Upmarket pawnbrokers boom as asset-rich struggle to raise cash The window of Suttons & Robertsons on Fleet Street is stuffed with Rolex watches, pearl necklaces and, in the middle of it all, a £37,500 diamond ring. Nestled in the centre of the City, a short walk from the London offices of JPMorgan and Goldman Sachs, the store is in an ideal location for a jewellery shop. But Suttons & Robertsons is a pawnbroker. "Pawnbroking has changed from the old boy in his shop in the East End," says Phil Diaper, who runs Suttons & Robertsons, which can lend customers up to £1m. There was a stigma. When you thought of pawnbrokers, you thought of Hogarth and Dickens. I don't think there's a stigma now. High-end pawnbroking is booming. From a near standing start in 2009, upmarket pawnbrokers now account for £100m of the UK's £1bn pawnbroking market, according to the National Pawnbrokers Association. Even those who can afford a helicopter or a Hermès handbag do not always have enough ready cash, according to James Constantinou, who founded Surrey-based Prestige Pawnbrokers in 2009. Since then, Prestige has pawned everything from a whale's tooth - which was worth £20,000 - to some disarmed MiG fighter jets, as the cash-strapped but asset-rich turn to alternative finance after struggling to receive decent terms from banks. Prestige's customers are often independent business men and women who are paid via dividends, making banks unwilling to lend to them. "You try and find a lender who will lend with no payslips," says Mr Constantinou. Interest rates are individually calculated. Prestige lent one customer £100,000 - with a wine collection used as collateral - with an interest rate of 2.9 per cent for a month. Although Prestige Pawnbrokers can lend seven figures, the average loan is between £3,000 and £4,000. But while the top end of the business is performing well, down-market pawnbrokers are struggling. The pawnbroking industry has polarised as the fall in gold prices hit the lower end of the market harder than the top end, where customers have a broader range of items to pawn - whether a watch or fine art. The price of gold doubled between 2008 and 2012, but its recent decline means that the price of gold is only a third above the level of 2008. Over the same period, the price of a Rolex has increased 72 per cent - and stayed there, according to Miltons Jewellers, the Merseyside jeweller and pawnbroker, which specialises in Rolex watches. Those who had surplus jewellery on their hands - often literally - rushed to sell it as the gold price rocketed, leaving them with less collateral to pawn in future. The gold supply from scrap rose from 10.7 tonnes in 2006 to 76 tonnes in 2011, according to the Birmingham Assay Office. This fell away to 69 tonnes in 2012. Increased competition has heaped more pressure on the lower end of the industry. The number of pawnbrokers has ballooned from 650 in 2007 to 2,250 today. On Walworth Road - an often clogged artery through the heart of Southwark, one of London's poorest boroughs - half-a-dozen pawnshops compete within 200m. Scattered among them, various payday lenders have also set up shop. A bored-looking eastern European woman handing out fliers promising an interest-free £200 loan for two weeks. This scene is typical across the UK, says John Nichols, who heads the UK's largest pawnbroker, H&T. "We've been in business since 1897," he says. Usually there was just one competitor, now you'll have eight or nine. At the same time, payday loan companies have also expanded as the consumer credit market becomes increasingly crowded. "Twenty years ago, the customer needed us more than we needed them - now it's the other way round," says Richard Fuller, a director at Cash Shop, which operates in Nottingham. This combination of falling gold prices and increasing competition has left Albemarle & Bond - the UK's second largest pawnbroker - on the brink of collapse. Albemarle & Bond is still trying to find £35m in cash to avoid breaching its banking covenants. The pawnbroker expanded rapidly as its profits swelled because of the rising gold price. Its head declared in 2011 that 2012 would be the "the age of the pawnbroker." Two years later, its share price has slumped 80 per cent and corporate vultures are circling. Albemarle & Bond "was a very fine company," says Josh Fish, former chairman of Fish Brothers, a family-owned chain of pawnbrokers based in London. Then it became public and other influences came to bear. It was a boom - and like all booms it comes to an end.