Japanese banks try to get rid of hidden art treasures

From street level in Tokyo's bustling Ginza district, the self-proclaimed "International Auction Organisation" looks the picture of discretion. Its tiny premises are tucked above an optician and a noodle shop, without any visible security in the dingy doorway.

But the little office holds one of Japan's more startling banking secrets. Tucked behind the door is a pile of western paintings which has recently emerged from the vaults of Japanese banks and brokers.

"It is quite a collection," explains Mr Kiyonori Yamamoto, president of IAO, as he waves his hand airily at two boxed Monets, a Picasso and a Utrillo, stacked randomly in the corner. Next to them, unboxed, is Kisling's Portrait de Jeune Fille Blonde, Matisse's Femme Assise and Chagall's Le Chevalier du Soleil. "We have good insurance," explains Mr Yamamoto, when quizzed about the wisdom of leaving this pile in an open office, near a table of soft drinks.

Mr Yamamoto (52) will not reveal how he acquired these pieces. But he has clear plans for their future. He formed the IAO with some European partners in April, in what appears to be the first such company dedicated to selling Japanese bank art, and he is planning to ship the works to Paris for sale to European dealers in the middle of this month.

Mr Yamamoto claims he is confident the pictures will sell well. But the bigger question is whether this treasure trove in Ginza marks the start of a new trend. As the government presses ahead with banking reform, the banks are under pressure to dispose of their "bad" assets, including the piles of art that they and their bankrupt borrowers acquired in the 1970s and 1980s, often for vastly inflated prices.

The banks are extremely secretive about their holdings. This is partly because they do not want to admit to the "shame" of their purchases having collapsed in value. And since most art has been acquired as collateral from failed borrowers, some are also protecting the privacy of clients.

Estimates of the value of the art vary between $8 billion (€7.7 billion) and $30 billion. "There are pictures which have not been seen for years, sometimes decades, in the banks' hands - it's going to cause a huge stir when they come out," says Mr Tristram Norriss. He is now helping a group of art experts in London raise finance for a fund, Pilkington International, to tap this pool of art.

But behind the hype, the uncertainty now is whether the banks will ever actually sell. A few have acted: Christie's, for example, had a record year in Japan last year, selling collections such as that held by Lake Consumer Company, estimated to be worth more than $200 million.

The collapsed Yamaichi Securities has sold pieces - some to Mr Yamamoto. Fukuoka City Bank, a small regional group, has also recently sold an estimated $60 million collection to the San Francisco Museum of Modern Art. The nationalised LongTerm Credit Bank recently sold paintings for around 700 million yen (€5.5 million).

Fuji Bank, which has an unusually large collection, is also understood to have sold a Jackson Pollock and a Van Gogh previously owned by the influential Saito family. It is now considering other sales of the Saito holdings, including a Renoir and a large group by Chagall. And Sumitomo Bank is understood to be mulling sales of its huge collection of pieces by Picasso, Chagall, Andrew Wyeth and Japanese artists.

But such sales remain insignificant compared to the total - and so far, most banks are reluctant to act. One reason is that dealing with their far larger real estate holdings is their key priority. Another problem is that the banks do not always have the legal right to sell art acquired as collateral without the owners' consent.

It is also the case that bank managements generally know very little about art and are nervous of exposing themselves to "embarrassment". This is fuelled by fears that some of the pieces may be fakes, or even stolen. The Art Loss Register, a London-based group, for example, wrote to the Bank of Japan last year warning that Japanese banks appeared to be holding stolen pieces, including a Picasso stolen in London in 1983, and a Sisley which was looted in the second World War. The bank has so far failed to reply.

None of these problems is deterring Mr Yamamoto. He has hired a former Ministry of Finance bureaucrat to negotiate with the banks, and is using his contacts as a former art dealer and journalist to prize out the hidden works. "If a foreigner goes to a bank president, he will always deny having any art - you have to know how to handle the banks," he says.

But the real test may come in Paris next month. For if Japanese banks see that the auction goes well, then more pieces may suddenly emerge. If not, they may cling to their hidden piles for longer. Either way, Mr Yamamoto's dingy offices may not remain obscure for long.

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