Irish Bank in Capital Crisis Sells Artworks; Others May Follow
Bank of Ireland Plc is to start selling its art collection after Standard & Poor’s estimated the government-backed recapitalizing of the banking system may cost as much as 50 billion euros ($64 billion).
The collection, begun in the 1970s primarily to support emerging Irish artists, has about 2,000 works including local favorites such as Paul Henry, Louis le Brocquy and Robert Ballagh. It is expected to raise more than 4 million euros ($5.1 million) in funds for charity over the next five years, Audrey Nolan, the bank’s head of corporate social responsibility, said.
The sale by the country’s biggest lender by market value, which said Aug.11 its first-half profit fell 66 percent, may be followed by some of its rivals, which also have art collections and made losses in the first half. Bad debts also surged at Allied Irish Banks Plc and Anglo Irish Bank Corp. after a decade-long real-estate boom collapsed during the credit crisis. Debts could be reduced by state aid or larger asset sales; S&P on Aug. 24 cut Ireland’s credit rating to AA-, the lowest since 1995, and raised its estimate for the cost of the rescue from the previous figure of 35 billion euros.
“It’s an exercise in face-saving,” Dominic Milmo-Penny, a Dublin-based art dealer, said in an interview. “The banks have to show they’re doing the right thing. It’s not going to have much of an effect on their financial situation.”
Proceeds from future sales will be added to the company’s existing community and charitable investment program, the Bank of Ireland said in an e-mailed statement. In recent years, a number of higher-value works, including paintings by Jack. B. Yeats, have been donated to the Irish Museum of Modern Art in lieu of corporation tax, Nolan said.
The most valuable works in the Bank of Ireland collection would currently be estimated at about 100,000 euros each, said James O’Halloran, managing director of the Dublin-based auctioneers James Adam & Sons Ltd., who last month was appointed sole adviser to the Bank of Ireland on the dispersal.
“We’re going to suggest auction to be the best way to sell most of the best pieces,” O’Halloran said in an interview. “There are a lot of lesser things that aren’t sellable and are better off left where they are.”
Demand for Ireland’s art has declined along with its real- estate market. During the boom “Celtic Tiger” years, wealthy private and corporate collectors paid record prices at Sotheby’s and Christie’s International auctions of Irish art in London.
Postwar paintings by Yeats and le Brocquy sold for 1.1 million pounds and 1.2 million pounds respectively in 2001 and 2000. Christie’s held its last standalone Irish art auction in 2008. Only 41 percent of the lots at Sotheby’s May sale in London were successful.
Prices of some contemporary Irish artists have fallen by more than 50 percent since the financial crisis, said O’Halloran. As yet, no date has been fixed for the first Bank of Ireland art sale, he said.
Dealers are awaiting news on the artworks belonging to Allied Irish Banks and the nationalized Anglo Irish Bank.
“It’s well known that Allied has the best collection,” said O’Halloran. “It’s much broader in scope.” The bank’s art purchases in recent decades include works by contemporary Irish artists with international reputations such as Sean Scully and William Scott, as well as paintings by Yeats and tapestries by le Brocquy, dealers said.
“We haven’t made a decision yet,” Jacqui McCrum, Allied’s corporate social responsibility manager, said in response to the question on if the bank’s art collection would be offered for sale. “Everything is being reviewed at the moment.”
Irish Prime Minister Brian Cowen said in an interview on Bloomberg Television’s “InBusiness” with Margaret Brennan in New York on July 12 that Allied Irish may need more state support to meet new capital targets.
“They have to sell some of their assets that are non- core,” Cowen said.
Anglo Irish, nationalized last year, has a more modest corporate collection of works, mainly by Irish contemporary artists, said dealers.
“Any decisions about the future of the collection have to be made by the board with respect to the finance minister,” Martha Kavanagh, a spokeswoman at Drury Communications, Anglo Irish Bank’s external public relations agency, said in an interview. “The minister will have the final say. The art collection isn’t top of the priorities at the moment.”
“If all these works come on the market, I don’t know who’s going buy them,’ Milmo-Penny said. ‘‘Most of the people who had the space to put a bank-sized painting on the wall have gone bankrupt.”
(Scott Reyburn writes about the art market for Muse, the arts and culture section of Bloomberg News. Opinions expressed are his own.)
To contact the writer on the story: Scott Reyburn in London at email@example.com.