I’m doing some research for a thesis at the moment which is analysing the lending policies of Anglo Irish Bank for commerical property purposes from 1999 - 2008.
My area of research focuses on their property loanbook within Ireland. Draft title is: An examination of Retail property lending by Anglo Iriah Bank from 2001 - 2008 and its subsequent impact on the Irish property sector.
The theory is that Anglo instigated a massive increase in property lending, in particular to the retail sector and BOI & AIB then followed when they saw the massive profits being made. This massive increase in lending then led to massive increases in retail property - too much money chasing too few properties…
A point of clarification first… What do you mean by “retail” lending? Do you mean lending for investment in, or the development of, shops, retail parks and centres?
Just a general note about Anglo’s lending - As we all know, it was focused on all facets of the property market; residential and commercial (which includes retail). Their mantra was “as we grow our clients - we too will grow”. Therefore the thrust was to get the loans out to their customers - with grease in the wheels, not grit. Service and a quick “Yes!” was the ethos. In fact, they could be best described as the bank who said, “The answer’s “yes”; now what’s the question?”
This ethos was encouraged by a bonus system for the staff which rewarded the making of a loan - not the success of it. The funds were borrowed on the wholesale market and lent on at a margin much higher than the other banks who tried to “copycat” later and competed by offering the same terms (100% plus loans) at lower margins. But customer loyalty was all important to the Staff at Anglo and if anyone dared move away to the likes of AIB or BofI, dire Mafia style consequences were threatened. It mostly worked although a few did manage to escape to the two major entities - as can be seen from their accounts!
It was a winning formula for Anglo as long as property prices kept rising.
