Business performance Specialised Finance

Activities and focus

Specialised Finance provides asset and project financing in a select number of sectors: infrastructure & renewables, shipping, commercial real estate and oil & gas services. It also includes NIBC’s retail activities in the residential mortgage market and in online savings via NIBC Direct.

Specialised Finance is active in the following areas:

Asset and project financing for corporate clients and investors in the oil & gas services industry worldwide;
Infrastructure & renewables financing in North West Europe. NIBC has a strong track record in financing schools, roads and hospitals and in wind, biomass and waste-to-energy projects;
Ship financing for shipping companies and investors worldwide;
Commercial real estate financing in the Netherlands and Germany. Project and asset financing is primarily focused on offices, retail and residential;
Highly sophisticated structured finance transactions for clients;
Distributing assets, loans and investments through an integrated bank-wide distribution team; and
Retail banking in the Netherlands and Germany with residential mortgages offered through a number of distribution partners and online savings products through NIBC Direct.

Behind the 2009 numbers

Specialised Finance regained momentum in 2009, recovering slowly in a persistently fragile environment. It ended 2009 with operating income of EUR 255 million versus EUR 305 million in the previous year, an enlarged client portfolio, a string of high-profile transactions to its name, and a well-filled deal pipeline.

Net interest income improved in the second half after reaching a low in the second quarter. The decline in net interest income in 2009 was the result of an increased liquidity buffer.

Net trading income is by nature more volatile. A significant portion of NIBC’s balance sheet is accounted for at fair value through profit or loss. This means that as a result of credit spread movements, trading income is affected by mark-to-market movements on both assets and liabilities.

Operating expenses fell by 11% in 2009 compared to the previous year. EUR 34 million of impairments were taken on the Corporate Loan portfolio.

Transaction highlights

NIBC arranged important client transactions in its target segments last year. Examples include:

NIBC Shipping acted as Mandated Lead Arranger in a USD 120 million transaction for Dutch client Vroon Group for the financing of six newbuild vessels. NIBC’s share in the transaction is guaranteed by the GO facility issued by the Ministry of Economic Affairs;
Acting as Mandated Lead Arranger in the refinancing facility for three Kogas LNG carriers;
NIBC Oil & Gas Services and Loan Syndications coordinated and closed a USD 200 million facility for SBM Offshore;
Closing USD 150 million transaction for the Odfjell Drilling group, NIBC acted as Mandated Lead Arranger;
Infrastructure & Renewables solely closed a transaction for Colonne, a joint venture company owned by TenneT/Novec and RBCIF. The transaction comprised the acquisition of 139 transmission masts from KPN;
Providing senior debt facilities for building the new parliament in the German city of Potsdam, NIBC acted as Mandated Lead Arranger in this EUR 106 million deal;
NIBC Commercial Real Estate coordinated the restructuring of a EUR 360 million debt package and extended the swap for one of the funds of IEF Capital; and
Acting as advisor to a consortium of private investors for the EUR 376 million acquisition of the Rhea Portfolio from ING REOFN.

Outlook

With its sound mix of geographical and sector exposure, Specialised Finance is well placed to help its clients further in 2010. We have the people, strategy, focus and liquidity to fulfil this goal. Yet we are mindful that the economic conditions remain uncertain.