It was a matter of hours after the Irish government announced the biggest spending cuts in the country's history. But in Dublin on Wednesday night (November 24) a sale of Irish art raised $2m before a packed auction house.
The connection? The sold artworks belonged to the Bank of Ireland, which had decided to sell its collection amidst criticism over its recent multi-billion dollar bail-out. The profits of the sale, however, are to be donated to local charities and not used to cover the bank's debts, as many critics feared.
More than 150 paintings and sculptures were auctioned off with the highest price of the night going to "Clouds at Sunset," a 1911 landscape of Killary Harbor in western Ireland by artist Paul Henry. It eventually sold for $88,000, along with 99% of the lots.
The sale highlighted once again the fact that, while advertising themselves as the best option for investors, most banks were investing their own money in alternative assets such as art collections.
RBS is reported to have a collection of around 2,200 works, with HSBC and Barclays not far behind. In fact the world's second-most valuable artwork, Alberto Giacometti's $104.5 sculpture 'L'Homme qui marche I', (The Walking Man) was until last year part of Commerzbank AG's corporate art collection.
After a turbulent few years and an unstable financial climate, many banks have been 'parking their cash in art.' But as several other banks in Ireland move towards nationalisation and look to sell of their own collections, it is collectors who stand to profit.
Art is becoming an increasingly popular alternative assets for investors, and the record-breaking results of many auctions this year show that this trend shows no sign of slowing down.
As financial markets continue to stumble and shares continue to underperform, more people are starting to realise what the smart investors knew all along: that in times of financial downturn, assets such as art and collectibles can often be the safest option of all.
And unlike stock certificates, it also looks great hung on your wall.
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