The FT reports
Some private banks are now considering launching their own art funds to meet client demand. A spokeswoman for Deutsche Bank says it is an area of the art market currently being researched by the bank.
The strength of the art market has also seen more wealthy clients using their existing art collections as collateral for loans.
Michael Darriba of Deutsche Bank Private Wealth Management says that interest in borrowing against art has increased enormously in the past year. “In the current climate where liquidity is king, to be able to monetise some of those assets without having to sell them is really attractive,” he says.
Deutsche Bank will offer rates of between 2 to 5 per cent over the three-month interbank rate, with an arrangement fee of between 1 to 2 per cent. It typically offers clients loans to value of between 20 to 50 per cent.
Citi Private Bank has experienced a similar increase in activity over the last quarter of 2010. Suzanne Gyorgy, head of art advisory and finance at Citi Private Bank, says wealthy individuals have begun looking at their art collections and realising that they have held up very well in price, providing a good basis for a loan.
“During the downturn we had a number of people that had margin facilities in trouble who had unencumbered art collections,” she says. “We quickly valued the art and transferred the collateral so that they weren’t sold out of their stock positions.”
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