Dec. 1 (Bloomberg) -- Competition among German arts institutions for corporate sponsorship is getting stiffer as recession prompts companies to cut back culture funding, said Max Hollein, the director of Frankfurt’s Staedel Museum.

Hollein, 39, has helped win more than 800 art works for he Staedel Museum as corporate gifts from Deutsche Bank AG and DZ Bank Group AG this year. Sponsors and corporate donors in the past three years have included BNP Paribas, Bank Julius Baer Holding AG, Commerzbank AG, DekaBank, Eurohypo AG and Fraport AG.

“A recession isn’t good for anyone,” Hollein said in an interview at the Staedel. “Not for a museum either. Company budgets for sponsoring are being reduced or reexamined. That means art institutions will be competing more fiercely.”

The crisis in the global financial industry has also hit German banks, which have so far requested at least 120 billion euros ($155 billion) from a government emergency bailout fund. The benchmark DAX stock index has slumped more than 40 percent this year and the economy has been shrinking since the second quarter.

“We are observing the market and the mood,” Hollein said. “We are practicing a kind of self-censorship. At the moment I wouldn’t go to Opel, for example, asking for sponsorship.”

Adam Opel GmbH is the Frankfurt-based German unit of General Motors Corp., the troubled U.S. automaker currently trying to cut costs to win $12 billion in U.S. government bailout loans.

Met Candidate

Born in Vienna, Hollein studied both business and art history. He has worked as a financial journalist and spent five years at the Solomon R. Guggenheim Museum in New York from 1995 to 2000, helping to set up branches of the museum in Berlin, Las Vegas and Bilbao. Recent reports named him as a possible candidate to run the Metropolitan Museum of Art in New York, before the museum appointed its tapestry specialist, Thomas P. Campbell.

Even in the current climate, the Staedel Museum has just won Bank of America Corp. as a long-term partner, Hollein said.

“So it is not as though nothing is happening,” he said. “But it is of course more difficult, the market is smaller, and we are more hesitant with some requests and waiting a little to see where things are going.”

Deutsche Bank in October announced the permanent loan of 600 works to the Staedel, among them art by Anselm Kiefer, Gerhard Richter, Joseph Beuys and Sigmar Polke. DZ Bank, Germany’s biggest cooperative lender, in March donated more than 200 photographs by artists including Cindy Sherman, Robert Mapplethorpe and Robert Rauschenberg to the museum.

Expanding Staedel

Hollein said he saw an opportunity to win works from corporate troves to boost the Staedel’s postwar collection, and pursued it “stubbornly.” Both banks’ collections began as a way of introducing art to the workplace.

“After 20, 30 years, they reached such a size, with works so significant that they are no longer suited to the workplace,” he said. “This is an interesting, important development in collecting that should be celebrated. The possibility of choosing the best works for the museum and making them accessible to the public forever is terrific.”

The Staedel is expanding to accommodate the new art, building a 3,000 square-meter extension which it plans to complete for 2011. The project’s budget is 30 million euros ($38.6 million). The museum has so far raised about half, with 7 million euros from the Hertie-Stiftung and another 3 million euros from Bankhaus Metzler and the Metzler family.

Art Slump

The worldwide economic slump is also likely to affect art- market prices, Hollein said, adding that he doesn’t expect old- master paintings or the highest quality contemporary works to shed value. The price declines may be an opportunity for the Staedel Museum to acquire art, he said.

“In broader areas of a market, there will be a price correction that could be an advantage for the museum,” Hollein said. Still, he added, “I wouldn’t welcome a collapsing art market, because that would be the consequence of something much bigger that would hit us much harder.”

The areas of the contemporary market most likely to be affected are Russian, Chinese and Indian art, where prices have been speculative, Hollein said. Sales at Christie’s International auction of Russian art in London last week missed the company’s low estimate by almost half, with one buyer picking up for 10 pounds ($15.40) an art work estimated to fetch 2,000 pounds.

“What happens in a recession is that the speculative element declines,” Hollein said. “Those participants who are speculating and wanted to make a profit in the mid-term will leave the market, partly because of their own liquidity problems, partly because these profits are no longer attainable.”

The impact on the market will vary from artist to artist, Hollein predicted.

“It is not surprising that the less than top-notch works by Damien Hirst will now come under pressure, because his oeuvre is very widely dispersed and there is a lot of it,” he said.

“For other artists and top works, the prices are still climbing. If you compare these three art-market figures -- Murakami, Hirst and Koons -- then Koons’s work is the most likely to be the most stable. His output is rather small and he has a very narrow group of collectors.”

To contact the writer on the story: Catherine Hickley in Berlin at chickley@bloomberg.net.

Last Updated: November 30, 2008 19:00 EST