By Jonathan Saul, Sophie Sassard and Andrew MacAskill

LONDON, June 22 (Reuters) – The Royal Bank of Scotland has obtained bids for its Greek ship finance enterprise, banking and monetary sources accustomed to the matter stated, following a leap in dangerous delivery money owed on the lender over the previous few months.

They advised Reuters that the operation was value about $3 billion though sources within the delivery enterprise stated that issues with lending to the business, a lot of which is in a deep downturn, would have an effect on the worth of what might be recouped through a sale.

Credit Suisse and China Merchants have been among the many suitors bidding, the sources stated.

RBS and Credit Suisse declined to remark, whereas China Merchants didn’t instantly reply to an emailed request for remark.

The British financial institution, which was rescued with a 46 billion-pound authorities bailout through the monetary disaster, had beforehand been a prime lender to the worldwide delivery business and its Greek workplace performed a pivotal function. The enterprise additionally features a banking licence in addition to about 40 employees, the sources stated.

“RBS has held preliminary discussions with a number of interested parties,” one supply stated. “The big difference here is they are not selling a portfolio of loans but a business, with staff in it able to do the debt collection stuff.”

RBS, which is 73-percent state-owned, is within the midst of a restructuring geared toward returning the financial institution to revenue after eight straight years of losses. In July 2015, Reuters reported it was winding down its Greek operation and placing its delivery loans portfolio up on the market.

While the oil tanker commerce has picked up, the container and dry bulk delivery industries are scuffling with a glut of ships, a faltering world financial system and weaker shopper demand.

One delivery business supply stated a part of the RBS portfolio included non-performing loans because of the worsening situations in some sectors.

“RBS has tried to put this sale together for some time. In the past two quarters, conditions in shipping have got worse and that has had some effect on the portfolio,” the supply stated. “That will mean that there will have to be some price-adjustment for whatever is on offer.”

Other sources stated the loans may carry a 30 % low cost to be able to appeal to curiosity, including that some patrons could also be solely in elements of the enterprise.

“It depends on the level of interest and also how quick a sale they want,” a ship finance supply stated.

The financial institution’s whole delivery publicity reached 7.1 billion kilos ($10.4 billion) within the first quarter of this 12 months, down from 7.5 billion kilos on the finish of final 12 months.

Non-performing loans to the business – these on which repayments are considerably in arrears – elevated to 827 million kilos within the first quarter of this 12 months from 434 million on the finish of 2015, RBS stated in its quarterly outcomes.

Reuters reported earlier this week that the European Central Bank has launched a evaluation of banks’ lending to the delivery sector. This has raised issues amongst lenders that they could be required to put aside extra capital and make larger loss provisions in opposition to loans to the business.

CHINESE INTEREST

China Merchants, one of many nation’s largest conglomerates, has been in search of low cost delivery and commodities-related property in Europe, hoping to reap the benefits of the market downturn.

In March sources advised Reuters that China Merchants had made an off-the-cuff bid to purchase London’s Baltic Exchange, which has been on the coronary heart of world delivery for hundreds of years.

Greece agreed in April to promote a 67 % stake in Piraeus port to Chinese delivery large COSCO for 368.5 million euros ($416 million).

“For a Chinese bank, buying RBS’s Greek business is an inroad into Europe. For others like Credit Suisse, RBS will have to offer something more as Credit Suisse is already a big player now in Greece,” one other ship finance supply stated.

A separate banking supply added: “It is not clear if Credit Suisse’s capital position would allow them to strike a deal, especially if Chinese players are competing for the asset.” ($1 = 0.6816 kilos) ($1 = 0.8850 euros) (Additional reporting by Sumeet Chatterjee in Hong Kong; enhancing by David Stamp)

(c) Copyright Thomson Reuters 2016.