We are talking about Art Lending, an already widespread niche in the American and British banking markets, that is slowly now also making its way in the Italian market.
Essentially, it is a form of financial loan where the work of art is used by its owner as collateral to obtain a line of credit from the bank.
The Italian legal system does not directly regulate Art lending, and so therefore, laws relating to the legal concepts of loan and lien are applied.
Before completing the loan, the bank or other financial company will have to carry out a series of verifications about the authenticity and the provenance of the artwork, the seller's proof of title to have the right to sell and the prior history of ownership of the piece.
Moreover, the financial institutions have to engage professional experts to produce a condition report, which documents the conservation state of the artwork at the point when the loan has been authorised.
Usually the loan has a 12-24 month duration and it is permitted for up to 50% of the value of the artwork.
In the current uncertain economic and political scenario, whilst Art lending is still limited in the Italian market, it represents a resource and a legitimate form of borrowing for the collector to transform an illiquid asset in a liquid one.
Moreover, especially in a country as rich in art as Italy, this mechanism may represent an increasingly attractive funding opportunity in the future.