Brokers mediate between their clients and shipping banks.This is an imporant task, especially in the sale and purchase activity.The broker's consulting role is again of importance here,as he must help make the intended transaction look sound from the bank's point of view.He must help in the preparation of the feasibility study that might be submitted to the bank,and also help bolster his client's profile Vis a Vis the bank.The relation of brokers and shipping banks also extends to the services experienced brokers provide by participating in evaluation boards of specific banks. The decisions faced by a broker are of lesser economic consequence than those of a shipowner or a bank,as much smaller risks are involved for him.It is thus natural to expect a smaller reliance on methodology.On the other hand,to be a successful broker, one must act with as deep an understanding of the market as those responsible for actually making these decisions.Therefore,if banks,owners or big charterers practice sophisticated decision-making methodologies,the broker must follow suit. An important internal decision faced in brokerage houses is the degree of information technology to be adopted.Although no self-respecting broker can do without the standard communication equipment,there are other mainly computer related technologies that are not obviously cost effective.For instance,investment in sophisticated data bases, intelligent message transmission through computer networks and the like,might or might not be justified,depending on the business size,the philosophy of operation and other factors.Other investments,relating to improving client relations might prove immensely more profitable. 2.4 BANKS Shipping banks risk huge losses in times of market downturns.These risks are balanced by comparable profit expectations during normal states of the market or during booms. Overall,the operation of a maritime bank reflects to a great extent the high-risk environment of shipping. The major decision faced by the banks'shipping branches is to screen bad loans and, naturally,attract shipowners with good prospects.Intangible factors play an important role in these decisions,much more so than in other areas of banking.Loan securities are of significance here since the main form of collateral (the ship)will probably have sunk to a small fraction of its value in case the debtor is in financial difficulty in a market downturn. The unpredictability of shipping makes formal feasibility studies of particular loan proposals extremely unreliable,much more than in other economic activities.Therefore the objective assessment of the shipowner's managerial potential(proven or manifest)and integrity are of prime importance. The amount to be lent is of particular importance in most banking deals.Usually owners seek a large amount of leverage,saving their own money for the hard times.A lender is of course not eager to do this and thus increase the risk of the undertaking.However, pressure from owners is such that competition among banks leads sometimes to overfinancing,with the expected catastrophic effects during market downturns. Loan management and auditing is a crucial aspect of everyday banking practice.Banks must guard against bad loans by keeping a close eye on their debtors'operation and intervene if possible at the first signs of difficulty.If the difficulties persist a bank might even consider selling the high risk loan (a rather difficult proposition)or even precede to more drastic measures.Timing is all-important,since being forced into financial difficulties when they still have a chance to recover should not lose good clients.9 Brokers mediate between their clients and shipping banks. This is an imporant task, especially in the sale and purchase activity. The broker's consulting role is again of importance here, as he must help make the intended transaction look sound from the bank's point of view. He must help in the preparation of the feasibility study that might be submitted to the bank, and also help bolster his client's profile Vis a Vis the bank. The relation of brokers and shipping banks also extends to the services experienced brokers provide by participating in evaluation boards of specific banks. The decisions faced by a broker are of lesser economic consequence than those of a shipowner or a bank, as much smaller risks are involved for him. It is thus natural to expect a smaller reliance on methodology. On the other hand, to be a successful broker, one must act with as deep an understanding of the market as those responsible for actually making these decisions. Therefore, if banks, owners or big charterers practice sophisticated decision-making methodologies, the broker must follow suit. An important internal decision faced in brokerage houses is the degree of information technology to be adopted. Although no self-respecting broker can do without the standard communication equipment, there are other mainly computer related technologies that are not obviously cost effective. For instance, investment in sophisticated data bases, intelligent message transmission through computer networks and the like, might or might not be justified, depending on the business size, the philosophy of operation and other factors. Other investments, relating to improving client relations might prove immensely more profitable. 2. 4 BANKS Shipping banks risk huge losses in times of market downturns. These risks are balanced by comparable profit expectations during normal states of the market or during booms. Overall, the operation of a maritime bank reflects to a great extent the high-risk environment of shipping. The major decision faced by the banks' shipping branches is to screen bad loans and, naturally, attract shipowners with good prospects. Intangible factors play an important role in these decisions, much more so than in other areas of banking. Loan securities are of significance here since the main form of collateral (the ship) will probably have sunk to a small fraction of its value in case the debtor is in financial difficulty in a market downturn. The unpredictability of shipping makes formal feasibility studies of particular loan proposals extremely unreliable, much more than in other economic activities. Therefore the objective assessment of the shipowner's managerial potential (proven or manifest) and integrity are of prime importance. The amount to be lent is of particular importance in most banking deals. Usually owners seek a large amount of leverage, saving their own money for the hard times. A lender is of course not eager to do this and thus increase the risk of the undertaking. However, pressure from owners is such that competition among banks leads sometimes to overfinancing, with the expected catastrophic effects during market downturns. Loan management and auditing is a crucial aspect of everyday banking practice. Banks must guard against bad loans by keeping a close eye on their debtors' operation and intervene if possible at the first signs of difficulty. If the difficulties persist a bank might even consider selling the high risk loan (a rather difficult proposition) or even precede to more drastic measures. Timing is all-important, since being forced into financial difficulties when they still have a chance to recover should not lose good clients