Six decades after being plundered, the art the Nazis stole is set to make millions

The black and white photograph from pre-war Germany shows an affluent and important banker sitting beneath one of the important paintings in his treasured collection of art. Max Steinthal was a pillar of the Berlin establishment and chairman of the Deutsche Bank. His wealthy bourgeois family could trace its German roots back at least two centuries.

But come the 1930s, the Nazis were not impressed. All that mattered to them was that Max Steinthal was Jewish. So, as happened to millions of others, he was stripped of everything he held dear.

Even his precious art, despatched to a non-Jewish relative for safe- keeping, was eventually lost to the family in the turmoil of war. Mr Steinthal died in 1939, penniless and homeless, just before his 90th birthday which he would otherwise have marked in a concentration camp. And his family were scattered, left only to lament the cruel destruction of their comfortable world; just more statistics in the horrifying story of the Holocaust.

Today, more than 60 years later, his four sons are all dead, too, leaving only grandsons and a string of cousins to keep up the family name. But against the odds, his art, an eclectic collection of works by artists including Picasso, Pissarro and Manet, has been rediscovered, thanks to the chaos caused by the devastating floods that ripped through central Europe two years ago.

Restored to the family earlier this year, Max Steinthal's heirs decided the only thing to do with their belated inheritance was to sell it and split the proceeds. Now, the name Steinthal will be restored to its former prominence at a series of Sotheby's sales over the coming months that will showcase the banker's eye for art.

On 16 November, in the first of six sales that will include works from the Steinthal family homes, Las Tres Velas by Joaquin Sorolla y Bastida, the painting that long held pride of place in Max Steinthal's study and was the gem of his collection, is expected to make up to £2.5m.

It is a figure that, though it will be divided between the banker's descendants, will bring some belated satisfaction to them. But it comes too late for the one descendant who had been most distressed by the mystery of the missing art - Mr Steinthal's grandson, Michael Max Montfort-Steinthal.

From his new home in Spain, he had often vowed to track down the art and make amends for the losses that had been inflicted upon his family. And he was thrilled to pieces when he was able to break the news that the collection had been found.

Far-flung members of the family, cousins from England and the Netherlands, and Frank, his brother from Canada, all agreed to meet in Berlin this summer to see the collection on show at the Jewish Museum prior to being sold. But Michael died. The opening of the exhibition turned out to be a reunion for his funeral, at the family plot where he had wanted to be buried, near his father. Sometimes restitution can come too late.

"My brother had the bad taste to die in the middle of this. But it was his whole life, actually. From a very early age onwards he would say, 'I've got to get this back'," Frank Montfort - as he calls himself - recalled from Canada this week. "It was at the back of his mind and the back of my mind."

For both brothers, the most direct surviving heirs, had extremely vivid memories of their grandparents and their grand town house in the fashionable Charlottenburg district of Berlin and their country estate about 20 miles away.

Max Steinthal was a serious, clever man who had been born in a successful affluent German family. Apprenticed to a bank at 16, he quickly rose through the ranks. In 1873, he met Georg van Siemens, a director at the fledgling Deutsche Bank. "So you want to become head clerk here?" Siemens asked. "Not at all," the young Max Steinthal said. "I want to be a director." He became one by the time he was 23, an indication of the formidable determination that so alarmed his young grandsons.

"I was always a little scared of him. He wasn't a threatening man - he was quite small - but he was quite serious, a heavily intellectual man. I don't think talking to a pre-adolescent boy was his forte. Half the things he talked about I couldn't even understand," Mr Montfort said.

Their home, at 191 Uhlandstrasse, had been commissioned from a leading architect in the 1890s and was the epitome of grand style. Its contents, too, reflected their wealth and sophistication although no reference was ever made to Max Steinthal's success. "We didn't know how big a man he was," Mr Montfort said.

In matters such as the hanging of the paintings, it was Mrs Steinthal, an elegant and artistic woman, who called the shots. He added: "In retrospect, I would say he was the driving force behind it, but she undoubtedly had a great deal of influence."

Several of the works being sold over the forthcoming months stick vividly in his mind. "I can remember the Serolla painting, it's a beautiful painting, that hung in my grandfather's study. When I went into his study, I used to sit in a chair that was opposite this painting and I would concentrate my gaze on the head of the child," he said.

Other paintings were in the country estate, including a Frans Snyders that the Sotheby's experts consider particularly fine. "The still life painting with the hare that hangs upside down dripping blood hung in the dining room in the country house. My brother and I always hated that painting. It put us off our food."

All together, the collection comprised Old Masters, 19th-century works, Impressionist pictures and prints as well as decorative works of art. But the family were important patrons of the arts, too. In 1897, Max Steinthal was the joint donor of Jean-François Millet's work November to the National Gallery in Berlin whose director, Wilhelm von Bode, is thought to have advised him on his own collection.

But the life of culture and affluence was not to last. Mr Montfort, now a 77-year-old retired physician, was only a child in the Germany of the 1930s, but he can remember some of the shock - "just flashes of memory" - among his family at the election of Hitler and later events such as the destruction of Jewish property on Kristallnacht.

"My grandfather was of that element among German Jewry who felt themselves totally assimilated. He had all his sons baptised. I was never brought up in the Jewish faith, but was baptised as a Lutheran," Mr Montfort explained.

"From the religious point of view, there was nothing tying us to Jewry which was why it came as such a terrific shock for people who belonged to that particular tranche of society that their German nationality was taken away from them. My grandfather came from a bourgeois family that had been relatively prosperous from the early 1700s."

In the vicious political atmosphere of the time, Max Steinthal eventually resigned the chairmanship of the Deutsche Bank he had done so much to develop because being a Jew had become a political embarrassment.

Within a few more years, the family homes had been seized by the Nazis, documentation of which is shown above. Yet the art was saved by despatching it to the hands of a non-Jewish son-in-law near Dresden in eastern Germany, before the Nazis could confiscate it. Max and Fanny Steinthal were forced to take lodgings in a guest house which was where he died.

The Gestapo were keen to find what was a well-known art collection. "We knew from reading books afterwards that Hitler and [Hermann] Goering [who was eventually head of Germany's armed forces] were very interested in these paintings. They would have been interested in all the Dutch interiors and Goering would have liked the still lives that my brother and I disliked," Mr Montfort said.

But they never thought to look in the hands of an Aryan. So the boxes were kept safe until around 1950 when the son-in-law, by then unhappy at living under a Communist regime, fled the German Democratic Republic.

Just as the Steinthals' homes had been seized by the Nazis, his property was taken by the Communist regime on the grounds that it was Feindvermögen, or enemy property. Yet, miraculously, the seven boxes marked Steinthal were not appropriated by the state but stored in the Gemäldegalerie in Dresden, where they were forgotten by the authorities and unknown to the family who really owned them.

All Max Steinthal's heirs were left with as a reminder of times past was a list of works, and their valuations, that a bank was able to provide for them. They were left clueless as to what to do with it.

Only when torrential floods poured through central Europe two years ago did they came to light as volunteers, art lovers and curators struggled to save works of art at the Dresden gallery. In the flooded basement, a museum employee who happened to research the provenance of works of art, noticed the boxes in the basement with the German Jewish name stamped upon them. The family was traced.

"My brother phoned and said. 'Guess what?'" Frank Montfort recalled. "'Remember that list? Those chickens have come home to roost and they have found 69 works. They seem to be quite valuable.' I immediately thought of those horrible still lives."

Both men were now surprised to discover the exact extent of their grandfather's collection and how well advised he had been in his acquisitions. "We had just thought that like most big houses, there were pictures on the wall, but we had no sense that these were a specially chosen art collection. We suddenly realised that our grandfather was actually a collector."

Adrian Biddell, the head of 19th- century European paintings at Sotheby's, said it was "a classic end-of-the-19th-century collection" in its emphasis on French and German art "but Max Steinthal also had this edge".

There were a few more avant-garde works, such as La Reaccolta delle Zucche by Giovanni Segantini, a purchase that may have been prompted by a significant acquisition of a painting by the same artist by the National Gallery in Berlin in 1903. Significantly, Mr Biddell said all the works had survived extraordinarily intact, given their history. "They were in wonderful condition given they had not seen the light of day for 60 years."

Mr Montfort, who lived and studied in England after his escape from Nazi Germany and later served in the Royal Navy, said the family had agreed the works must be sold as the insurance premiums would be prohibitive and splitting the proceeds was the only fair way of dividing them. "You can't chop up paintings," he said.

The sale is expected to make at least £3m in total, though Mr Montfort was at pains to stress he is entitled to just a fraction of that.

"It would be lovely," he said, "if the best of the works - the Serolla and the Segantini - went to museums. That would give us a great deal of pleasure."

But he would rather have owned them himself. "I would have loved to have had some of these paintings, but I couldn't afford £2.5m," he admitted, sadly. "We don't have that sort of money. We're no longer wealthy."

And there are still many items outstanding. Frank Montfort can remember sitting in his grandmother's elegantly furnished private rooms with an assortment of miniatures, many painted on ivory, on the walls. There was also an enormous family library of first editions that have not been retrieved. Where they all are remains a mystery as baffling as the fate of the Steinthal art until the devastating storms of 2002.