Study On The Risk Control Of Banks In Ship Mortgage Finance

The acceleration of the process of economic globalization greatly promotes the development of maritime industry. The great potential of international ship finance market becomes increasingly prominent. Although since the 1990s, methods of ship finance have been innovating, the ship mortgage finance has always been the major. In this process, the banks have played the most important role. Shipbuilding and shipping industry of China have got a rapid development in recent years. However, we have to admit that relevant laws and regulations of China are deficient, domestic banks are vulnerable to the risks, and they also have to face the great competition pressure from foreign banks. Ship Finance industry has huge profit margins and a rosy prospects. The commercial banks should seize the favorable opportunity to develop their own ship finance business. It can not only solve the difficulties in finance of ship industry, but also cope with the challenge from foreign banks. Meanwhile, profits and risks are co-existing. The banks should evaluate all kinds of business and legal risks precisely so as to protect their legal interests.This thesis is divided into five chapters.Chapter 1 introduces the overview of development in ship mortgage finance, which includes the origin, the development, the current situation in China and the main characteristics of ship mortgage.Chapter 2 introduces the whole legal framework of ship mortgage. First of all, the author will bring forward the definition of ship mortgage. Then the author will analyze the subject, object, rights and obligations of both parties in ship mortgage. At the end of this chapter, the author will compare some related issues about registration of ship mortgage.In chapter 3, the author will analyze the various kinds of risks the banks have to face, including customer choice risk, ships choice risk and claims distribution risk. The author will also introduce interest rate risk, exchange rate risk, country risk, natural risk and operational risk of banks.In chapter 4, the author will propose some reasonable measures which banks can take to control the aforesaid risks. These measures include reasonable arrangement of mortgage loan agreement, guarantee and security provided by the owner's parent company, the ship revenue transfer agreements, share mortgage agreement, ship insurance, etc. Through these measures, banks can reduce risks to a very low level.In the final chapter, based on the loss and insufficiency of China's legislations, the author will draw legislative and practical successful experience on Anglo-American and other developed countries. Furthermore, the author will give some legislative proposals to balance the interests of different parties'at the end. If the domestic theory circle, legislative branch and the practice circle can make joint efforts, China's shipping industry and financial industry can get common development and prosperity.