Saturday, July 13, 2024

Why banking and art are intrinsically linked | N’Gunu Tiny explains

N’Gunu Tiny is CEO and Chairman of Emerald Group, an international investment company that stands apart from the rest. 

Art and banking go hand in hand in a way that many people are unaware of. In 2021, pretty much every major bank is snapping up contemporary art at auctions. 

Contemporary art is changing hands at ever-higher prices, with 2021 proving a record-breaking year. For example, Jean-Michel Basquiat’s is the most successful artist in the world’s secondary market right now. Sales of his work at global auctions in the first half of 2021 generated just over £194 million. Basquiat (who died in 1988) is responsible for five of the six best contemporary art sales this year. 

Art and banking – what’s the link? 

Contemporary art is, in short, a major investment category not only for HNWI but for financial institutions around the world. This year has also witnessed the explosion in NFTs, which are challenging the traditional art market in terms of value. 

The second-best contemporary art sale this year was from a previously unknown artist called Beeple. Responsible for the first-ever NFT to go to public auction, which is called ‘Everydays: The first 5,000 Days, Beeple’s work went for $69.3 million.

While buyers of NFTs tend to be entrepreneurs and tech experts right now, it’s likely that traditional banking will also begin to move in this direction. For now, I want to talk about the historical link between financial institutions and art. 

How involved is the world of banking?

According to Guido Guerzoni, who is a professor of Cultural Management at Milan’s Bocconi University, at least 20% of art sales are to financial services firms. Banks even have curators employed in-house to monitor the contemporary art market, scout for new and rising talent and organise exhibitions. 

Of course, the link between banking and art collecting goes back for centuries. Private banks have been financing the arts for centuries, ever since the Medici backed the likes of Botticelli and da Vinci. And today, private banks still own some of the best art collections in the world. 

Rockefeller and the start of the JP Morgan collection 

The modern connection between art and finance can be traced to the 1950s. David Rockefeller is famous for making a huge number of key art acquisitions while heading Chase Manhattan Bank. He established a collection for the bank, which set the standard for other financial and corporate art collections. 

Today, JP Morgan fulfils Rockefeller’s vision of ‘art at work’ and displays more than 450 collections worldwide. Rockefeller is also known for commissioning key works from emerging artists. For example, the Chase Manhattan Bank Mural was created by Sam Francis in 1959 when he was a mostly unknown artist. 

So, while major investors and financial experts have long been interested in collecting art, how it is used has changed. 

The main link between financial leadership and art used to lie in the personal collections of the buyer. Today, it’s much more about a strategic marketing strategy within the art sector. It helps financial institutions infiltrate the cultural markets worldwide and show that they are involved with the zeitgeist in a meaningful way. 

This makes much more sense when we consider that a significant number of HNWI and UHNWI are interested in art investment and collecting. Banks and financial firms, therefore, see this as an opportunity. 

Repositioning their services – the BSI Art collection 

Over the last couple of decades, global banks have repositioned themselves in the minds of clients by collecting art, sponsoring exhibitions, artists and galleries, and owning spectacular collections themselves. For example, the Swiss Banca Della Svizzera Italiana (BSI) deliberately changed tack in 2000 to create an art collection. 

By engaging recognised artists, such as French concept artist Daniel Buren, to create brand new works of art such as installations and paintings adorning the walls of its head office in Lugano, it became a bank and gallery space. 

BSI was founded in 1873 and is one of the biggest financial institutions in Switzerland. Since it began curating its own contemporary art collection, it has amassed important works of art from Alberto Garutti, John Armleder, Alighirto Boetti and Tony Cragg, among others. 

While some works are incorporated into the office space, others are loaned out to international museums and exhibitions, all sponsored and supported by BSI. According to the Head of Management, Francesca Martinoli, the collection has more than 1600 works of art. 

Creating a dialogue between the bank and its clients – the UBS collection 

Investment bankers UBS currently has a 30,000 strong art collection, with most of the artworks placed in its global offices. According to the worldwide head of the UBS Art collection, Mary Rozell, this forms a dialogue for employees and clients and encourages innovative thought. 

She says in an interview with “The USB Art collection reflects the many paths our business has taken as we have grown to become one of the world’s largest institutions.”

Many UBS clients are also art collectors, which is a familiar story with major financial institutions. This obviously drives a shared passion for art that works for both parties. 

One of the biggest players in the art market – Deutsche Bank  

Deutsche Bank also has a major art collection, which focuses largely on contemporary photography and drawings. And according to Britta Faerber, chief curator of the collection, Deutsche sees parallels between itself and contemporary art. She says that: “… contemporary art often anticipates developments before they are acknowledged by mainstream society – you can call it a think tank for the future.”

Since 2016, Deutsche has combined all of its interests in art, sports and culture in a dedicated division. The division aims to leverage Deutsche Bank’s resources and expertise to strengthen relationships with its clients. 

And for those looking to invest in art, many banks now include art advisory experts as part and parcel of their wealth management services. It’s very much sending a message to clients that the bank in question is on the same page, that they are familiar with art collecting and working with HNWI. 

Sponsorship and investment – how far the link goes 

It’s not just about the banks’ in-house art collections. Their cultural reputation is very much boosted by the sponsorship of major art fairs. In the past, Deutsche Bank and UBS have sponsored art fairs, such as Art Frieze and Art Basel. Both banks also regularly feature in the ArtReview magazine’s list of the 50 most powerful figures in art. 

There is also the added advantage for the investor of knowing that their money is in safe hands. Contemporary and classic art collecting can be risky investments, and with a world of forgeries and fraud out there, it can feel safer to entrust their investment through a bank’s art division. 

Claire James
Claire James
Claire is an accounts manager at Fire Digital UK, an online publishing and content marketing company based in the North West.

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