Art Basel’s main sponsor UBS has this week completed its takeover of Credit Suisse, creating a mega-bank with $5 trillion in assets under management. The acquisition follows a government-backed rescue of Credit Suisse begun in March, which staved off a bigger banking crisis. As part of the deal, UBS bought its defunct rival for a knock-down price of $3.25bn and assumed $5bn of its debt—though, in a later regulatory filing, UBS said it was rushed into a deal it did not want.
Integration is now expected to be protracted and thousands of jobs are still at risk. As part of the deal, UBS has imposed tight restrictions on Credit Suisse bankers—for example, they must seek permission to extend loans of more than $60m backed by assets such as yachts and property.
One art adviser with clients in Switzerland who prefers to remain anonymous says the takeover has been “very, very controversial. These are not the sorts of things that should happen in Switzerland. It’s a calm, quiet place for people to store their wealth. Tumult like this is very un-Swiss and doesn’t fit with the brand.”
Meanwhile, lucrative sponsorship deals between Credit Suisse and several museums at home and abroad are facing a shake-up in the coming months. Sponsorship deals in Switzerland now at risk include those with the Kunsthaus Zurich, which Credit Suisse has sponsored for more than 30 years; the Kunstmuseum Basel, where the bank has provided support for one exhibition per year since 2012; and Fondation de l’Hermitage in Lausanne, which says that Credit Suisse covers one annual exhibition, or around 6% to 8% of its annual budget. Outside of Switzerland, a major partnership with the National Gallery in London, which has been in place since 2008, hangs in the balance.
The bank also has close ties with the Brazilian art world; José Olympio da Veiga Pereira, Credit Suisse’s former chief executive officer in Brazil, is a major art collector and president of the Fundação Bienal de São Paulo. Though Credit Suisse’s donations are undisclosed, top-level corporate sponsors such as banks and private equity firms can expect to contribute more than £500,000 for a blockbuster exhibition.
A spokeswoman for UBS would not comment on whether the bank will fulfil the partnerships Credit Suisse has already entered into, though she stresses that the acquisition will not affect UBS’s sponsorship of Art Basel. She adds: “We recognise the important support Credit Suisse has been giving to arts organisations in Switzerland and abroad. It is too early to say what the additional partnerships and support for the arts will look like.”
UBS’s takeover of Credit Suisse creates a mega-bank with $5 trillion of assets under management Photo: Valerio Rosati/Alamy Stock Photo
Anne Laure Bandle, an art law specialist with legal firm Borel & Barbey in Geneva, thinks existing agreements will be upheld by UBS, “unless the terms and the agreements stipulate otherwise”.
Some key deals are due for renewal next year, including those with the Kunstmuseum Basel and London’s National Gallery. “Certain museum directors have already turned to UBS,” Bandle says. She notes that there are some Swiss cantons where the two banks divided up the institutions they wanted to support. “When those existing contracts expire, that distribution will be reviewed and potentially certain institutions will no longer be supported.”
One of the biggest controversies of the takeover has been the decision by the Swiss financial regulator to wipe out $17bn worth of AT1 bonds (Additional Tier 1 bonds, a type of hybrid debt instrument designed to give banks greater capital flexibility in the event of a crisis). The anonymous art adviser says this could have an impact on the art world. “Many of the bondholders are Middle Eastern, and big art collectors I suspect,” he says. In April, some investors filed a lawsuit against the regulator, claiming it had acted unconstitutionally by cancelling the bonds.
Echoes of 2008
Credit Suisse’s collapse has prompted comparisons with the 2008-09 banking crisis when UBS was itself bailed out by Swiss taxpayers. As the anonymous art adviser notes, “banks are not exactly the flavour of the month”, though he thinks this could mean UBS will tread carefully when it comes to cutting any philanthropic activities. “They’re going to be very conscious of their reputation within Switzerland, and that means probably not too many drastic cuts for Swiss museums and art education.”
After the 2008-09 banking crisis, a number of corporate art collections were sold off to help pay creditors. Big parts of Lehman Brothers’s collection were sold at Sotheby’s in 2010, racking up $12m (a further $2.5m was made in an “artwork and ephemera” sale at Christie’s). The Irish banking sector faced a deep crisis between 2008 and 2010 prompting a number of fire sales, including at the Anglo Irish Bank whose modest collection fetched around €280,000. Though such sums appear paltry, the auctioning of art collections can pave the way for the sale of other parts of a bank’s property.
Credit Suisse has been amassing a collection of Swiss contemporary art since 1975, which now comprises around 10,000 works by artists including John Armleder, Monica Studer and Christoph van den Berg, Balthasar Burkhard and Yves Netzhammer. Its value is undisclosed. The UBS spokeswoman declined to comment on whether there are any plans to sell off any of Credit Suisse’s art collection, but, as Bandle points out, “the purpose of the collection was never to become an investment asset to be sold.”
Begun in the 1960s, UBS’s own collection has swelled to an astonishing 30,000 pieces, in part because it has acquired other individual collections through various mergers and acquisitions, notably the Swiss Bank Corporation and PaineWebber Inc.
Bandle adds: “Most banks don’t collect art to make money out of it. They collect because they want to support and promote these artists, and they want something nice to display for their clients and employees in their offices.”
• Listen to more about the effect of the banking crisis on the art world on The Week in Art podcast
