Late January in Manhattan.

For most it's a frigid post-holiday wasteland. But for Francesca Guglielmino, it's the busy season.

Frenetically hopping back and forth between Christie's and Sotheby's, she is spending her days escorting clients to auctions of Old Masters: European works of art from the 14th through 18th centuries.

An unusual way to spend time for a banker, no doubt, but as head of Citigroup Inc.'s 10-man art advisory service, Ms. Guglielmino runs a fee-generating and lending business that is practically without peer.

Consultant David Kusin says the art market had a terrific year in 1999, with volume reaching some $22 billion, compared with $15 billion in 1998. He estimates Citigroup currently has $80 million lent against works of art. Though Citigroup will not disclose figures, Mr. Kusin guesses the art advisory group charges its private bank customers some $30,000 a year for a bundle of services and then receives per-transaction fees on top of it.

"Citibank is the only bank that advertises a full, fleshed-out service," he says.

Dennis Doherty, a principal in Lyons & Hannover LLC, a small investment bank that specializes in art finance, calls the few art advisory services at other banks "puffery. At Citibank, they've invested some money and people. It is the exception."

IBJ Whitehall Financial Group, a New York unit of Industrial Bank of Japan Ltd., has about $30 million of loans outstanding backed by art and rare books, according to vice president Gerald Levine. But those credits, which are mostly to galleries and dealers, range from $500,000 to $10 million, and the collateral is appraised by specialists from outside the bank.

"At Citibank, they value the art themselves. They have experts on staff. They do much larger transactions with high-net-worth individuals. They do mega deals," Mr. Levine said.

Which is why someone like Ms. Guglielmino, 34, is so valuable. A native Italian, she was raised in India, where her father ran a manufacturing company. Educated at English boarding schools and in art history at Cambridge, Ms. Guglielmino is the consummate art banker. She speaks impeccable French and Italian, and her English is thick with the armor of the British upper class.

"There are very regular auction seasons," she explained during a recent interview at Citigroup's midtown offices. "The end of January in New York, it's works of art and furniture season. In May, you have Impressionists, Moderns, Contemporaries, and the minor Old Masters.

"In June and July, it's London for the full gamut: everything from Impressionists and Old Masters to porcelain and silver."

She and her staff, who, were drawn from academia, the art auction houses, and the major galleries, attend all the important sales, sometimes with bank customers looking to make a purchase or on their own to scout the market.

Though art has not regained its late 1980s high, when wealthy Japanese buyers - especially keen on Impressionist paintings - pushed prices into the stratosphere, 1999 was "a really great year" nonetheless, Ms. Guglielmino says.

And experts remain confident about this year. "The demand is there," Mr. Doherty of Lyons & Hannover said. "You've got a whole lot of new wealth that's chasing the market. This year you'll see secondary pieces by big names being scooped up because there aren't many great works available. That should be the case for the foreseeable future."

Mr. Kusin says that real estate and short-term government securities are better indicators of the art market than equities. He predicts, "barring any debacles, 2000 will be at least at the same level as 1999."

To take advantage of what it expects will be another record year, Citi's art advisory group has reorganized its approach, partly to accommodate the swelling new wealth in the United States.

At the same time, an increase in the British VAT tax from 2.5% to 5%, which affects all luxury items including art, has caused a shift in the art market from London to New York. The formation of the European Monetary Union threatens to create additional tax and bureaucratic hassles for the art world, further dampening the market there and boosting the industry in the United States.

Citigroup closed its London art advisory service at the end of 1998 and brought Ms. Guglielmino, who had been with the group for two years, to New York. She had previously worked as an art historian - her specialty is the Renaissance - and for six years at Christie's in London, where she ended up in charge of 19th and early 20th century sculptures. ("A lot of naked nymphs," she said.)

Once in New York, her boss at Citi wanted to tap all those newly minted Internet millionaires who did not necessarily know anything about art but were intrigued by the idea of owning a great painting.

The result was Ion Art, the bottom tier of what has become three levels of service, all differently priced, for private banking clients interested in art. Scheduled to go on-line at the end of this quarter, Ion Art offers a minimalist approach to art advisory. "It's our least-tailored service," said Ms. Guglielmino, "designed for the Silicon Valley set. You get access to art advisers but no hand-holding. We're not going to go around with you to galleries."

It is what Todd Thomson, CEO of Citibank's private bank, calls "the toe-dipping approach." At the center of Ion Art is an on-line quarterly that proposes to teach the beginning art buyer how the market works, what the lingo means, and a little bit of art history.

"The whole point is to bring them in and then have them jump tiers," Ms. Guglielmino explained.

Once a client has been enticed by the largely Internet service provided by Ion Art, they can consider the two higher levels of art advisory: "Select" and "Premier."

Select is an advice and acquisition service that includes research for purchases, bidding at auction, negotiating with private dealers, even shipping and framing. (Once Ion Art goes on-line, it will come as part of Select and Premier.)

Premier gives clients everything from Select plus personalized gallery, museum, and auction tours and full art collection management (this includes buying and selling, insurance, maintenance, record keeping, and appraisals).

"It means, for example, dealing with a termite invasion which might infect a customer's furniture collection or installing a special air conditioning system to make sure their artworks don't deteriorate," Ms. Guglielmino said. "It also means watching over their art collections on the yacht or in the mansion at Palm Beach."

The hope is that all three levels will catch a broad swath of what everyone expects will be a growing number of affluent people interested in buying art. Even if there's a downturn in the stock market, Ms. Guglielmino predicts a short-term gain for art immediately following "as people turn to tangible assets."

There are two things necessary to bring the art market into its own: information and liquidity, says Mr. Doherty of Lyons & Hannover. With the longstanding bull market showing no signs of slowing, more and more players are getting into the art advisory and art finance business.

UBS is a case in point. A heavyweight in private banking, with $1.2 trillion of assets under management, it started an art advisory business in Switzerland two years ago and added a staffer for it in New York late last year.

"We could see there was a client demand for this service," said Olivia Jones, associate director of UBS' art banking in the Americas. "But we've taken a different approach. We don't try to have a Renaissance expert. We identify the experts who already exist and put the client together with the appropriate person in the market. We don't treat it as a business." At this point, UBS does little lending against art.

Meanwhile, Internet sites like those run by Art Sales Index and others have made price information widely available, bringing greater rationality to what Mr. Doherty calls "the single most inefficient market in the world."

At the same time, on-line auctions are beginning to change the nature of art distribution. Mr. Kusin predicts this will eventually erode profit margins at the major auction houses by half.

Inside Citigroup, which started its art advisory business inside Citibank's private bank more than 20 years ago, there is some concern about how to handle this burgeoning business. With Citigroup's pending acquisition of Schroders' investment bank, which had a long history of art lending and advising, the client load of about 200 in the art advisory group is sure to swell.

"The potential is enormous," says Jon R. Bourassa, a vice president in the art advisory service, who specializes in Asia. "Schroders will bring a new client base, especially in Europe. The difficulty for us is determining how we can be most effective. Citigroup is huge and we're a small, dedicated team that can only serve well a rather limited group of clients. We can't be everywhere at all times. And we can't take on more business than we can effectively manage."

To that end, Ms. Guglielmino has already gotten approval to add another senior art adviser to her staff. And she is fortunate in that though she does not report directly to Mr. Thomson, the head of Citibank's private bank, he has a special interest in the art advisory service.

"This is an area that's very important for our customers," Mr. Thomson said in an interview. "People are beginning to turn to art for personal pleasure but also as an investment. We have been in this business for a long, long time. We have a deep set of experience and we can offer highly customized and highly intensified service.

"What's unique about Francesca is that she's an expert in art who can have an intelligent, person-to-person conversation about how to build a collection with someone who may be great at running their own business but doesn't know very much about art.

"And nobody has Francesca but us."

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