Developments in the World of Art-Backed Loans

August 28, 2012 – More brokers let clients borrow against their Bruegels

REUTERS – Mainstream U.S. brokerages are now increasingly offering high-net-worth clients non-recourse loans up to approximately $150 million collateralized by fine art and important collectibles as a response to investors’ desire to create liquidity without paying capital gains taxes or commissions from the sale of their art possessions. Historically, art-backed loans were offered only from a handful of specialty banks and private banking units.

[ARIS Commentary: Most brokers have until recently steered clear of art lending because of the fact that they lack expertise required to assess properly the complex issue of confirming borrowers’ legal ownership of the offered art or collectible as well as the volatility and macro market conditions of the global art market. Lenders’ standard use of art title insurance as a risk management best practices tool has given banks comfort and confidence to offer new financial products in the alternative art asset sector.]  Access Full Text