Business Case Studies & Business Publications

Christie's: The Art of Lending

Allayannis, George...

Case

Christie's: The Art of Lending

Allayannis, George (Yiorgos); Sesia, Aldo

F-2065 | Published January 22, 2024 | 21 pages Case

Collection: Darden School of Business

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This case study focuses on the emergence of art finance, a way to provide liquidity to art collectors by structuring loans using works of art as collateral. Sayuri Ganepola, global managing director of Art Finance at Christie’s, provides a view of art lending from Christie’s perspective and describes Christie’s competitive advantages in this new line of business. Ganepola has to decide whether to lend against a portfolio of art and what risks such a loan could entail, given her overall portfolio of art loans. Students receive information on the collateral and are asked to provide recommendations. The field-based case provides background on the history of Christie’s, its businesses, and its art lending operations. The case also discusses the art market and its historical returns on investment. Students have the opportunity to consider art as collateral for a loan and to discuss the challenges of risk management in art lending. At the Darden School of Business, this case is taught in “Financial Institutions and Markets,” a second-year MBA elective. It is ideally suited for a course on financial institutions, money and banking, and risk management.

The key objectives of the case are (1) to discuss the art market and the art lending market; (2) to examine the role of auction houses, and Christie’s in particular, in the art market; (3) to assess factors impacting art valuation; (4) to consider art as an investment; (5) to discuss risk management in art lending; and (6) to examine whether Christie’s should issue a loan backed by specific artwork as collateral and, if so, what the terms should be, taking into account the rest of the art loan portfolio.