UBS completes takeover of Credit Suisse—but what will happen to the bank’s art world sponsorships?

Artwork Basel’s important sponsor UBS has this week accomplished its takeover of Credit score Suisse, making a mega-bank with $5 trillion in belongings underneath administration. The acquisition follows a government-backed rescue of Credit score Suisse begun in March, which staved off an even bigger banking disaster. As a part of the deal, UBS purchased its defunct rival for a knock-down worth of $3.25bn and assumed $5bn of its debt—although, in a later regulatory submitting, UBS stated it was rushed right into a deal it didn’t need.

Integration is now anticipated to be protracted and hundreds of jobs are nonetheless in danger. As a part of the deal, UBS has imposed tight restrictions on Credit score Suisse bankers—for instance, they need to search permission to increase loans of greater than $60m backed by belongings akin to yachts and property.

One artwork adviser with purchasers in Switzerland who prefers to stay nameless says the takeover has been “very, very controversial. These will not be the kinds of issues that ought to occur in Switzerland. It’s a peaceful, quiet place for folks to retailer their wealth. Tumult like that is very un-Swiss and doesn’t match with the model.”

In the meantime, profitable sponsorship offers between Credit score Suisse and several other museums at residence and overseas are going through a shake-up within the coming months. Sponsorship offers in Switzerland now in danger embrace these with the Kunsthaus Zurich, which Credit score Suisse has sponsored for greater than 30 years; the Kunstmuseum Basel, the place the financial institution has offered assist for one exhibition per yr since 2012; and Fondation de l’Hermitage in Lausanne, which says that Credit score Suisse covers one annual exhibition, or round 6% to eight% of its annual finances. Outdoors of Switzerland, a significant partnership with the Nationwide Gallery in London, which has been in place since 2008, hangs within the steadiness.

The financial institution additionally has shut ties with the Brazilian artwork world; José Olympio da Veiga Pereira, Credit score Suisse’s former chief govt officer in Brazil, is a significant artwork collector and president of the Fundação Bienal de São Paulo. Although Credit score Suisse’s donations are undisclosed, top-level company sponsors akin to banks and personal fairness corporations can anticipate to contribute greater than £500,000 for a blockbuster exhibition.

A spokeswoman for UBS wouldn’t touch upon whether or not the financial institution will fulfil the partnerships Credit score Suisse has already entered into, although she stresses that the acquisition won’t have an effect on UBS’s sponsorship of Artwork Basel. She provides: “We recognise the vital assist Credit score Suisse has been giving to arts organisations in Switzerland and overseas. It’s too early to say what the extra partnerships and assist for the humanities will appear like.”

Anne Laure Bandle, an artwork legislation specialist with authorized agency Borel & Barbey in Geneva, thinks present agreements might be upheld by UBS, “except the phrases and the agreements stipulate in any other case”.

Some key offers are due for renewal subsequent yr, together with these with the Kunstmuseum Basel and London’s Nationwide Gallery. “Sure museum administrators have already turned to UBS,” Bandle says. She notes that there are some Swiss cantons the place the 2 banks divided up the establishments they wished to assist. “When these present contracts expire, that distribution might be reviewed and probably sure establishments will not be supported.”

One of many greatest controversies of the takeover has been the choice by the Swiss monetary regulator to wipe out $17bn value of AT1 bonds (Further Tier 1 bonds, a sort of hybrid debt instrument designed to provide banks larger capital flexibility within the occasion of a disaster). The nameless artwork adviser says this might have an effect on the artwork world. “Most of the bondholders are Center Jap, and large artwork collectors I believe,” he says. In April, some buyers filed a lawsuit in opposition to the regulator, claiming it had acted unconstitutionally by cancelling the bonds.

Echoes of 2008

Credit score Suisse’s collapse has prompted comparisons with the 2008-09 banking disaster when UBS was itself bailed out by Swiss taxpayers. Because the nameless artwork adviser notes, “banks will not be precisely the flavour of the month”, although he thinks this might imply UBS will tread fastidiously in relation to reducing any philanthropic actions. “They’re going to be very aware of their fame inside Switzerland, and which means in all probability not too many drastic cuts for Swiss museums and artwork schooling.”

After the 2008-09 banking disaster, various company artwork collections had been offered off to assist pay collectors. Large elements of Lehman Brothers’s assortment had been offered at Sotheby’s in 2010, racking up $12m (an additional $2.5m was made in an “paintings and ephemera” sale at Christie’s). The Irish banking sector confronted a deep disaster between 2008 and 2010 prompting various hearth gross sales, together with on the Anglo Irish Financial institution whose modest assortment fetched round €280,000. Although such sums seem paltry, the auctioning of artwork collections can pave the best way for the sale of different elements of a financial institution’s property.

Credit score Suisse has been amassing a set of Swiss up to date artwork since 1975, which now contains round 10,000 works by artists together with John Armleder, Monica Studer and Christoph van den Berg, Balthasar Burkhard and Yves Netzhammer. Its worth is undisclosed. The UBS spokeswoman declined to touch upon whether or not there are any plans to unload any of Credit score Suisse’s artwork assortment, however, as Bandle factors out, “the aim of the gathering was by no means to change into an funding asset to be offered.”

Begun within the Sixties, UBS’s personal assortment has swelled to an astonishing 30,000 items, partially as a result of it has acquired different particular person collections by numerous mergers and acquisitions, notably the Swiss Financial institution Company and PaineWebber Inc.

Bandle provides: “Most banks don’t accumulate artwork to earn a living out of it. They accumulate as a result of they need to assist and promote these artists, they usually need one thing good to show for his or her purchasers and staff of their places of work.”

• Hearken to extra in regards to the impact of the banking disaster on the artwork world on The Week in Artwork podcast