Simply about the difficult: Art Banking
ARTinvestment.RU   07 июля 2020

We analyse what is behind the term "art-банкинг" how it arose and what is this business

During the quarantine art-рынок filled with new potential players — buyers making their first purchase of art, and private companies discerned in an appeal to the world a great competitive advantage in the struggle for their client in the crisis period. Since the fall of young collectors, according to forecasts, will begin to look at the market of services of a full-fledged formation and management of collections, and banks and other financial institutions will receive a lot of suggestions about the organization of the departments of art-банкинга from galleries and private art-консультантов. To clarify, what is art-банкинг in the conventional international understanding, and to help young collectors and banks to meet the other ten theses material "Just about the complex" AI will be dedicated to this direction.

1. The name of the direction "art-банкинг" indicates the Association in a mutually beneficial Union of art as an asset and the Bank as a financial institution. This is true, but not every Union of art and the Bank can call art-банкингом. For example, if a gallery offers to place on the walls of the Bank, their works and sell them to customers for a Commission, it is not art-банкинг, and the operation of the free walls of the institution as a free storage with the possibility of an accidental sale. What is art-банкинг?

2. Today, banking services are in the field of art-банкинга can be divided into three major groups:

• art-банкинг as the extension service, a Concierge-услуг the Bank for their wealthy clients (usually these clients are United by division Private Banking, and services are referred to as Wealth Management): management of private collections, tips for storage, examination and attribution of the paintings to bring the works up for auction, i.e., all that relates to increasing the capitalization of existing collections or the creation of such;

• art-банкинг as a financial instrument provided by the Bank: loans to the customer secured by works of art (or portfolio of works);

• art-банкинг as the creation of the Bank's own art collection and work with collection (capitalization and socialization of the collection, the removal of the Bank to a new level of relations with the cultural sector, which improves customer loyalty and strengthens the relationship with the Bank).

3. Two main causes of art-банкинга:

• the need to provide wealthy clients a new product or service. It is no secret that a wealthy client holds monetary assets in several banks, diversifying risks between them. Accordingly, one Bank can get a large part of the capital, another — smaller. Banks figured out that appeal to art (through the support of art-мероприятий or other philanthropic actions) makes the institution in the eyes of the client more stable and reliable — accordingly, the majority of their money a customer will trust them. The important role played by services associated with the formation and management of the collection: some of the banks provides such opportunities, then leave your customer for easy payment of the acquired operations from the account of the Bank;

• the requirement of banks to protect the Deposit using alternative types of property. With the advent of science about the pricing of art and art-инвестиций banks have more confidence in cultural values, while customers from other credit institutions that do not have such a service.

4. Wide spread art-банкинг was only in the last 40 years — simultaneously with the formation of art-рынка in the modern sense. Factors that in 1980-х years has forced banks to search for and to formulate a competitive advantage for their existing and future customers, were as follows:

• standardization of services private banking customer;

• death of customer service traditions from generation to generation;

• the rapid growth of "boutique banks" and "family offices" (small private companies managing assets of a limited number of customers or individual families);

• social and financial problems of private banks associated with the failed strategies of asset management and significant losses of own and client funds.

5. The main advantages of art-банкинга the eyes of today's analysts:

• for the client: if the client — are a beginner in the art, trust in the name of the Bank extends to competence in action at art-рынке, including anonymity of transactions;

• for the Bank: through a unique service, the Bank attracts new affluent clients, who later become customers of financial services of the Bank.

6. Confidence in the success of open art direction-банкинга is based on statistics, first announced in the Deloitte report Art & Finance 2013: more than 70 % of clients sector Private Banking / Wealth Management at least once in your life had the experience of owning a work of art, consciously or not. Accordingly, 2/3 of the existing customers of the Bank can be potentially interested in the services of the capitalization of their assets.

7. Important addition: art-банкинг never considered by the Bank as an independent business, only as additional services (consulting, security) or activities (own collection). While only about 10 world banks have their own departments of art-банкинга, the rest for these purposes, use the services of third parties — private art-консультантов or consulting companies on issues of art.

8. In conclusion, briefly light themselves art direction-банкинга. Within the scope of the first direction — art-консалтинга — is usually included:

• evaluation of the work, expertise and attribution;

• full capitalization meeting — from the exhibition management and cataloging to launch to the auction and support in the sale;

• monthly reports on the state of the market: fixed indicators of investment attractiveness (up to the trends in art at the moment), the deviation risks indices currencies and their correlation with respect to the international auctions (in which currency is better to buy), optimization of the tax base (the country in which it is better to buy), the best investment deals for the upcoming auctions;

• proposals to diversify the portfolio of art-инвестиций;

•organization of storage, insurance and logistics work.

All of this can be transferred in one simple phrase: from "what should I do if I already bought", to "what to buy if you have the opportunity to invest." Read more about the direction of the management of the collections you can read here.

9. The collateral instrument. In the world there are a limited number of private banks use their own balance to credit customer transactions with art objects. As a rule, even when the formal availability of such services, banks are trying to avoid their own risks in such transactions due to the resale of art-кредитов third parties — larger banks or mortgage companies. Read more about lending on the security of art objects you can read here.

10. Bank's collection. A collection in the tens of thousands of works of art (Deutsche Bank or UBS) remove the financial institution on a par with the world's leading museums. The banks try to support sponsored projects only those artists whose works are owned by the Bank, thereby continuously increasing the capitalization of assets. Other sponsorship strategy as part of the art-банкинга — the sharing of the financial burden of sponsorship with major clients of private banks: the more valuable customer for the Bank, the more money the Bank can allocate to the sponsorship programme within the framework of art-инициатив their customers. According to this scheme, Deutsche Bank and ING sponsored by TEFAF, UBS — Art Basel, etc. read More about corporate banking art collections you can read here and here.

Denys Belkevych, AI