Colin Gleadell takes the New York Times story about art loans a little further by giving us some figures. Combining his numbers for Art Capital Group and Sotheby’s Financial Services, Gleadell gives us almost $300 million being loaned against art this year. The story doesn’t clarify whether the lenders are talking about loans outstanding or loans made that year. Either way, although Sotheby’s and ACG are fairly big players in the business, they cannot represent more than a plurality of the business given that other financial institutions like investment banks and hedge funds got into this business in recent years.
Gleadell starts with the size of Ian Pecks loan book:
Last year he loaned out $80 million on art, and this year anticipates that the figure will be closer to $120 million. [ . . . ] While Peck, and a select group of banks (Citibank, or the Bank of America’s US Trust, for example) tend to make loans described as “term loans”, which free up cash for clients without any commitment to sell, the major auction rooms prefer to lend by making advances on art that they will subsequently sell.
Sotheby’s Financial Services is probably the biggest player in the art loan market. In 2004 it lent $92.3 million on art, a figure which rose to $208 million in 2006, but has since stabilised at about $176.5 million a year. Managing director Jan Prasens points to the essential conundrum. “People need liquidity, but the traditional sources of capital are drying up. There has definitely been an increase in demand. We are lending, but we are extremely selective. Our capital is precious.”
Any guesses on how much money is currently loaned out against art collateral? $1 Billion? More?
Does Art Make Good Collateral? (Telegraph)
