From Barron's Penta:
How Art Lovers Squeeze Money From Their Collections
Nearly two years ago at Sotheby’s, auctioneer Helena Newman brought the hammer down when Amedeo Modigliani’s Nu couché (sur le côté gauche), 1917, inched up to US$139 million from a US$125 million opening, after barely a stir of activity in the New York salesroom.
The US$157.2 million total achieved, with fees, meant Modigliani’s painting was the most expensive ever sold at Sotheby’s at the time. The work appeared to have been more or less presold before the auction to a collector who had guaranteed he or she would buy it for an unspecified minimum price.
The buyer of the Italian Modernist’s famous nude remains anonymous, yet there’s a good chance he or she tapped a credit line backed by their own art collection to have the flexibility to fork over so much cash at the drop of a hammer. This isn’t unusual—in the past decade, the business of extending credit backed by art has boomed to an estimated US$21 billion to US$24 billion, according to the 2019 Deloitte Art & Finance Report.....MUCH MORE
Art lending allows collectors to tap value that’s otherwise “locked up in paintings, sculptures, drawings, photo-graphy, whatever it may be,” says Suzanne Gyorgy, global head, art advisory and finance, at Citi Private Bank’s more than 40-year-old art-advisory and art-finance practice. Banks are comfortable writing these loans because “art has been a very stable form of collateral,” Gyorgy says, even during the 2008 financial crisis.
At that time “some clients considered their art an investment, but not many,” says Evan Beard, national art services executive at Bank of America Private Bank, which began ramping up its art-finance practice only in the past decade, fleshing out a suite of services that includes art lending, art planning, and consignment services.
Today, the private bank has billions of loans outstanding....
