Jetrader - January/February 2012 - 11
Q: How has the competition in global aviation ﬁnance changed and developed since 2008? A: With regard to competition, we must differentiate between the ﬁnancing of new versus older aircraft. In general, the competition in the ﬁnancing of new aircraft did not change very much over the past few years: • Firstly, there are loans from commercial banks and funds from the capital market. • Secondly, there is cash from airlines and lessors. • Thirdly, there is the commitment of the ECAs. The proportion between those three sources has changed though. In 2008—before the global economic crisis—the ECAs held a market share of 20 percent, which in 2009 to 2011 increased to a portion of 30–35 percent on the new aircraft front. Thus, ECAs are further substituting loans from commercial banks. Since spring 2011, we have seen banks retreating from the aviation ﬁnance market, and the question remains whether or not this pullback will be of a permanent nature (like for HSH Nordbank and Société Générale) or just temporary (like the French banks BNP, Natixis and Calyon). To my mind, this is the start of a deﬁnite pullout of some banks from this market segment. I am quite sure that we will see further changes in 2011/2012. But DVB will stay active, of course. The situation in the older aircraft ﬁnancing world has changed immensely over the past few years—and much to the good of DVB: the number of banks prepared to ﬁnance aircraft which are 7 to 15 years old reduced dramatically and for the time being only PK Finance and DVB are willing and even more importantly able to ﬁnance such equipment. The rest of our bank competitors in this market segment have just disappeared. Let me add that market participants like airlines and lessors are realizing now that there is a price to be paid due to the prevailing conditions of high liquidity cost and the risk premium. Q: What is your vision for DVB’s Aviation Finance business in 2012 and indeed beyond? A: I think there are two issues. Firstly, do we think that the existing aviation platform is completed? Do we need to add some more expertise? And
if yes, does this imply stafﬁng up our teams? We as a team carefully reviewed the market opportunities, and we came to the mutual conclusion that the platform is close to perfection as it is—at least for the time being. So, in terms of expertise, we will not stretch ourselves beyond what we have achieved so far. Secondly, can we better assess the aviation markets using our platform and can we better capitalize on the platform’s output? The answer to those questions is “Yes,” as there is always room for improvement. We have made
fantastic progress to cross-fer tilize between the various teams. It works very well for the beneﬁt of the Bank but equally important for the beneﬁt of all staff who enjoy learning more from any corner of our platform. But I think we can still achieve higher productivity. So, possibly the only challenge I see for the teams is to derive even more competitive advantages from the platform than we have done in the past. But to draw a conclusion: our aviation platform works beautifully—much to our clients’ advantage.