A former Texas billionaire has had his 217ft superyacht seized by Goldman Sachs. William Kallop, who owned the 217ft Natita, used the boat as collateral for a US$32m loan from Goldman Sachs’ private bank in 2014. Kallop, who had purchased seven yachts, eight residences and three jets in a short time, ran out of money, according to a report in the Wall Street Journal.
Kallop attempted to sell assets, including Natita, but failed. He stopped repaying the loan in November 2016. Goldman filed suit and was awarded the boat by a US district court in Miami. Last month, US Marshalls impounded Natita in a Palm Beach marina.
Kallop’s case demonstrates a new form of lending through private banks in firms like Goldman Sachs. The banks are allowing wealthy clients to use property and yachts as collateral for large loans. Some loans are secured by classic cars, hedge-fund stakes, and even rare violins. These wealth loans are profitable for banks because they generate more revenue than a traditional loan through a broker.
Goldman's private bank has quadrupled its overall lending balances since 2012 to US$29bn. Morgan Stanley’s wealth-loan balances are up 420% since 2012 to US$72bn, according to FoxNews.com. "If you do it right, it's a great business and clients will absolutely love you for it," Bruce Holley, a partner at the Boston Consulting Group who advises private banks on wealth-management strategy, told the website. "But there are a lot of ways to mess up."
Whether Kallop’s case will be a one-off transaction or the start of a string of repossessions of superyachts remains to be seen. Kallop fired the crew of Natita in 2016 and put the boat up for sale for US$67m. It did not attract any buyers for two years. Goldman currently has it listed for US$39.9m with Worth Avenue Yachts. The loan due is for about US$28m. After obtaining the yacht, Goldman’s first act was to fill it with US$67,000 worth of fuel to keep the generators running.