In hock
BANCO DI SICILIA, part of Capitalia, a large Italian banking group, is spring-cleaning its vaults. Items against which the Sicilian bank has lent money, including watches, jewellery and silverware, are due to be auctioned between May 28th and June 3rd. Among the items on the block are a white-gold and diamond bracelet, for which the bidding is expected to start at 8,000 ($10,200), and a gold Rolex watch, for which the auctioneer will ask at least 7,000.
About 200 people call at the bank's pawnbroking branch in Palermo each day. They can expect to raise just over half of the market value of their goods. Most of those who borrow are needy and we usually lend the maximum permitted by law, says Gioacchino Chiavetta, head of Banco di Sicilia's pawn business. The bank holds regular sales of unredeemed items, besides next week's special spring auction. Proceeds in excess of the bank's loan, less 5%, go to the borrower.
In Sicily pawn lending began in the early 16th century with two banks, one dealing with precious items like jewellery and silverware and the other with ordinary objects like farm implements. Banco di Sicilia entered the business only in the late 1990s when it absorbed Sicilcassa, the island's savings bank, and its ten pawn branches.
On the mainland the business is even older: the first pawn lender was founded in 1452 by Franciscan monks in Perugia to combat usury. The Monte dei Paschi di Siena, which claims to be the world's oldest bank, began in the pawn business and is still in it. Banca Regionale Europea, a northern bank, has nine pawn branches, having absorbed the Banca del Monte, an institution founded in 1496 that was Milan's oldest bank, and Pavia's pawn bank, established in 1493.
Sanpaolo-IMI, a large group based in Turin, has five pawn businesses and holds auctions every two days. It has about 45m-worth of pawn loans on its books, but trade is declining. But Capitalia's own pawn business in Rome, which has weekly auctions, grew by almost 10% last year. The bank says some customers use it as a frequent source of credit. Banco di Sicilia's business also expanded a sign, perhaps, of Italy's yawning north-south economic gap. The needs once met by 15th-century monks endure: it is said that some pawn their goods in order to pay loan sharks.
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