Ship Finance Fundamentals
How Shipping Banks Organise Credit Committees
Summary
Credit committees are internal decision bodies that assess proposed exposure against a bank’s delegated authority, policies and risk appetite.
Why this matters in ship finance
Committee governance protects decision quality by making assumptions, exceptions and responsibilities explicit.
The concept
Common inputs include independent credit analysis, front-office recommendation, valuation, legal due diligence, compliance, capital usage, group limits and environmental risks. Exact composition is bank-specific; EU guidelines frame governance for in-scope banks.
How it is used in practice
Prepare a concise decision memorandum covering transaction rationale, repayment, collateral, downside scenarios, mitigants, exceptions, conditions and monitoring actions.
Practical issues
Committee approval is not substitute for legal completion, conditions precedent or ongoing monitoring. Do not portray one committee model as legally mandated.
How ShipFinance.ai uses this concept
Generate transparent investment and credit memoranda from linked data, with audit trails for assumptions.
Key takeaways
- Committee governance differs across banks
- Material exceptions need ownership
- Approval and funding are separate stages
Primary legal, rule and scholarly sources
- EBA/GL/2020/06 - Guidelines on loan origination and monitoring (in-scope institutions; supervisory guidance)
- Directive 2013/36/EU - Capital Requirements Directive (CRD; lenders within scope)
- Schinas, Grau & Johns (eds.), The HSBA Handbook on Ship Finance (Springer, 2015) - scholarly reference, not legislation