Sunday, August 18, 2019
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I like reading about things you never thought about.
In this case, it is an Economist article on how owners of multi-million dollar works of art use them to secure loans. Many art owners are not liquid, and it's not easy to buy and sell art quickly. But loans can be arranged quickly.
It turns out this is big business, handled by both traditional banks (like Bank of America) and specialized, boutique lenders (such as Athena).
According to the article, while banks might loan $1 million for every $5 million the painting is worth, Athena will load closer to $1 million per $2 million in value.
Art-secured loans are less risky than you might think because they only loan against works of well-known artists (like Picasso), who have longevity in the art market.
The article concludes that 90% of art lending happens in the U.S., and Europe will probably be the best prospect for loan growth.
© 2019 Praveen Puri
Praveen Puri is the Strategic Simplicity® expert who has delivered over $400 million in value. He helps clients "weaponize" simplicity and bridge the gap between strategy and execution. Visit PuriConsulting.com