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A €38m lesson with my latte

Yesterday, I stopped for a coffee in the lobby of one of Amsterdam’s more upmarket hotels. I settled into a stylish yet surprisingly comfortable armchair next to a wrought iron room divider, and cracked open Fay Weldon’s The Life and Loves of a She Devil. Before I knew it, though, I had stopped reading, and instead tuned in to the intriguing conversation on the other side of the divider.

At a coffee table was a man with a shaved head, who looked of a similar age to me, wearing a white shirt, and a somewhat over-tight unfastened blue suit jacket, pale blue denim jeans, and black suede shoes. Opposite him, with their backs to me, were a man and a woman, each in smartly conservative suits, with leather folios of notes and papers before them. All three were served cappuccinos.

My ears pricked up when the conversation revealed that the man in jeans was confirming and signing the paperwork for a €38m personal loan: that’s not a conversation one hears every day, and not one that I would have expected to hear in such a public place. It turned out that the loan was to fund the purchase of a luxury boat from the man’s father, at below market value as it was partly being offered as a gift. The man intended to use the boat for general recreation, but also had designs on renting it out commercially for cruises, as acquaintances with similar boats were reputedly wont to do.

I know very little about luxury boats. I’ve seen articles in newspapers and magazines about million-pound super-yachts, but I can’t even conceive of what sort of vessel €38m buys you – let alone the full amount including the ‘gift’. I’d believe you if you told me this was a conversation about a four-bedroom yacht that one might sail into a small harbour, and I’d also believe you if you told me this was a conversation about a mini cruise ship with tens of rooms that would require dedicated port facilities. I’ve really no idea. And I’ve also no idea on what sort of terms a €38m personal loan would typically be offered: it’s never a conversation that’s crossed my mind, let alone one that I’m ever likely to take part in (especially if I spend all my money on expensive coffees in posh hotels). And so I was intrigued. Fay Weldon was not going to receive much attention as I sipped this particular latte.

As the conversation progressed, the man in jeans explained that he was confident in the arrangement because he was near certain that his pay cheques would cover the loan repayments whether or not he got round to renting the boat out (goodness only knows what his job was), and if he should fall on hard times, he could sell the boat and easily pay off the loan given that it was for less than the market value. So to this nosey parker, listening through the divider, the deal seemed as sensible as a loan to spend €38m on a boat ever could.

Yet just as he was on the verge of signing the paperwork, the man asked a question which confounded me: “Given that there are no arrangement fees, why are you charging me such as low interest rate?”

The man went onto explain that he was concerned that he had misread the wisdom of the deal. The loan provider had sent two members of staff to meet him in Amsterdam from their offices elsewhere in Europe, at presumably high cost to their firm. The amount of money being borrowed was substantial. The low interest rate meant that the profit they would make on the deal would be small in comparison with the outlay. Why, the man wanted to know, weren’t they pushing for more? Were they expecting that he would default on the loan, and that they would recoup a greater financial prize from the fallout? Were his assumptions about the safety of the deal wrong? What did they know that he didn’t?

This question confounded me because it’s not common to hear someone clarify the reasons for suspected undercharging. I’m not sure I would have done so—not that I’m ever likely to borrow €38m—because I think I would have been concerned that the lenders would raise their price to meet my expectations.

Yet on my way to Amsterdam, I’d just finished reading Thanks for the Feedback by Douglas Stone and Sheila Heen. This book makes the case that receiving feedback is an interactive process, and we should always seek to understand the point of view of the person giving the feedback. The interest rate on this loan is clearly a type of feedback from the lender.

By discussing the rate with the lenders, the man in jeans could either avoid a huge and costly financial miscalculation on his part, or could set his mind at rest. If the lenders had jacked up the rate in response to his question, he could always have taken his business elsewhere—and, of course, the lenders were unlikely to do so for exactly that reason.

The decision by the man in jeans to have this conversation could have only positive effects: and yet, it is a conversation that I would naturally have shied away from. I suppose, given that he was taking out a €38m loan, the man was probably more used to large scale financial transactions than me. It wouldn’t be an absurd supposition that his day job may be in the financial sector. Perhaps that is why he had he confidence that I would have lacked to initiate this conversation.

But that’s a very easy get-out for myself. What other conversations do I shy away from for illegitimate reasons? Do I avoid asking things that could help prevent me from making unwise decisions because I lack the confidence to ask them? There’s some food for thought and reflection.

And the answer to the man’s question? Simple, really, according to the lenders. Pricing for loans is risk-based. The loan is secured on the boat which is worth more than the total value of the loan regardless. The terms of the loan state that appropriate insurance must be in place. Even if the man fails to make his repayments, the risk of the lenders not receiving their capital back is very low: such low risk investments for such large amount of money are rare. And besides, even at a low interest rate, the lenders stand to make hundreds of thousands of Euros in pure profit, because a small percentage of a very big number is still a big number.

Before long, the paperwork was duly signed and all three were on their way. The meeting lasted twenty, maybe thirty minutes. If I were one of the lenders, travelling internationally for such a short meting would feel like a waste of time, even though I’d just brought in a huge amount of profit for my firm. But as someone travelling solely for pleasure, I think this was possibly one of the most thought-provoking and educational coffees I’ve sipped in a very long time.


Most of the pictures in this post are not my own, though I did post a nice picture I took at the Rijksmuseum in ‘real time’. In this post, the first picture (Amsterdam) is by Boudewijn “Bo” Boer; the second (a ship’s wheel) is by Maximilian Weisbecker; the third (Amsterdam again) is by Javier M; and the fourth is my own picture of a boat’s wake, co-incidentally taken from the back of the DFDS ferry to Amsterdam (though not on this trip). All are used with grateful thanks, and under the terms of their Creative Commons licences.

This 2,467th post was filed under: Miscellaneous, Posts delayed by 12 months, Travel, , , , .

Cruise ships and me

Last week, I read this remarkable story about a new cruise ship by Oli Franklin-Wallis in Wired, and have been thinking about it ever since:

Symphony of the Seas – which, on its maiden voyage from Barcelona in March 2018 became the largest passenger ship ever built – is about five times the size of the Titanic. At 362 metres long, you could balance it on its stern and its bow would tower over all but two of Europe’s tallest skyscrapers. Owned and operated by Miami-based cruise line Royal Caribbean, it can carry nearly 9,000 people and contains more than 40 restaurants and bars; 23 pools, jacuzzis and water slides; two West End-sized theatres; an ice rink; a surf simulator; two climbing walls; a zip line; a fairground carousel; a mini-golf course; a ten-storey fun slide; laser tag; a spa; a gym; a casino; plus dozens more shopping and entertainment opportunities.

Cruise ships mean two things to me.

Earlier this year, I went on a ‘mini-cruise’ from Newcastle to Amsterdam aboard a DFDS ship. The journey was an overnight 15 hour or so thing, so certainly not equivalent in any way to spending weeks at sea on the world’s biggest cruise ship. The rationale for this was that I fancied a last-minute break and couldn’t find a cheap flight from Newcastle, so went on a cheap boat instead, spent a day in Amsterdam, and took a cheap flight from there. This worked remarkably well, and I’d do it again.

This was the first time I’d been on an overnight boat since our annual family camping trips to France when I was a child. Prior to going, I’d sort of thought in the back of my mind that I might be the sort of person who might one day enjoy a proper cruise. This experience put me off.

The ship was lovely, and I was particularly impressed by the cabin. I had expected a pokey bunk-bedded hovel but was actually rewarded with a fairly large space which looked not unlike a Travelodge room, with an en-suite bathroom. The food on board was also much higher quality than I would have expected. But I am somebody who likes to wander—and even with only 15 hours on the ship, I was itching to get off and explore. Exploring the ship felt a bit constrained.

It was silly of me not to realise this in the first place. Wendy and I ruled out going to an idyllic holiday resort last summer for the sole reason that it was located on a main road along which walking was not advised, so we couldn’t ‘go for a wander’ without catching a bus or taxi somewhere first. I hadn’t really clocked that ‘going for a wander’ wasn’t really a go-er on a ship.

While the Symphony of the Seas is ridiculously bigger than the ship I was on (it’s more than twice as long and can take four times as many passengers across twice as many decks), I still think I’d feel ‘cooped up’ pretty quickly. So I don’t think I’ll be going cruising anytime soon.

My other relationship with ships is professional. One of the more esoteric parts of my role as a Consultant in Health Protection is that I am the designated Medical Officer for a number of ports. This gives me certain legal responsibilities relating to ships and the health of their crew—most of which are thankfully delegated to people much more expert than me. But just imagine how complex an outbreak of norovirus or Legionnaire’s disease could get on a ship as huge as Symphony of the Seas. I was fascinated to read in Oli’s article about some of the steps taken to mitigate the risks:

“The level of hygiene is extreme,” Yrjovuori announced, as we passed a hand-washing station. Though ship-wide outbreaks of sickness make the news at least once a year, the total number of passengers who fall ill is a fraction of one per cent. But close quarters enable outbreaks, so sanitation regulations at sea are stringent. Every part of the ship, from lift buttons to the casino’s chips, are sanitised daily; interior materials have to stand up to the high level of chlorination from the constant cleaning. Rubbish is frozen in vast storage containers to slow bacteria growth and is only removed in port.

Fascinating stuff… perhaps we could even try and replicate some of it on land!


The pictures in this post are my own from the above-described ‘mini-cruise’ adventure. The pictures in the Wired article are a great advert for the power of print, looking far more arresting as double-page spreads than as on-screen images.

This 2,430th post was filed under: Health, Posts delayed by 12 months, Travel, , , , , , , , .


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