Florida banking regulators have ordered CenTrust Savings Bank, which lost $10 million in its most recent quarter, to sell a $12-million Peter Paul Rubens painting hanging in its chairman’s house.
The savings bank bought “Portrait of a Man as Mars” by the Flemish Rubens, 1577-1640, from Sotheby’s auction house for $12 million plus a $1.2-million commission last fall.
“It’s a beautiful painting,” said CenTrust Chairman David Paul. “It’s not only a fine painting, but it will appreciate nicely for the benefit of the institution.”
Paul, prominent in south Florida arts and fund-raising circles, said the painting is not an investment, but part of the thrift’s “office furniture and fixtures.”
But the Florida Office of Comptroller said in a March 2 letter that the painting was “inherently speculative.”
It wondered how the savings bank, which lost money in its past two quarters, including $10 million last quarter, could justify the purchase, and questioned why it was placed in the chairman’s house.
“Your letter indicates that the painting, although currently displayed in your personal residence, was acquired as ‘furniture and fixtures of CenTrust and is reflected on the balance sheet as an asset of the institution,’ ” wrote Alex Hager, the chief of the bureau of thrift supervision.
Hager ordered CenTrust to sell the painting within 30 days unless he approves an extension. The painting “creates the likelihood of abnormal risk or loss,” he wrote.
Paul said representatives of the savings bank would speak to regulators to resolve the issue. He said the painting is in his house only because work in the CenTrust Tower is incomplete and the painting should be placed there by June. He added that paintings have recently appreciated at an average of 15% a year.
“We have less than 3% or 4% of our regulatory net worth invested in works of art,” Paul said.
He said CenTrust’s art collection is worth about $20 million, while comptroller officials put the figure at about $30 million.
“We do not think it’s speculative or creates an abnormal risk or loss. If that was the case, there’s a lot of other institutions in the country that would have much greater problems than CenTrust would have,” he said. “The institution is doing just fine.”