Banks thrived on the art boom of the 1980s. They made loans on art, mounted exhibitions, acquired art, and advised their clients about purchases and sales.

Then, as the economy weakened in the late '80s, the art market tanked. Objects that had commanded millions of dollar,, a few years earlier sold for just a fraction of those prices. Banks jettisoned or pared down art activities.

Today, only a few banks remain committed to art services and exhibitions.

But these stalwarts swear by art, calling it a vital part of their private banking programs.

"It's been a very successful hook to get us into new clients and new referrals," said Katharine E. Bouckley, who heads Citibank's art advisory services for the private banking unit.

Even banks that have pulled back from the field still recognize that knowledge of art is valuable.

As a result, they are retaining consultants to make sure their people can discuss, say, that Andy Warhol hung in a client's hallway.

What follows are profiles of the art programs at two banks - Citibank and Chase Manhattan Bank, plus a look at some of the consulting services available to banks.

Chase Gets Mileage

From Role as Curator

The importance of art to Chase Manhattan's international private banking unit is visible to clients as they walk through the door of the Sixth Avenue offices in New York.

Greeting them are paintings hung to mimic an art gallery exhibition.

Off the main hall, conference rooms have smaller installations around a regional or genre theme.

The exhibit was recently installed by the director of Chase's art program, Manuel E. Gonzalez.

With 13,000 bank-owned works to choose from, Mr. Gonzalez assembled a Who's Who of domestic and foreign artists including David Salle, Antonio Lopez Garcia, and Mr. Warhol.

Hook for Referrals

Already the works are paying dividends.

One client recently visited the office just to show a friend one of the works. That makes for good referrals, said Maria Elena Lagomasino, senior vice president in charge of international private banking.

Chase is making prodigious use of art to build business outside the United States.

Mr. Gonzalez, together with Lisa Phillips, curator of the Whitney Museum of American Art, assembled a collection of photographs that has been traveling around Central and South America.

How effective has it been?

|A Household Word'

On a trip to Monterrey, Mexico, a year ago, Ms. Lagomasino found that Chase Manhattan was not well known.

Things quickly changed, however, after its Photoplay exhibit opened and attracted 1,000 to 1,700 visitors daily to the Museo de Arte Contemporaneo de Monterrey.

"By the time I landed there Chase Manhattan, was a household word." she said.

Chase also has other exhibitions. It recently installed a technological exhibit in Brooklyn, N.Y., and opened a gallery in Kohuo, Japan, at the community's request.

The bank's art is considered one of the premier collections in the country. The 13,000 works were assembled over the past 34 years.

Most of those works are in Chase's banking offices, Mr. Gonzalez said.

Buying Less

The bank is not acquiring works as fast as in the past, but Mr. Gonzalez said it continues to purchase works by younger, developing artists.

"To me, the art collection is not a separate part" of the bank, Ms. Lagomasino said.

"It's part of the tapestry of Chase."

Citibank Pares Back

But Is Still Committed

Citibank's art advisory service, part of its private bank, was introduced in 1979 and built a reputation in the 1980s.

The unit is organized into estate, loan, and advisory segments. It has five full-time art historians on staff, despite widespread staff cuts at Citibank in the past few years.

Some observers maintain that Citibank does less overall with its service than five years ago.

"They've really pulled back," said Daniel P. Davison, chairman of the American branch of Christie's auction house.

Ms. Bouckley, in charge of the unit for about 18 months, wouldn't specifically discuss staff levels or the extent of art activities. But the service is here stay, she said.

Hanging In

"Banks seem to come in and out of the market," she said, "but they don't have the breadth of commitment to the business that Citibank has."

Her unit provides or arranges for services to maintain art collections. And Citibank is always busy in lending against artwork, she said.

The art historians' primary responsibility is to stay abreast of market changes. It is a task complicated by the wild price gyrations of certain artists and movements since the bubble burst at the end of the decade.

"Watching the market has been difficult," Ms. Bouckley said. "It's been something we've had to do very seriously."

Objective Advice

A solid grounding in market issues helps the private bankers give objective advice to clients about their art collections and purchases, she said.

If a client wants a particular artist's work, the bank tries to ensure that the piece purchased is the best available for the money, she said.

"We look at every art advisory client as someone who we educate, making them comfortable with the art that they wish to buy."

Finding a New Role

In Post-Crash Era

Though Citibank and Chase are continuing their art activities, the 1990s have brought a new restraint toward art at many banks.

"It is seen as one of the ostentatious activities that they can't be involved with if they are going to be |lean and mean,'" said Lynne Sowder, a Chicago-based consultant who served for several years as director of art at First Bank Systems.

But even when a bank cools its art lending or relegates its own collection to the back room, bankers still have a variety of reasons for learning about the subject.

Margaret Mathews-Berenson, a New York-based consultant who has worked with several large banks, said she is often called upon to give crash courses to bank executives.

Brushing Up

Recently, a top executive at large bank realized he needed some firepower for conversations with fellow museum members in New York. He got it in several trips to the Metropolitan Museum of Art with Ms. Mathews-Berenson.

The simple goal is for the executive "to be seen not as a philistine, but as someone who is knowledgeable," Ms. Mathews-Berenson said.

And bankers will always have estate work with the collections of deceased clients. Christie's, for instance, does a brisk business providing auction services to banks, said the auction house's Mr. Davison, who used to be chief executive of U.S. Trust Company of New York.

Because of their role in helping manage large estates, banks mean "not only a very substantial portion of our business, but also the best," Mr. Davison said.

Much of the artwork squirreled away in mansions has been so long off the market that it is fresh, he explained.

About one-third of Christie's business is through banks, Mr. Davison said. And lately, much of that business comes from "distress sales."

"We're in an economic down-turn," he said. "Our three best friends are death, divorce, and bankruptcy."

The price crash in artworks hasn't been all bad, Mr. Davison said. It has restored a sense of reality, he believes.

"Art is not an investment," Mr. Davison said. "It's a purchase."

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