Here’s how the super rich get multi-million-dollar loans — they borrow against their Picassos or Patek Philippe watches

• Sotheby’s has doubled head count for its finance arm since September 2020 to beef up its lending.
• The auction house lends as much as $150 million on nearly any type of object it sells.
• Sotheby’s lending head, a JPMorgan veteran, explains how it competes with private banks.

Loans against art are a popular offering at banks catering to the elite. For wealthy people in need of cash who don’t want to sell stock or property, which can incur taxes, leveraging their art collections is a solution.

It’s a growing market, estimated to reach up to $31.3 billion this year, according to Deloitte, up from $24 billion to $28.2 billion in 2021.

Private banks account for the lion’s share of these loans, but the 277-year-old auction house Sotheby’s wants a bigger piece of the action. Sotheby’s campaign to strengthen its financial-services arm began in September 2020, when the former hedge-fund manager Alex Klabin took a minority stake in Sotheby’s and became the executive chair of its finance unit.