries will all
investment will continue, but in light
benefit from OBOR?
benefit from the investment – however,
of the recent economic slowdown, may
Most airlines support, and will profit
China will have the largest slice of the
not match current levels.
from, OBOR, as they can open more
cake.
What is happening in China to
gers to new destinations when new
What investment opportunities do
support this development currently,
airports have been built. The govern-
you see in the aviation sector?
and how is the government creating
ment’s support isn’t just around
Aircraft are always a good invest-
the foundations for growth?
domestic and foreign infrastructure.
ment asset, with a stable market
The Chinese government has encour-
It also includes negotiating landing
value. As demand is strong, we expect
aged Chinese companies to look
rights and a 72-hour visa-free policy
continued growth in aviation over
outwards for many years. This means
for some hubs in western China.
routes and transport more passen-
the coming years. Both asset-focused
investing abroad and entering new
and corporate-focused investments
markets outside of China. Of course,
provide strong opportunities.
bridging asia / 11
“Now is the time to continue
our investment in China”
An interview with Peter Bromberger, General Manager, Duravit China.
by end of this year. This will not only
boost our worldwide capacity, but
also help us to achieve the next level
of quality, precision, and efficiency.
How are Asian markets developing,
and how important are they currently in your overall portfolio?
The company's positive growth is due
to its market success, particularly in
international export territories, such
as the USA, the UK, Saudi Arabia, China, and various regions in Asia. China
is our largest Asian market. However,
business in other Asian countries is
also going well and we will continue
to focus on further consolidating
the position of the Duravit brand
with retailers, developers and our
Duravit
wholesale partners in these markets.
You worked on the transacIn Europe, Duravit is known as a
meet the highest standards of design
high-end supplier of bathroom equip-
and quality. Furniture is a key area
bank stand out from other po-
ment. How has the Chinese market
where the trend for greater individu-
tential banking partners?
developed and what are customers
ality can be indulged, both by arrang-
At Duravit we were looking for a pre-
asking for? What trends do you see?
ing different storage elements and
mium banking partner like Nord/LB.
The bathroom industry is a sector
in the choice of finish. Future trends
The combination of its comprehensive industry know-how and excel-
tion with NORD/LB. How did the
with great potential. Over the last few
will be influenced by innovative
years, international markets have
solutions and high-end technologies.
lent customer relationship manage-
provided us with sustainable growth
That includes water saving as well
ment makes Nord/LB an experienced
based on real demand. However, we
as energy saving and environmen-
and strong partner. Nord/LB showed
always have to bear in mind that global
tally friendly production processes.
considerable flexibility and was able
to offer us a customized solution.
trends in the bathroom industry are
relatively broad and developments in
In 2016 you are going to open a
each region are very different. After en-
production site in China. What is
Which role did the bank’s German
tering the market, Duravit China soon
the background to this decision?
desk in Shanghai play? In what ways
became one of the fastest-growing re-
In 2012 we adapted our existing
was it supportive and helpful?
gions within the Duravit Group world-
structure to help underpin our
The German desk in Shanghai
wide. There is a dramatically growing
growth and technical progress by
added value to our project but was
demand from Chinese high-end con-
founding Duravit Sanitaryware
not central to its success. From a
sumers for high-quality, technological-
Technology Co. Ltd, our ultramodern
language perspective, the German
ly up-to-date, well-designed bathrooms,
engineering and assembly plant in
desk in Shanghai is less important
which Duravit meets 100 per cent.
Shanghai. Now is the time to continue
for Duravit, as all our staff either
A key bathroom trend that will not
our investment in China and take it to
speak Chinese or English. Neverthe-
change is comfort in all stages of life.
the next level to ensure we increase
less, its understanding of the local
This means products that enhance
our visibility in the marketplace. Our
business and of the headquarters’
life in the bathroom; they have to be
new production and development
work in Germany was tremendous-
intuitive to use, easy to clean, and
center in Chongqing will go online
ly helpful in closing the deal.
12 / Focus country: Australia
Fast-Growing Australian
Renewables Sector
Conergy
NORD/LB gains foothold in booming Australian renewables market, and
benefits from unique learning opportunity with world’s first utility-scale
solar-storage facility.
Illustration of Project Lakeland upon completion, courtesy of Conergy
NORD/LB has been a pioneer in renewable energy project
seeking a slice of this opportunity. In August 2016, NORD/
finance, and since the mid-1990s it has financed over
LB gained a foothold in this market, reaching financial
12GW of projects worldwide. Building on its success in
close on one of the world’s first large-scale solar-storage
Europe and North America, NORD/LB has built up a team
projects, working together with German developer and
of 10 renewable energy finance specialists to support
global leader in solar power Conergy.
its clients as they enter the booming Asia-Pacific sector.
After years of political uncertainty, Australia has
Australia in particular represents a promising market for
finally turned a corner and set some of the most exciting
renewable energy, and NORD/LB has consequently seen
renewable targets and development incentives worldwide.
a number of its clients from Europe and North America
In June 2015, the Australian government implemented a
bridging asia / 13
33,000 GWh Large-Scale Renewable Energy Target (LRET)
plummeting from around US$1,000/MWh in 2010 to US$300/
to be reached by 2020. This is equivalent to ~6,000MW of
MWh today, and are expected to reach US$120/MWh by 2030.
new renewable energy and will require ~A$14.5bn of new
Exciting global initiatives to accelerate technology
investment. According to the Australian government’s
development include STEAG Energy Services’ 90 MW
Clean Energy Finance Corporate (CEFC), this is just the
storage program in Germany, Edison’s 100 MW facility in
start, as it expects Australia’s renewable sector to require
Long Beach, California and the National Grid’s tender for
around A$100bn in investment in the run-up to 2050.
frequency response in the UK.
To incentivize development of the sector, renewable
projects receive Large Renewable Generation Certificates
Australia has also set attractive incentives to drive
further innovation and deployment, with ARENA current-
(LGCs), currently trading over A$85/MWh compared with
ly committing over A$100m of grants to support energy-
around $30/MWh in 2015. This is in addition to the whole-
storage research and development projects. Additionally,
sale electricity market price in a given region. Numerous
the ACT government has set a battery storage target of
energy utilities and retailers are signing up to long-term
36MW by 2020.
power purchasing agreements (PPAs) to help lock in
As the standalone business case for storage technolo-
revenue streams, typically between A$ 80 – 100/MWh, in
gies continues to improve, NORD/LB has been approached
some cases reaching grid parity with traditional forms of
by numerous clients across its four main global offices
energy generation.
(Hannover, London, New York and Singapore), all looking
Grant-funding support is available from the Australian
for a project financing solution. NORD/LB’s first battery
Renewable Energy Agency (ARENA) as well as a signifi-
storage project, located in Northern Queensland, Austra-
cant debt program from the CEFC for large-scale solar. In
lia, will certainly not be its last.
March 2016 the Australian government established the
$1 billion Clean Energy Innovation Fund, which is to be
co-managed by ARENA and the CEFC.
Individual territory governments and utilities have
Project Details: Lakeland Solar &
Storage Project, Queensland, Australia
also introduced their own incentive measures, such
In August 2016, NORD/LB reached financial close on a
as the Australian Capital Territory (ACT) government
A$42.5m, 13MWp solar PV plant with a 1.4MW/5.3MWh
20-year feed-in-tariffs (FiT). Allocated through a series
battery storage facility in the town of Lakeland, Northern
of competitive auctions, the aim is to power 100% of the
Queensland, Australia.
needs of Australia’s capital city of Canberra with renewable energy by 2020.
The market response has been overwhelming, with a
surge in domestic and international developers, including
As one of the first large-scale solar and battery storage
projects worldwide, capable of powering 3,000 homes day
and night, the project represents a global milestone in the
transition to sustainable energy.
many of NORD/LB’s clients, seeking to enter the Austra-
NORD/LB acted as Mandated Lead Arranger (MLA) and
lian market. At the time of writing more than 8,000MW
Sole Financier for the project, providing renewable energy
of wind and 2,500MW of solar projects are either under
structuring expertise and long-term, 15.5-year non-re-
construction or under development, of which 12 large-
course financing.
scale solar projects (totaling 480MW) have been awarded ~A$92m of ARENA grant funding, and 2,000MW of
Around A$17.4m of funding was also committed by
ARENA to support the project. The plant will conduct a
projects have applied for finance from CEFC’s Large-Scale
series of battery tests during its first two years of oper-
Solar Program.
ation and deliver a Knowledge Sharing Program (KSP)
overseen by a steering committee including Conergy,
Energy Storage –
the sustainable energy "Holy Grail"
Smoothing out the intermittency of renewable technologies with affordable energy storage solutions is without
ARENA, BHP Billiton, Ergon Energy and Origin Energy.
Knowledge and experience will also be shared with local universities, thereby building grassroots Australian
battery expertise.
German solar company Conergy is the project owner
doubt the Holy Grail required for a global transition to
and developer, and will also act as Engineering, Procur-
sustainable energy.
ment, Construction (EPC) and Operation and Mainte-
The International Renewable Energy Agency (IRENA)
estimates that the world needs 150 GW of battery storage
nance (O&M) contractor. Conergy is one of the world’s
largest downstream solar companies, specializing in
to meet its desired target of 45% of power generated from
the design, finance, build and operation of high-perfor-
renewable sources by 2030, and Bloomberg New Energy
mance solar systems. With almost two decades of solar
Finance (BNEF) believes the global market for storage
experience, it has completed over 1.5GW of capacity
could reach at least US$250bn by 2040.
across more than 300 projects in more than 15 coun-
While there are a range of storage technologies at varying
stages of maturity, it’s clear that lithium-ion batteries are going to play a significant role in meeting this target, with costs
tries around the world.
The project is scheduled for completion in April 2017.
14 / Focus country: Australia
“Australia has become one of the
most promising markets in the region
for project finance”
NORD/LB
An Interview with Sebastian Heddergott, Director and Head of Corporate
Sales Asia Pacific in NORD/LB’s Singapore office.
Mr. Heddergott, NORD/LB is active
As a bank you were originally suppor-
region in order to be part of its success
across the entire Asia Pacific region.
ting clients from Germany in the
story. This means that today NORD/LB
What products does Corporate Sales
region. Now you have greatly widened
is one of the biggest German banks in
offer to clients in the region?
your range of clients. How did this
Asia. As part of our strategy we are
The Asia Pacific region is by far the
come about?
aiming for a wider diversification of
most dynamic industrial and trade
Although our roots began 250 years
our client portfolio. Therefore,
zone in the world. We support our
ago in northern Germany, our clients
aviation finance, structured finance
clients across three priority sectors
and businesses are very international.
and project finance have all become
(shipping, aviation and structured
The shipping market, for example, is
important components of our Asian
finance), providing solutions for
one of our key industries abroad, and
business as well. Our latest strategy is
hedging both their interest exposure
it grew much quicker in the two Asian
to open for corporate business with
as well as exposure to all major
shipping hubs of Hong Kong and
German clients in Singapore, as we
currencies. Furthermore, NORD/LB is
Singapore compared to Europe and
are already doing in Shanghai.
active in the money market, dealing
the Americas. As a major ship-financ-
with short- and long-term deposits.
ing bank it was therefore logical to
grow disproportionately larger in the
/ 15
How does your Corporate Sales team
uranium, there has been a focus on
address the specific needs of NORD/
developing alternative pillars for
recent Structured Finance transacti-
LB’s clients in the Asia-Pacific market?
economic growth, including energy
on in Asia Pacific which was tailored
The Corporate Sales team has strong
and infrastructure.
ties to all our origination and credit
Can you provide an example of a
to meet the needs of your client?
A good recent example of such
teams. We have frequent discussions
We talk about Structured Finance
with existing and potential new clients
being our biggest instrument in
Here we were able to bring German
on their strategy, and exchange
structuring know-how was in Japan.
Australia. Where do you see potential
sovereign funding support to a
relevant market intelligence between
in the market?
German-based sponsor, who was
our Asian branches, head office and
Our Corporate Sales team works in
looking to establish a series of solar
other foreign divisions. Listening
close collaboration with the bank’s
photovoltaic (PV) projects in Japan.
carefully to our clients is key to
Structured Finance division as they
We successfully delivered a project-
understanding developments and
seek to optimize financing packages to
financing solution that was financed
potential new opportunities. NORD/LB
meet the needs of our clients. The
via EUR-denominated loans, and
covers numerous different industries
Australian market is one where NORD/
swapped into Japanese yen (JPY)
and has completed a wide range of
LB sees opportunities to differentiate
obligations through cross-currency
different financing structures. Further-
itself against local financial institu-
swaps, providing material-cost
more, having trading capabilities in
tions. Our value proposition in the
savings to the client.
both Asia and Europe helps us to cover
Australian market is not in directly
both these time zones more efficiently.
competing with domestic offerings.
What’s next for NORD/LB and Corpo-
Instead, we are complementary, given
rate Sales in Asia-Pacific?
You also offer products and services
our structural expertise in the
While some industries such as
in Australia. What areas do you
renewable energy market, which is
shipping are facing difficulties, it is
operate in and what is different about
based on our >12GW of global experi-
still the region where new ideas are
that market?
ence. We can also differentiate from
being brought to life most quickly. The
As part of our Asia Strategy we are
local banks by offering long-term (i.e.
focus on China over the last 15 years is
constantly looking into new markets,
>15 year) financing solutions to
understandable given it is the biggest
and Australia has become one of the
eliminate refinancing risk, which
economy in the region, and therefore a
most promising markets for project
results from the shorter-term (5-7-year)
major driver of success or failure.
finance in the region. We are dealing
mini-perm debt structures that are
However, many smaller Asian
with very long tenors and, due to the
more traditional in Australia. Through
countries have open opportunities
international nature of the sector
our own balance sheet or through our
and sustainable growth figures. The
(including developers, contractors
partner network, we can deliver these
"One Road, One Belt" initiative is one
and equipment suppliers), involve-
long-term financing solutions via
ment with cross-currency financing.
Australian-dollar (AUD) floating-rate
that might be led by China but stretch
The volatility of foreign exchange
loans plus interest-rate derivatives,
over many other countries.
rates over those extended maturity
AUD fixed-rate loans, or for the more
periods therefore needs to be limited.
sophisticated client, euro (EUR)-
up and currencies that have not been
Projects need cashflows to be
denominated loans exchanged into
freed for trading can tomorrow
stabilized, and derivatives such as
AUD through cross-currency swaps.
become new business opportunities.
example of investment possibilities
Markets which have not yet opened
cross-currency swaps are a suitable
Based on preliminary feedback in the
The best way to stay ahead of the
way to mitigate these risks.
Australian market, we hope to replicate
curve on new developments is to keep
this structure to deliver value to our
a close eye on opportunities through
Australia has seen continuous growth
other clients operating there.
a diverse range of clients and
for 23 years in a row. How do you
explain this astonishing success, and
Each of these instruments can be
implemented for the right clients in
financial partners in so many
different countries.
do you think it will continue?
the Australian market, and we have
Australia's strong economic track
been able to appeal to them especial-
record has been largely underpinned
ly by demonstrating our strong
new projects in this dynamic market;
by its ability to capitalize on its rich
knowledge of how project financing
and as a Corporate Sales team we will
commodity resource, helped by close
for renewables has been achieved in
continue our regular discussions on
ties to East Asian markets, as well as
other offshore markets – for example,
clients and projects,thereby helping
NORD/LB will therefore continue to
look out for new opportunities and
its strong financial market environ-
in Europe or the US. For these clients,
ourselves to understand the trade
ment. Following the 2008 financial
there is a clear value proposition in
rationale, markets and client needs to
crisis, and subsequent deterioration
creating such structures, enabling
provide truly tailor-made solutions.
in demand and prices for key
them to deliver optimal financing
commodities such as iron ore and
solutions to their projects.
16 / Focus country: Australia
“Australia should be leading
the way in solar and storage”
An interview with Alexander Lenz, President, Asia Pacific at Conergy
How does the Lakeland so-
so when paired with storage. We are
be leading the way in solar and stor-
lar-storage project fit into Co-
confident that this will be the first of
age, given its climate and low popula-
nergy’s Asia-Pacific strategy?
many Conergy projects in Australia
tion. But Australia faces some unique
The Lakeland Solar & Storage project
and Asia that combine grid-connect-
challenges in its electricity transmission and distribution systems due
presents a new chapter for the compa-
ed solar and storage over the next
ny after several years in development.
few years. Since Conergy has one of
to its size and dispersed population.
Australia provides many opportuni-
the industry’s most advanced and
Utilities have an obligation to provide
ties for large-scale solar and storage
complete portfolios of solar services
reliable power supply to these remote
energy solutions due to the immense
and solutions, we will aggressively
communities, which quite often re-
distances between towns, a strong fo-
pursue more solar project develop-
quires transmission hundreds of kilo-
cus on remote mining and resources,
meters from the original generation
as well as neighboring island commu-
source. This difficulty in distribution
nities. All of these factors make it a
and transmission causes high supply
great case study for large-scale solar
costs, unreliable power supplies, and
power-quality issues, particularly
and storage – either on-grid or off-grid.
for communities that sit at the edge
In terms of the broader Asian
of the grid network (fringe-of-grid).
market, this utility-scale solar + bat-
While the solar + battery storage
tery storage solution is particularly
relevant to most markets in South
technology is already commercially
East Asia – as many countries are
available to cater for various applications and scenarios, factors such as grid
of islands, they cannot be connected
support, integration of intermittent
to central grids. This forces these
embedded power generators, on- and
islands to operate expensive fos-
off-grid applications, ancillary services
sil-fuel-based power generation
plants. A utility-scale solar + battery
Conergy
archipelagoes made up of thousands
frameworks and market operation tools,
storage solution is a superior way
forward as it will provide reliable
for frequency control and provision of
spinning reserve, updated regulatory
ment and finance opportunities, from
as well as a lowering of equipment
clean energy at a fraction of the cost
early-stage investment through to
prices are all required to allow for this
of traditional generation plants.
construction and long-term asset
new technology to be more readily in-
management, besides our traditional
tegrated into commercial solar design.
What’s next for Conergy in both
solar EPC and O & M businesses.
Australia and Asia Pacific generally?
What struck you as different
The Lakeland Solar & Storage project
What were the main challeng-
from conventional approach-
is set to demonstrate how utili-
es you faced when entering
es when working with NORD/
ty-scale renewable energy, combined
the Australian market?
LB’s Structured Finance team?
with storage, can be a reliable and
Conergy has been active in Austra-
We found the NORD/LB team to be
stable source of energy that can
lia for more than 10 years, but in a
extremely knowledgeable about the
seamlessly connect into the grid
different segment of the business,
solar market and the consequent hur-
network, providing communities
which was significantly support-
dles faced in financing solar projects.
We appreciated very much that they
with power supply during times of
ed by government policies. Now
grid faults or outages that may be
we’ve entered into utility-scale
tend to take a pragmatic approach
caused by natural disasters or issues
PV power plants, in line with our
and showed flexibility in structur-
further upstream in the network.
regional and global strategy.
ing a loan agreement with partial
Given Australia’s high levels of sun
policy to support renewable energy
very pleased to see that they shared
The lack of a strong and stable
merchant exposure. We were also
irradiance and vast amount of unin-
generation earlier on in this segment
a similar motivation as Conergy to
habited land areas, it makes a lot of
has been a barrier to entering the
break into the Australian market
sense to embrace solar – even more
Australian market. Australia should
with a large storage + PV project.
bridging asia/ 17
Economic Viewpoint Australia
The Australian economy has done well for a really long time. And the
fundamentals still look very good. An analysis by NORD/LB research.
• Exports are very important to the Australian economy, meaning that further economic integration across the Asia Pacific region would deliver clear benefits. However,
currently Australian exports seem to be overly dependent on China. In this context the
rising share of exports to ASEAN countries, as well as to the US and India, have to be
seen as a positive step towards a more diversified structure.
• Unsurprisingly, the main focus of Australian foreign economic policy is on creating bilateral free-trade agreements (FTAs), especially those that remove agricultural duties
and export subsidies in order to provide Australian agricultural products with access
to overseas markets.
NORD/LB
• There certainly are some risks for the Australian economy. Slower growth in China
could become a problem, meaning that investors should closely monitor economic
activity in the Australian commodity sector to ascertain potential risk. In contrast,
Torsten Windels,
residential construction could be a bright spot of the economy moving forward.
Chief Economist NORD/LB
• Central bankers in Sydney seem to be quite confident that lower interest rates will support economic growth within Australia. The somewhat-weaker Australian dollar (AUD)
will also help. However, it is important not to overestimate the impact of this devaluation on Australian exports.
• Inflation is not currently a problem, although rising house prices could change this.
However, Reserve Bank of Australia (RBA) officials seem to believe that the inflation risk
from the real estate market has diminished recently.
• In August the RBA decided to cut the cash rate by 25bps, putting some pressure on the
AUD. Central bankers in Sydney plan to improve the growth prospects of the Australian economy by lowering short-term interest rates. Essentially, monetary policymakers have recently started to fear downside risks to the economy "Down Under". Further
easing in 2017 therefore seems to be likely. The RBA will probably prefer to use a combination of rate cuts and unconventional monetary-policy measures to manage risk.
Major export destinations of Australian products
China
Japan
ASEAN
South Korea
EU-28
USA
India
0
2014/2015 2013/2014
10
20
30
40
Source: Australian Bureau of Statistics
NORD/LB
18 / Deals
Panamax: Creative solutions
for challenging changes
Slow steaming has changed global shipping. In an exciting project NORD/LB
helped high-speed Panamax container ships cope with decreasing demand.
Current tonnage overcapacity means that the overall
point of being the largest ships capable of passing
shipping industry has been in a critical financial situa-
through the old canal.
tion for several years. Shipping operators are therefore
NORD/LB has a long track record of generating
under immense pressure to reduce operational costs
creative, tailor-made solutions for its clients – be it in
where possible. These include methods such as slow
Germany, Europe or Asia. In a recent project NORD/LB
steaming to reduce fuel costs or delivering greater econ-
supported an innovative and technically sophisticated
omies of scale by reducing unit costs (i.e. lower costs per
Panamax container ship conversion concept implement-
TEU or ton) by phasing larger-size vessels. At the same
ed by our client, NSB Niederelbe Schiffahrtsgesellschaft
time the industry faces a significant change in trad-
mbH & Co. KG in Buxtehude, Germany (NSB). NSB antici-
ing patterns due to the recent opening of the widened
pated the massive change in the shipping industry’s re-
Panama Canal, which means that much larger ships can
quirements in today’s market – especially the decreasing
now pass through it. However, this development has
demand for the classic Panamax container ship design
had a considerable impact on classic Panamax contain-
and the urgent need to significantly reduce operational
er ships, which have basically lost their unique selling
costs – and thus developed a unique technical solution.
bridging asia / 19
portfolio and expertise in retrofitting ships, giving them a
new lease of life.
Through the project, the vessels were successfully converted from ca. 4,900 TEU to ca. 6,300 TEU. Additionally,
the three new wide-beam-like designs are much more fuel
efficient due to improved flow conditions, and thus could
all attract a fully debt service-covering, long-term charter
with one of the world’s top container lines. In turn, this
led to a material improvement of the borrowing entities’
financial situation.
Conversion costs: the cost of the widening was $10 million
per vessel, or $30 million in total. Financing for the project
was shared equally, with NORD/LB providing new financing
for 50% of the total cost, and the remainder provided by
investors, who were attracted by a convincing (equity) story
based on the conversion concept.
After widening, all three ships offered lower unit costs
through their higher load capacity and higher fuel efficiency
due to the new design, meaning they can now successfully
NORD/LB
compete with state-of-the-art ship designs in their class.
NSB’s patented ship-widening concept
Award-winning project
NSB received an award for the best maritime industry inno-
From 2005 to 2007 NORD/LB financed three 4,900 TEU
vation of 2015 at the European Marine Engineering Confer-
classic Panamax container ships for NSB. At the time these
ence in Amsterdam. In June 2016 Marine Money Internation-
were state-of-the-art, high-speed Panamax designs with a
al gave NORD/LB the 2015 wild card deal of the year award
comfortable, 3.5-year, debt service-covering charter attached
for the financing of the project.
as non-recourse project finance. Due to the very challenging
environment, all three borrowing SPCs had to cope both with
very weak charter markets and a sustainable slow-steaming
environment after the expiry of their initial charters. This
led to a gradual deterioration of the borrowing entities’ financial situation and finally a very severe liquidity situation.
So, how to tackle the problem? To solve the issue, as well as
to increase the overall competitiveness of these ships, NSB
developed its innovative and patented ship-widening concept. Despite the obviously large technical risks, the widening of a Panamax container ship was successfully achieved
for the first time through strong collaboration between all
the parties involved in the project.
Higher load capacity and significantly
increased fuel efficiency
Widening involved docking each of the vessels, cutting it
into four parts, separating each part, inserting pre-fabricated new segments, each made of 4,200 tons of steel, and
finally re-assembling all of the components. The conversion
included fitting the vessels with a bulbous bow more suitable for slower, optimal speeds, as well as a new, improved
propeller. To carry this out the ships were brought to the
drydock of China’s Huarun Dockyard (HRDD) and complete-
in the areas which undergo the least mechanical stress. The
widening also helped NSB to enlarge its already-strong
NORD/LB
ly cut open, from prow to stern. Developed in 2013, NSB’s
unique, patented concept is based on cutting the ship open
20 / Splitter news
Sandra Reich joins
German Desk
Former board of management
of Hamburg and Hanover Stock
Exchange joins NORD/LB
In August 2016, Dr. Sandra Reich joined NORD/LB’s Singapore
branch as Head of German Desk, Singapore. Her appointment
is part of the bank’s strategy of focusing on its core purpose –
assisting German companies doing business within Asia.
NORD/LB is in the process of expanding its SME businesses with German companies in Asia. The Singapore branch
acts as a competence center in Asia-Pacific outside China
for the company’s credit and financing business with
include project financing in energy and infrastructure,
ship and aircraft financing, and corporate and market sales.
With a staff of 80 at the Singapore branch, as well as 20
NORD/LB
NORD/LB’s German SME clients. Further key business areas
employees in Shanghai, NORD/LB is the leading German
Landesbank in Asia.
Jia Wei Toh joins
Credit Asset
Management Unit
First member of newly formed
Credit Asset Management unit joins.
NORD/LB is working to become a provider of credit-based
investment products, specifically alternative assets. A key
pillar in this strategy was the establishment of the Credit
Asset Management (KAM) unit, which was launched last
October. KAM functions as a group-wide competence
center, responsible for the marketing of alternative assets
to institutional clients, as well as having active control
After joining the Singapore branch as a director in
October 2016, Ms Jia Wei Toh is the first KAM team member
on the ground in Asia Pacific. With more than 10 years of
experience, she was previously at ANZ, working on the loan
syndications team, where she was responsible for the
execution and distribution of primary syndicated loans,
ranging from corporate loans to structured project/asset
finance and M&A transactions in South and Southeast Asia,
as well as in the Middle East. Before ANZ, Jia Wei was with
DBS, where she supported the execution and distribution of
loan transactions across multiple countries and industries.
NORD/LB
and optimization of NORD/LB's credit book.
bridging asia / 21
12 May: New Singapore
branch officially opens
NORD/LB’s representative office in Singapore has served as a regional
hub since it opened in 1994.
Since then NORD/LB has seen enormous growth within
On May 12, 2016 the new office was officially opened.
Asia. This trend accelerated further after 2013, when the
Approximately 80 Singaporeans, including regional
bank expanded in its core business segments of aviation
clients and partners, attended the reception. Special
finance, shipping finance, renewable energy finance,
guests were Dr. Michael Witter, Ambassador of the Federal
Republic of Germany to Singapore, and Dr. Gunter Dunkel,
region. To complement this growth NORD/LB has invested
Chairman of the Management Board & Group CEO of
in Singapore, recently relocating to new offices within a
NORD/LB, who both made speeches, celebrating the move
building which matches our sustainable business ideals.
and the bank’s success in the region.
NORD/LB
German corporates and markets, and corporate sales in the
Lower Saxony delegation visits Singapore branch
In August state secretary Daniela Behrens paid a visit to NORD/LB's
Singapore branch.
The Ministry for Economics, Labour and Transport of
NORD/LB’s Singapore Branch was honored to host a lunch
Lower Saxony and the Hannover Chamber of Industry and
and presentation for the delegation at its office. The
Commerce organized a trade delegation to Indonesia and
delegation’s theme and mission were, "How to successfully
Singapore between August 21st-27th. Daniela Behrens,
establish business in Singapore/the ASEAN region" , and
State Secretary at the Ministry, was accompanied by
the event covered current developments of Singapore’s
politicians from the Lower Saxony state parliament,
port and opportunities in autonomous driving. Members
representatives of chambers of industry and commerce,
of the German Embassy in Singapore and the Singapore
and executives from companies based in Lower Saxony.
German Chamber of Commerce also attended the lunch.
22 / Splitter news
Annual Oktoberfest Celebration
NORD/LB Singapore branch celebrates traditional German beer fest.
seminar at its office. A total of 125 clients from Shipping,
Oktoberfest celebration held at Paulaner Bräuhaus
Aviation, Structured Finance, German Desk, Corporate
Singapore, NORD/LB’s Singapore branch held a Markets
Sales and Markets Sales joined us for the evening.
NORD/LB
On September 30, 2016, in conjunction with the annual
NORD/LB – a global leader
in renewable energies
It is now official: NORD/LB Norddeutsche Landesbank ranks among the world's
leading institutions when it comes to financing renewable energy projects.
A new index compiled by the prestigious international trade
NORD/LB has been active in the financing of renewable en-
publication IJ Global – Project Finance & Infrastructure Jour-
ergy projects since the early 1990s, taking a pioneering, lead-
nal places NORD/LB in fourth place worldwide in the "Mandat-
ing role very early on in the sector’s growth. It announced
ed Lead Arranger Renewables" category. Twenty-fifteen saw
in 2015 that its financing volume in renewable energies had
NORD/LB take the role of mandated lead arranger (MLA) in 41
grown by around 27 percent to EUR 8.2 billion within the
transactions, with a total financing volume of USD 1.9 billion.
last three years. At 73.5 percent, wind energy accounts for
MLA refers to those banks with lead responsibility for struc-
the majority of the financing operations, with solar energy
turing and arranging the syndicated financing of a project.
making up a further 15.5 percent.
Imprint
Bridging Asia
German Banking – Financial
Solutions by NORD/LB Asia
Publisher
Norddeutsche
Landesbank - Girozentrale 138 Market Street
CapitaGreen #36-03
Singapore 048946
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.
/ 23
Your Northern Gateway
into Germany
‘
With a history dating back over two centuries, NORD/LB is one of Germany‘s
top banking groups in terms of diversified access to funding sources and
a flourishing domestic capital markets franchise.
Combining general retail and specialist wholesale focus into a successful
business model for the German Landesbank sector, NORD/LB is honoured to
have helped a growing share of premier covered bond issuers worldwide to
deepen their distribution in the largest fixed income investment market of
the European continent.
www.nordlb.com