Stay on Course with Ciris Capital
The HISWA Amsterdam Seaport Boat Show is behind us and we can say with confidence that this exceptionally wet exhibition was more nautical than ever! The Ciris Capital team were very pleased with the countless conversations we had with watersports fans and the many business relations who dropped by our stand. The contrast with sunny Cannes just a few days after could not have been greater in terms of weather, but here too we met many interested parties.
All this bodes well for the months ahead. Our busy schedule includes new-build plans, projects well underway with the launch due soon, refinancing from clients who had owned their yacht for a while without taking out a loan at the time of purchase, and much more besides.
Wherever we go currently, one of the main topics of conversation is the credit crunch. How did it come this far? What influence will the crisis have on the yacht market in general and the yacht financing market in particular?
Around ten months ago, business seemed to be as usual. We would have an assessment meeting with the client, make a thorough analysis of the project, draw up the application for the selected bank and submit this to the credit committee. After answering any follow-up questions from the bank, the job was usually complete within one or two weeks, depending on the size of the application.
Slowly but surely, a change in direction from the banks became apparent. Some banks withdrew from the market - these were parties at the top of the market that had not been active in this segment for long - while others saw room for becoming more active. General conditions with regards to loan to value and maximum term remained largely the same.
Things then started moving rather quickly as the credit crunch increasingly made the headlines. Will the banks end up writing off 250, 400, 1000 or even 2000 billion? The increasing cost of lending has caused interest rates and surcharges to rise, although this varies greatly per supplier. The most important change, however, has been the time required for applications. What used to be processed and approved within a few days now takes considerably longer.
The main reason for this is that banks analyse the received information more thoroughly and then have it checked by other institutions. Until recently the primary assessment during the application procedure was security. Now the emphasis has switched to two main areas: The ability to meet payments and legal matters. In other words: Is the source of income sufficient and stable enough to be able to meet the financial obligations? What risks are contained in the application? How can we counter them and limit the risks faced by the bank?
Financial institutions want much more detailed information than before. This information is studied more extensively by a larger team - from two to four to six eyes - which results in an application taking considerably longer. This is actually a good thing, especially considering what is happening in the US at the moment. Many of us can now seriously consider a dream home with a swimming pool in Ft. Lauderdale. While a quick internet search provides plenty of choice, there is currently.
This change in approach to credit loans by the banks has resulted in a major increase in applications at Ciris Capital. This is a logical consequence of the banks' new policy. Communicating with banks, understanding and answering the many questions, and meeting their requirements, becomes a more specialist task every day and one which Ciris Capital provides. After all, if yacht financing is becoming increasingly challenging for us as a yacht finance specialist, imagine how it must be for someone who is not involved with these issues on a daily basis.
Ciris Capital is registered with the AFM (Authority Financial Markets), is fully licensed in accordance with the Act on Financial Supervision (WFT) and has a Dutch Financial Services certificate.
The buying and selling of yachts continues as always.
We advise potential buyers or yacht owners who wish to (re) finance their yacht to start the application process well in advance so as to allow sufficient time to have the application drawn up, approved and finally documented and paid. We are here to provide this service. It saves yacht owners a lot of time, need not increase the costs of a loan and may well result in you enjoying lower rates!
In view of the current circumstances, Ciris Capital is currently also hosting workshops for various groups in the yacht industry. Over a day-long course, you will gain an overview of the varying issues involved in the field of yacht finance.
