Leslie Rankow Fine Arts

INTERNATIONAL ART ADVISORY SERVICE

Tag: bank of america

The future of the art market with Dana Prussian, Art Lending Service, Bank of American Private Bank

Dana Prussian
Art Lending Services
Bank of America Private Bank

THE ART BASEL AND UBS GLOBAL MARKET REPORT, AUTHORED BY THE RENOWNED CULTURAL ECONOMIST, DR. CLARE McANDREW, WHO FOUNDED THE RESEARCH CONSULTING FIRM FOCUSED EXCLUSIVELY ON THE ART ECONOMY IN 2005, REPRESENTS THE PINNACLE OF ART MARKET RESEARCH AND ANALYSIS. THE 2019 REPORT PROVIDED 5 KEY INSIGHTS INTO THE ART MARKET PINPOINTING A 6% INCREASE IN GLOBAL ART SALES WORLDWIDE, ACTIVE BUYING BY MILLENNIALS  AND A GROWING PARTICIPATION IN ONLINE SALES AS LEADING INFLUENCES IN THE CURRENT ART MARKET.

HERE ARE THEIR FIGURES:

Art Basel

1. The US retained its position as market leader

In 2018, the US sustained its position as the world’s largest art market, accounting for 44% of sales by value – or a total of $29.9 billion, the highest recorded level to-date. The UK regained its position as the second-largest market at 21%. China was the third largest market at 19%, with sales reaching $12.9 billion – a decline of 3% year-on-year.

2. Millennials emerged as active market participants

“A very positive finding of the research this year was the dynamism in collecting by global millennials.While respondents in the US were predominantly aged 50 and above, in Singapore, 46% of collectors surveyed were millennials, while in Hong Kong the figure was 39%. Collectively, millennials accounted for just under half (45%) of high-end spenders, underlining the importance of this demographic.

3. The online market witnessed continued growth

The online market reached an estimated new high of $6 billion in 2018, representing 9% of global sales – up 11% year-on-year.

4. Auction figures rose 3% year-on-year

While economic and political issues drove risk-averse buyers and sellers towards private sales in the dealer market, sales of fine and decorative art and antiques at public auction still rose in value, reaching $29.1 billion. High-value works had the greatest impact on this sum, accounting for 61% of total sales by value.

5. Art Fairs continued to shape the global market

Art fairs continued to play a central role in the global art market, with aggregate sales estimated to have reached $16.5 billion in 2018 – up 6% year-on-year. The share of the total value of global dealer sales made at art fairs was 46%.

https://www.ubs.com/global/en/our-firm/art/2019/art-basel.html

 

Lee Krasner
Free Space Blue, 1975

AT BANK OF AMERICA PRIVATE BANK, ART LENDING SERVICES, DANA PRUSSIAN, VP, HAS AN INSIDER’S VANTAGE POINT IN TRACKING THE EBB AND FLOW OF THE ART MARKET FROM THE PERSPECTIVE OF THE INDIVIDUAL COLLECTOR, DEALERS, AND ART AND CULTURAL INSTITUTIONS.

https://www.privatebank.bankofamerica.com/solutions/individuals-families/art-services.html

DANA, A WARM WELCOME BACK.

HOW DO YOU SEE THE CURRENT ART MARKET?

Even though total art sales has slowed since 2012, we’re still seeing a strong art market. Low interest rates and stratified wealth creation worldwide continue to drive capital toward art. The art market is ultimately driven by sentiment, so the greatest risk is a major geopolitical event that impedes global capital flow.

John Chamberlain
Chinati Foundation
Marfa, Texas

HOW DO YOU ANTICIPATE THE ARCH OF THE ART MARKET OVER THE NEXT FEW YEARS? DO YOU SEE A RETURN TO THE GALLERY SYSTEM OF THE PAST AND A RESURGENCE OF SMALLER GALLERIES OR FURTHER EXPANSION OF THE “UBER” GALLERIES?

We should keep our eye on how technology changes the landscape (online sales have yet to deliver meaningful scale or margin expansion), art fair fatigue, and new revenue opportunities for the major auction houses. I think the future of the gallery system will be based, in large part, on how a current push-pull resolves itself over the next decade.

The mega galleries, particularly the big 4 featured in Michael Shnayerson’s Boom (Gagosian, Hauser & Wirth, Zwirner, and Pace), are at a critical juncture. They are currently expanding their global footprints-and Chelsea footprints- in a big way. At the same time, the mega dealers who have built these empires are not getting any younger. We will have to see what their succession plans look like. With Pace, the Glimchers will look to next-of-kin, Marc. With Gagosian, Larry could be looking to Andrew Fabricant. It will be interesting to see how it all plays out. 

Evan Robarts
Untitled Tenant, 2015
Bruce Wolkowitz Gallery

DO YOU COLLECT YOURSELF?

Working on it! One of the many things I love about my fiancé, Joel, is that he was interested in art well before I met him in 2015. He owned a mix of prints and lithographs by Miro, Sam Francis, and Dali, all of which we brought with us when we moved into an apartment together. Since then, we have acquired a few pieces together, most recently a massive Evan Robarts Mop Painting from Bryce Wolkowitz Gallery. It’s a wonderfully textural black and white on linoleum from his Super Reliable series.   

Helen Frankenthaler
Mnuchin Gallery: The Art of Marriage

WHO ARE SOME OF THE ARTISTS THAT YOU WISH YOU OWNED?

A Chamberlain crushed steel sculpture is at the top of my list. Before he passed away, I had the chance to see Chamberlain at work in his Shelter Island studio, which is an experience that I will never forget. Of course, we are in the age of identity, so I would love to start a female collection: Grosse, Krasner, Frankenthaler…I would weep with happiness! Also Shantell Martin. I met her this summer at the Parrish Midsummer Party. She’s simply the coolest. 

Shantell Martin
New York City Ballet commission

DANA, THANK YOU SO MUCH! THE LRFA BLOG IS SO APPRECIATIVE OF YOUR INSIGHTS.

BANK OF AMERICA PRIVATE BANK, ART LENDING SERVICES, IS NOT ONLY ATTENTIVE TO THE FINANCIAL ASPECTS OF ACQUIRING, COLLATERALIZING AND DEACCESSIONING ART BUT ALSO TO THE IMPORTANT PLACE THAT CULTURAL AND CONSERVATION PROJECTS ARE IN THE CURRENT ART WORLD.

 

Katharina Grosse
Hamburger Bahnhof – Museum für Gegenwart – Berlin

 

 

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!

 

 

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!