The Anglo Irish Bank Discussion Thread

Merl

Thanks ixus.

I'm coming at from a property point of view - the theory is that the increased supply of money in the economy (by anglo in particular) was forcing up the demand and thus prices being paid for property. My argument that the increased lending by Anglo (and most other banks) was based on the belief that prices would simply keep going up, instead of actually analysing the underlying property and occupier demand. For example, units on Grafton St were being sold at 2.5% yield (which is ridiculous!) and now they're available at 6.5 - 7%. The irony is that now when the figures actually stack up to invest, investors can't get finance!

I know I'm maybe biting off more than I can chew, but its an incredibly interesting topic...

Merl

Also, I have been able to check their accounts and have the lending figures and percentage increases for each year. They also state the impairments for these loans which is fairly minimal, given the nature of their loanbook..

ixus

Merl wrote: »

T the theory is that the increased supply of money in the economy (by anglo in particular) was forcing up the demand and thus prices being paid for property. My argument that the increased lending by Anglo (and most other banks) was based on the belief that prices would simply keep going up, instead of actually analysing the underlying property and occupier demand.

Regarding supply of money, I would suggest you should have your figures correct here and supply them in your thesis. You'd need to show that Anglo's loan book was rising at a greater level to the others to say that they were the main instigators.

My understanding of Anglo is that they worked on a model whereby they took greater risks on property and thus, had greater mark ups on the loans they made. When they had great earnings, the other banks followed. If you can demonstrate this from all the banks accounts (AIB, BOI etc)you'd be on to something decent.

Would also advise seperating their commercial book from the residential book if you can.

Merl

Good advice - thanks. Will def look at the loan books of BOI and AIB also to compare. The theory that Anglo instigated lending is good, and worth following up.

Anglo didn't really get too involved in residential. Ideally I'd like to focus on retail property lending (as the Anglo retail loan book more than doubled from 10% of overall loan book in 2001 to 22% in 2008) but it really depends on the breakdown of information I can find.

Working title of the thesis is: An Examination of Retail Property Lending by Anglo Irish Bank from 2001 - 2008 and its subsequent impact on the Irish retail property sector.

stepbar

A lot of it was down to margins as well and the speed at which they could evaluate a deal. Particularily, for property lending, Anglo may have lent based on the value of a building, where as the incumbents may have looked for another property as security to bring down the LTV. BoS played the same game. Towards the end the incumbant banks leveraged the hell out of their balance sheets, particularily AIB, in order to stop, as one banker put it, "Anglo from stealing their lunch".