Leslie Rankow Fine Arts

INTERNATIONAL ART ADVISORY SERVICE

Tag: art lending

The Bank of America Private Bank Art Conservation Project, with Art Lending Services VP, Dana Prussian

 

Dana Prussian Art Lending Services, Bank of America Private Bank

 

BANK OF AMERICA PRIVATE BANK OFFERS EXTENSIVE ART LENDING SERVICES. AS WELL AS COLLATERALIZING ART COLLECTIONS, THE BANK HELPS COLLECTORS TO DESIGN ESTATE PLANS THAT TAKE INTO CONSIDERATION THE VALUE OF THEIR ART COLLECTIONS, BOTH AS AN ALTERNATIVE ASSET AND AS A LEGACY. THEY ASSIST IN THE CONSIGNMENT PROCESS FOR A SALE OF A WORK OR A COLLECTION AT AUCTION. APART FROM THE ART OF THE BUSINESS OF ART, BANK OF AMERICA PRIVATE BANK HAS A TRULY IMPRESSIVE RANGE OF PHILANTHROPIC ENDEAVORS THAT SUPPORT MUSEUM EXHIBITIONS, ART PANELS AND LECTURES, ART FAIRS AND ART CONSERVATION.

ART AND CULTURE

Bank of America believes the arts matter: they help economies thrive, help individuals connect with each other and across cultures, and educate and enrich societies. We support more than 2,000 visual and performing arts organizations worldwide that provide inspirational and educational sustenance, anchor communities, create jobs, complement school curricula, and generate substantial revenue for local businesses.

Vincent van Gogh
Starry Night
MoMA Collection

BANK OF AMERICA ART CONSERVATION PROJECT

We are pleased to present the 2019 Bank of America Art Conservation Project grant recipients. In reviewing the twenty-two projects, we are reminded of the tremendous need for art conservation in cultural institutions across the globe. And we are honored and proud to help these institutions and others preserve their treasures for generations to come.

With this year’s selections, we will have provided funding for more than 170 projects in thirty-three countries, representing thousands of works across different art movements, media and time periods- and, importantly, cultures. All the works we help to conserve share one thing in common however. They reflect the creativity, ingenuity and passion of people throughout the world over hundreds, even thousands, of years.

TODAY, THE LRFA BLOG IS DELIGHTED TO WELCOME BACK DANA PRUSSIAN, VP, ART LENDING SERVICES, BANK OF AMERICA. HER BACKGROUND IN BOTH ART AND FINANCE MAKES HER THE PERFECT FIT FOR THIS PROFESSION AND HER ACADEMIC AND PROFESSIONAL STEPS WERE KEENLY FOCUSED ON THIS DREAM JOB SINCE THE BEGINNING.

DANA, WELCOME BACK TO THE LRFA BLOG!

HOW DOES BANK OF AMERICA PRIVATE BANK COMPETE IN THIS HIGHLY CHARGED MARKET WITH SOME OF THE OTHER ART SERVICE COMPANIES, EITHER AT BANKS AND INVESTMENT FIRMS OR PRIVATE SPECIALIZED COMPANIES?

Paul Cezanne
The Bather
MoMA Collection

Let’s just say I followed Bank of America’s progress veryyyy closely and jumped the minute they opened a role. 😉

WHAT ARE THE CRITERIA FOR COLLECTORS LENDING AGAINST COLLECTIONS TO UNLOCK CAPITAL?  HAS THAT CRITERIA CHANGED OVER THE YEARS TO REFLECT THE GAINS AND GLOBALIZATION OF THE ART MARKET AND IN WHAT WAYS?

Our criteria has not changed much over the years (collectors need a certain sized collection with both commercial and diverse works and a robust balance sheet), but appetite for art lending has expanded greatly. Since interest rates have been hovering around historic lows, more clients are looking to use this as a balance sheet arbitrage, unlocking capital from art to redeploy into higher-return areas of their financial lives. We have also seen more clients use art loans as working capital lines to expand privately held companies. Since the elimination of the 1031 Like-Kind Exchange in 2017, it has also become prevalent to leverage art to generate liquidity.

WHAT ARE WAYS IN WHICH AN ART COLLECTION CAN DIVERSIFY A PORTFOLIO?

We never recommend that a client start an art collection as an investment or a way to diversify his portfolio. Passion comes first. Once someone has been bitten by the collecting bug (it’s real), they should consider whether their collection fits into their estate plan and how they want to manage it over time. It’s still quite common to see rising collectors go to great lengths to prove they’re not simply investors, whether it’s by marketing themselves quietly to dealers or acquiring non-commercial works to round out their collections.

Pablo Picasso
Three Musicians
MoMA Collection

BANK OF AMERICA PRIVATE BANK SUPPORTS A GREAT MANY MUSUEM EXHIBITIONS, ART PANELS, ART EDUCATIONAL EVENTS. WHAT ARE SOME OF THE HIGHLIGHTS THAT WERE THE MOST INTERESTING OR EFFECTIVE?

Bank of America provides unbelievable support to museums and art institutions worldwide. We get to reap those benefits by helping deliver unique experiences and programming to our collectors. You probably saw that we sponsored the reopening of MoMA and the conservation of Starry Night and other iconic works. We took small groups of collectors through MoMA’s Conservation Lab while the museum was closed so they could see these works off the wall, unframed, and under a microscope. Cezanne’s The Bather, Van Gogh’s Starry Night, Picasso’s Three Musicians. I was blown away. So were our clients. In Paris BofA sponsored the Da Vinci exhibit at the Louvre and hosted a small private group. 

SOME OF THE OTHER 2019 CONSERVATION PROJECT BENEFICIARIES INCLUDE “SPRING” IN THE COLLECTION OF THE GEORGIA O’KEEFFE MUSEUM IN SANTA FE. THIS LARGE-SCALED WORK REPRESENTS A TURNING POINT IN O’KEEFFE’S LIFE AT A TIME WHEN SHE HAS THE NEWFOUND FREEDOM TO MOVE PERMANENTLY FROM NEW YORK TO SANTE FE. THE WORK INCORPORATES ALL OF THE ICONS EVOCATIVE OF NEW MEXICO: LANDSCAPE, BONE AND FLOWER.

Georgia O’Keeffe Spring, 1948

AND WERE AS FAR-RANGING AS THE RESTORATION OF THREE TAPESTRIES BY MARLENE DUMAS, “THE BENEFIT OF THE DOUBT”, IN THE CONSTITUTIONAL COURT ART COLLECTION IN JOHANNESBURG, SOUTH AFRICA. THE TRIPTYCH CONSISTS OF THREE FIBER WORKS WEIGHING APPROXIMATELY 620 POUNDS, AND A ROBUST PRESERVATION-APPROPRIATE HANGING SYSTEM WAS DESIGNED FOR PERMANENT DISPLAY.

 

Marlene Dumas
The Benefit of Doubt
Tapestry Triptych

IN OUR NEXT LRFA BLOG, DANA WILL SHARE HER ASTUTE PERCEPTION OF THE CURRENT AND FUTURE ART MARKET. TUNE IN THEN!

 

 

Dana Prussian, VP Art Services, Bank of America Private Bank: a focused career path

Dana Prussian
VP, Art Services, Bank of America Private Bank

 

ON MAY 30, 2018, WEALTH MANAGEMENT.COM FEATURED AN ARTICLE ON THE NOW ESTABLISHED INCLUSION OF ART AS AN ASSET CLASS.

AT CHRISTIE’S, THE COLLECTION OF PEGGY AND DAVID ROCKEFELLER SET A RECORD HIGH FOR THE MOST VALUABLE PRIVATE COLLECTION   SOLD AT AUCTION AT $833 MILLION.

n.b. Gathered over a lifetime and handed down from previous generations, the collection reflects the Rockefeller family’s deep, life long passion for Impressionist works of Art, American paintings, English and European furniture, Asian works of art, European ceramics and Chinese porcelain,  silver, and American decorative arts and furniture. What was a passion for collecting for pure aesthetic joy has been transformed into a philanthropic legacy. The proceeds from the Estate sale at Christie’s have gone to support selected charities in which the Rockefellers believed. 

Peggy and David Rockefeller sale
Christie’s New York

“THE VIGOROUS BUYING THIS WEEK FOR EVERYTHING FROM A MONET TO A MONEY CLIP … SURPRISED MANY ART EXPERTS,” ACCORDING TO A NEW YORK TIMES REPORT ON THE AUCTION.

INDEED, A CONVERGENCE OF FACTORS IN RECENT YEARS HAS GENERATED HIGHER INTEREST IN ART AS AN ASSET THAT HAS THE POTENTIAL TO APPRECIATE: INTEREST RATES AT HISTORIC LOWS, STOCK MARKET VOLATILITY, TECHNOLOGY CREATING INCREASED TRANSPARENCY IN THE ART MARKET AND INCREASED INTEREST IN ART GLOBALLY, AMONG OTHERS.

ALTHOUGH DEMAND FOR ART FLUCTUATES, WITH DIFFERENT AREAS OF THE ART MARKET EXPERIENCING VARYING LEVELS OF DEMAND, THE GROWING TREND OF VIEWING ART AS AN ASSET CLASS HAS MEANT INCREASED INTEREST AMONG WEALTH MANAGEMENT PROFESSIONALS. NEARLY 90 PERCENT OF WEALTH MANAGERS SAID THEY THINK ART AND COLLECTIBLES SHOULD BE INCLUDED IN WEALTH MANAGEMENT OFFERINGS, ACCORDING TO THE DELOITTE 2017 ART & FINANCE REPORT.

https://www.wealthmanagement.com/high-net-worth/art-asset-class

Christie’s Education

IN TODAY’S LRFA BLOG POST, WE ARE FASCINATED TO FOLLOW DANA’S ASTUTE ACADEMIC AND PROFESSIONAL JOURNEY REFLECTING BOTH HER PASSION AND HER COMMITMENT TO MASTERING THE ART OF FINANCE.  IN TODAY’S WORLD, MANY PRIVATE AND PUBLIC BANKS AND FINANCIAL INSTITUTIONS HAVE DIVISIONS SPECIALIZING IN OFFERING LOANS AND ADVISE ON COLLECTING, THE BANK OF AMERICA BEING ONE OF THE MOST OUTSTANDING. MANY UNIVERSITIES AND AUCTION HOUSES OFFER CLASSES AND DEGREES. CHRISTIE’S, FOR EXAMPLE,  OFFERS A GRADUATE DEGREE: MASTERS IN ART, LAW AND BUSINESS.

https://www.christies.edu/new-york/courses/degree/masters/art-law-business

A FEW YEARS AGO WHEN DANA WAS STILL IN SCHOOL, SHE WAS A PIONEER AND CARVED OUT HER OWN ACADEMIC PATH TO GAIN RECOGNITION AS A FINANCIAL ADVISOR TO INDIVIDUALS AND FAMILIES OF HIGH NET WORTH.

DANA, THE LRFA BLOG WARMLY WELCOMES YOU BACK.

WERE YOU COMMITTED TO THE IDEA OF COMBINING ART AND FINANCE FROM THE BEGINNING OR DID THE IDEA EVOLVE AS YOU PROGRESSED IN SCHOOL AND PROFESSIONALLY?

Yes, pretty much. That said, when I graduated, the idea of “Art as an Asset Class” was only just taking shape. It certainly was not institutionalized like it is now. I knew that I wanted to jump onto that track as soon as possible, but was not sure how long it would take.

WHAT WAS YOUR FIRST POSITION AND DID IT COMBINE YOUR TWO AREAS OF EXPERTISE?

It had nothing to do with the art world! I had just come out of a Christie’s internship when I graduated, and I knew that if I wanted to work in the Art Finance sphere, I needed the Finance component. I knew nothing about finance! Like one Columbia Econ class, nothing. So I got into a two-year rotational analyst program at Barclays, which gave me a necessary understanding of financial products.  

A SELF-MADE MAN, HENRY PHIPPS UNDERSTOOD THE CHALLENGES INVOLVED IN CREATING WEALTH. AS A FOUNDING PARTNER AND CHIEF FINANCIAL OFFICER OF CARNEGIE STEEL, HIS INNOVATIONS MATCHED HIS WORK ETHIC. HE ALSO UNDERSTOOD THE CONNECTIONS BETWEEN COMMUNICATING AND SUSTAINING VALUES, AND GROWING AND PRESERVING WEALTH FOR HIS FAMILY. PHIPPS FOUNDED BESSEMER TRUST WITH THIS CONNECTION IN MIND. HE COMMUNICATED HIS INTENTIONS AND GUIDANCE TO EACH OF HIS CHILDREN, URGING THEM TO SPEND WISELY AND WORK COLLABORATIVELY TO PRESERVE AND MAINTAIN THE FAMILY’S WEALTH AND VALUES FOR GENERATIONS TO COME.

https://www.bessemertrust.com/what-makes-us-different/key-facts

YOU WERE AT BESSEMER TRUST FOR OVER THREE YEARS. HOW DID THEY GROOM YOU FOR YOUR CURRENT POSITION?

Bessemer was the perfect intermediary step to my transitioning into Art Services. The advisors and culture are truly crème de la crème, and I was fortunate enough to be part of an incredibly motivated team. Working as a Client Advisor there taught me three invaluable skills: how to hustle and grow a book of business, what it looks like to provide exceptional client service, and how to look at a balance sheet holistically. I worked with several art collectors who were part of our book, and by the end of my time at Bessemer, I knew that I had the skill set to serve a super sophisticated group of collectors and focus solely on the art on their balance sheets. I ultimately left Bessemer because, in the time I was there, the concept of “Art as an Asset Class” took shape more formally and there was a new spot open at Bank of America Private Bank.   

WHAT ARE YOUR RESPONSIBILITIES IN THE ART SERVICES DIVISION AT BANK OF AMERICA PRIVATE BANK?

I’m one of two VPs of Art Services on the team. The two of us have divided the country in half and lead Art Lending and Consignment efforts for our markets. I focus on our NYC market in addition to Miami, Palm Beach, Dallas, Houston, DC, and Long Island. You can imagine, that’s a lot of art collectors and internal advisors to cover!

HOW DID THE PROGRAM DEVELOP? WHEN WAS IT INITIATED AND HOW HAS IT GROWN AND CHANGED SINCE ITS ONSET?

In 2015, the Private Bank (formerly US Trust) hired Deloitte to implement a strategy that would serve our clients and their art collections. The head of that consulting project came on board as our National Arts Services Executive, and he built out the program from there. In the last four years, our team has grown our Art Lending book from $2 billion to $8 billion. We’re now the largest art lenders in the country.

 

Bank of America
Art Services
Panel Discussion

WHAT IS THE SCOPE OF SERVICES THAT YOU OFFER COLLECTORS AND INSTITUTIONS?

We are obviously highly focused on art lending, but we have expanded our services beyond lines of credit. We offer the only Consignment Services platform at a private bank, so we can act as agent for a client who wishes to sell at auction. We negotiate everything from enhanced financial packages to sales and marketing strategies.

IN OUR NEXT LRFA BLOG POST, DANA PRUSSIAN WILL SHARE WITH US THE WORKING OF THE ART SERVICES DIVISION AT BANK OF AMERICA PRIVATE BANKING. THANK YOU, DANA, AND THANK ALL THE FOLLOWERS OF THE BLOG FOR YOUR CONTINUED INTEREST!

The importance of the new technology in the art market as analyzed in the Bank of America Private Bank survey

THE DIGITAL REVOLUTION HAS DRASTICALLY AFFECTED MANY INDUSTRIES, CHANGING THE WAY WE COMMUNICATE, ACQUIRE AND SELL PRODUCT. ONE OF THE INDUSTRIES THAT HAS, SURPRISINGLY, BEEN IMPACTED LESS THAN ONE WOULD THINK, GIVEN ITS BASICALLY VISUAl NATURE, IS THE ART MARKET AS SEEN IN THE RECENT PIERCINGLY INFORMATIVE AND COMPREHENSIVE BANK OF AMERICA PRIVATE BANK REPORT.

  • ART AND TECHNOLOGY
  • The art market remains one of the few industries still largely undisrupted by technology. We’re seeing innovation, but it’s still at the fringes. While online transactions are increasing, the growth of online sales has slowed, growing at 9.8% in 2018 versus 12% in 2017.
  • Internet-native art companies are trying to help. In June, private equity firm Cove Hill made an investment in online marketplace LiveAuctioneers, aiming to accelerate online sales growth for their auction house partners, while Invaluable has made it easier to source and buy lower value items. Major galleries like Gagosian and David Zwirner launched digital sales channels, but the digital revolution still eludes the art world.
  • On the transparency front, Christie’s became the first major auction house to record sales via Blockchain with the sale of the Ebsworth collection in November. At the request of the seller, Christie’s partnered with Blockchain-secured registry Artory to record its transactions. It’s an interesting development, but we’re a long way from Blockchain becoming industry standard.
  • The most significant art world technology has been the rise of Instagram. Artists market themselves, museums announce exhibits, dealers initiate sales, and collectors tout their purchases through the platform. In 2017, when the “Untitled” Basquiat sold at Sotheby’s for over $110 million, Yusaku Maezawa posted his photo on Instagram to let the world know of his acquisition. Younger collectors, artists, dealers and auction specialists are increasingly using Instagram to enhance their personal and professional brands. Expect the new status loop to fuel a herd mentality for some artists and more price volatility. So collector beware.

 

  • AS AN ASIDE, ARTISTS ARE CREATING WORKS THAT REPRODUCE EFFECTIVELY ON INSTAGRAM IN TERMS OF COLOR, DIMENSIONALITY AND SURFACE WITH THEIR AESTHETIC PRESENCE IN PERSON SOMETIMES TAKING A BACK SEAT.

 

  • ART LENDING

    Our art lending business grew by 20% year-over-year, as you all continue to unlock capital from your art to build hotels, buy sports franchises, expand companies and even buy more art, just to name a few. The four most common situations we’re seeing are:

    1. The balance sheet arbitrage: With historically low interest rates, more of you are unlocking capital from your art to redeploy into higher-return areas of your financial life, like private equity.

    2. Working capital line: During the current economic expansion, more of you are using art loans to fund the growth of your privately held companies.

    3. Monetizing a collection: The passage of the 2017 Tax Cuts and Jobs Act eliminated the 1031 Like-Kind Exchange, making it more expensive to sell art. Instead of selling art and dealing with paying the 28% federal tax + 3% health care surtax + state taxes + sales commission, many of you have chosen to leverage your art via an art line to generate liquidity.

    4. Guarantees: We’re seeing more of you using art facilities to back guarantees at auction (but we advise caution).

    We estimate that total U.S. art loan commitments stand at $16 billion. We’re proud to have a significant portion of those loans, and we remain staunchly committed to the space. Given our forecast of continued low interest rates, stratified wealth creation, and expansion of the collector base, we expect continued growth in the space.

    Top five artists we lend against, by value:

    1. Willem de Kooning

    2. Andy Warhol
    3. Constantin Brancusi

    4. Paul Cezanne

    5. Roy Lichtenstein

    AT THE CLOSE OF THE SURVEY, BANK OF AMERICA PRIVATE BANK TARGETS THE OPPORTUNITY ZONES AND THE EFFECT OF CAPITAL GAINS TAX INCREASES AND THE REPEAL OF THE SECTION 1031 LIKE-KIND EXCHANGES PROVISION. THIS IS INVALUABLE INFORMATION FOR ANY ONE INTERESTED IN THE ART MARKET: DEALERS, GALLERISTS, AUCTION SPECIALISTS, AND MOST OF ALL COLLECTORS.

    PLEASE JOIN US!

     

A comprehensive report on the current art market from the Art Lending Services division at U.S. Trust

U.S. TRUST, AS DO MANY OF THE MOST HIGHLY REGARDED BANKING AND FINANCIAL ADVISORY INSTITUTIONS, OFFERS EXTENSIVE ART SERVICES. AS ART IS NOW CONSIDERED TO BE AN ALTERNATIVE INVESTMENT, AND NOT SIMPLY AN AESTHETIC PLEASURE, BANKING HAS ENTERED VERY FORCEFULLY IN THE COMPETITION TO PROVIDE ART LENDING SERVICES TO HELP BOTH COLLECTORS AND INSTITUTIONS HELP NAVIGATE THE COMPLEX ART WORLD.

RECENTLY U.S. TRUST, THE PRIVATE BANKING ARM OF BANK OF AMERICA,  PUBLISHED AN EXTREMELY COMPREHENSIVE ANALYSIS ON THE STATE OF THE CURRENT ART MARKET. IN A TIME OF TURMOIL AND CHANGE, GENERAL REEVALUATION AND A GLOBAL SHIFT IN THE ART MARKET, IT IS PARTICULARLY RELEVANT AND THE LRFA BLOG IS PLEASED TO SHARE IT WITH YOU. WE ARE DELIGHTED, AS WELL, TO REPORT THAT DANA PRUSSIAN, VICE PRESIDENT AT U.S. TRUST ART LENDING SERVICES, WILL BE CONTRIBUTING TO THE LRFA BLOG IN THE MONTHS AHEAD.

PART ONE

“We feel that you should not buy art purely as an investment. Buy it for love, desire, legacy, culture, pleasure, addiction,

status, and community.”

Art Services Market Update

At Bank of America Private Bank, we maintain a sharp focus on the art market and on the collectors, dealers, auctions specialists and institutions that make it function. We work closely with many of you across four pillars: art lending, art planning, consignment services and institutional arts endowment management. This update features our observations on the current state of the art market from a business perspective.

The Market

  • Current low interest rates, solid equity markets and more stratified wealth creation worldwide continues to drive capital toward art. The maturation and globalization of the art market has expanded the collector base and transformed the art market from a niche lifestyle into a $60 billion global industry.1 Still, overall art market growth in terms of total art sales has stalled since 2012, even as the S&P 500has currently more than doubled since that time.
  • If the Federal Reserve (Fed) continues its dovish policy, we expect collectors’ continued allocation of capital to art. When interest rates fall, the opportunity cost of holding non-interest-bearing assets like art goes down. The art market is driven by sentiment, so the greatest risk we see is a geopolitical event that impedes the global flow of capital and credit prompting collectors to pause.

• We anticipate that financial returns for contemporary art will be lower in the next decade than some may expect. The market has absorbed a lot of art since the turn of the century. An exceedingly large percentage of those works may be worth close to zero in a generation or so. And because we’re in a more mature and efficient art market, there may be fewer upside surprises than in decades past. We feel that you should not buy art purely as an investment. Buy it for your passion, enjoyment, legacy, culture, status or community.

The Auctions

• During the New York Spring Auctions, the market absorbed over $2 billion of art at Christie’s, Sotheby’s and Phillips, handily above the $1.6 billion pre-sale estimate. It was the first auction season defined by large estates of postwar
and contemporary art. Eye-catching results such as the $91 million Koons “Rabbit”, the $110 million Monet “Haystack” and the rapidly growing market for KAWS belie a more modest 5.1% annualized return2 achieved for repeat sales during the season. Given the recent performance of London auctions and the lack of clarity around a Brexit deal, New York will continue to be the premiere sale site for high-end postwar and contemporary art for the foreseeable future. Fresh-to- market works, typical of the artist’s oeuvre, in good condition, with strong provenance, continue to perform strongest at auction. Works by female and black artists also continue their rise.

• You likely saw that in June, Sotheby’s accepted a $3.7 billion buyout offer from French media entrepreneur Patrick Drahi. Interestingly, Bonhams was also bought out earlier this year. Going private will allow Sotheby’s more flexibility to compete for top lots, which will benefit major collectors, and will provide time and space to evolve its business model, which, like Christie’s, is challenged. Competition for top pictures has become a race-to-the-bottom: China isn’t the growth engine everyone hoped it would be, and online sales have yet to deliver meaningful scale or margin expansion. With business margins at around 10% for the industry, auction houses are officially on the hunt for new revenue streams.

• Look for the auction houses to continue to expand into art advisory, financial services, brand licensing and even investment research as they look beyond their supply-constrained auction business. As a collector, you may see better terms when consigning top works at auction, but expect higher commissions for lower- value works. Buyer premiums will continue to expand at all levels. Finally, get ready for more convenience. Virtual reality will change how you view upcoming sales, and artificial intelligence will soon be sending you an endless array of Netflix-style lot recommendations across all categories based on what you’ve perused across the internet.