This morning’s New York Times has an interesting little blurb on another asset class held by major banks — Art. According to the article, Deutsche Bank (DB) has the largest corporate art trove in the world, with 60.000 contemporary works. UBS (UBS) and J.P. Morgan (JPM) could also open major museums with what they hold along their hallways and in their basements. These assets provide no income, other than psychic income to employees when displayed in the offices, and none at all when sitting in storage.
Due to wave after wave of consolidation in the banking industry, many institutions really have no idea of exactly what they are holding. A great art collection does nothing for the safety and soundness of the bank. A great painting does not make loans to small businesses that create jobs to move the economy forward.
The time has come for the banks to start auctioning off these assets, not all at once so the market does not become flooded, but over a couple of years in a concerted effort to monetize these vanity assets. The proceeds would bolster bank capital ratios and would also be good for the likes of Sotheby’s (BID) and Christie’s. Perhaps even a few museums might buy the works, and the public could get to see them as well.
For the banks who are living on public life support, like Citigroup (C), having a private museum should not even be an option. The bank will operate just as well with a cheap reproduction on the walls as it will with an original Warhol or Lichtenstein. It is an outrage that this process has not already started.
Read the full analyst report on “DB”
Read the full analyst report on “UBS”
Read the full analyst report on “JPM”
Read the full analyst report on “BID”
Read the full analyst report on “C”
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