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Report: Commerzbank gives up right to issue shipping covered bonds

Commerzbank AG has given up its license to issue shipping covered bonds as it moves ahead with its plan to withdraw from shipping finance, Handelsblatt reported June 1, citing a report by German news agency DPA.

Commerzbank was cited by Handelsblatt as stating it had not issued any covered bonds in six years and it was not planning to revisit the asset class in the future. The banking group has reduced its shipping portfolio to €4.5 billion now from €20 billion in 2012.

In shipping finance, covered bonds are secured by shipping loans. After returning its license, Commerzbank received approval from financial watchdog Bafin to use government bonds as collateral for its existing shipping covered bonds. The bank plans to make use of that privilege by the end of the year.

In 2017, the bank expects to make shipping loan loss provisions in the range of €450 million to €600 million.