Art: a new outlet for the private banking
- Key Data Market
- Degree of market concentration
- Technological developments
- Changes in consumer behavior
The general public is aware about the record amounts of the revenues realized form some auctions of works of art. The art market has undoubtedly transformed the effect of global wealth.
The increase in real estate, increase in stock and oil prices have increased the wealth of individuals who invest directly in this field. The dynamism that appears in this market has increased the competition that is facing the banking sector, and it is doubtful if private banks can find new opportunities in the field of art.
To answer this question, the buyers, their motivations and their financial burden was taken into consideration. Then, this study will examine the relevance of its acquisitions in terms of investment, tax exemption and proprietary tool and finally it will see if banks can interact on this sector by expanding their service offerings while maintaining its traditional characteristics.
Since the Renaissance, art has emerged as a major value for the radiation of the major powers, the kings being the main sponsors of the time. During the Cold War, art has been used as a propaganda tool for both blocks. Those days are now old, but the value of the artwork remains intact and the work itself is always coveted. At the time of the market economy, one can see what were the motivations that drive the purchase of the art market valuations and what they have at both personal and professional heritage.
The most like art collectors are politicians, aristocratic families or businessmen, the great collectors have many reasons to diversify their assets in investments in the field of art.
For a collector, buying a work of art (see glossary) is not an investment.
The collector buys primarily by taste. It makes a real distinction between the financial value of the work and its artistic value. It feels admiration and contemplation in his works. This passion is often jealous and exclusive: a work of art is a unique object and therefore invaluable for anyone who owns it.
Buyers of art have more financial incentives. Some of the traditional buyers, especially merchants, saw already in the work of art a way to make gains. Art as a subject of speculation was particularly developed during the 1980s.
The rising price of works during this period has attracted many investors already on the property and stock markets. The true speculator spends his time in selecting the appropriate times to buy or sell his works to achieve maximum profit. Trade-offs are made permanent.
Speculators are not in general true art lovers.They try to rationally calculate their earnings potential and sell their works consistently when they judge the right moment. In this they differ radically from traditional collectors who sell occasionally and for external reasons.
The apparent dynamism of art leads to a reflection on the need for involvement of banks in this market. The players in this sector generally have significant assets, so they are a prime target for private banks.
The purchase of works relevant heritage is a tool both for investment and in terms of tax exemption. It comes in both individual and professional heritage.
The private bank has a vested interest in filling the field of art of its intrinsic skills (investment, insurance ), while being aware of the limitations of this market that continues to be governed by considerations of art and culture.
Tags: Art , buying art as an investment, a new outlet for private banks