09.04.10

Viewers of Property Week’s first live webcast hear Richard Dakin’s strategy for banking group

The banker in charge of Lloyds Banking Group’s corporate recovery last week gave a live television audience the clearest insight yet into his strategy for managing its £88bn property loan book (see box, below right).

Richard Dakin, managing director and head of corporate real estate services at Lloyds, was speaking at a live webcast organised by Property Week and Lambert Smith Hampton.

His co-panellists were Great Portland Estates chief executive Toby Courtauld and Lambert Smith Hampton chief executive Ezra Nahome.

Dakin sought to reassure those tuning in, saying: “Despite challenging conditions, we do see property as a very important sector. We have a strong track record of supporting our long-term customers and this absolutely remains our focus.

“On top of that, our twin focus is this: first, securing the appropriate internal resources; and second, understanding the real estate market.

“The two ideas are connected. We have grown from 40 to 400 people by appointing bankers and property specialists.

“It is important to have both,” Dakin continued, “because bankers have an eye to the short term, perhaps on refinancing, whereas property specialists have an eye to the medium- or longer-term picture. That mix is the best way for us to manage the recovery.

“We want to give clarity early on to the future relationship with the borrower and, in those situations, it is important you gain control of the situation early to ensure value is not eroded.

“We want to spend time with these customers — we have some ‘relationship managers’ who have only two customers. Compare that with our ‘good book’ side where relationship managers have 20 or 30 clients.”

Asked by webcast chairman and Property Week editor Giles Barrie if this meant that Lloyds would be executing a lot of property sales, Dakin hedged his bets.

“In situations where we are the principal holder of debt, we look at every possible avenue. We can go down the joint venture route or we can look at disposals in the market. We are looking at disposals because the appetite is favourable,” he explained.

“But I want to be clear that we will not do what banks did in the early 1990s and dump stock on the market, because we want to have a clear strategy on everything we control — to maximise value.

“If it is a high-value, income-producing asset with good-quality tenants, and the yield has come down, we will sell. If it is a development property that we can rebuild or work to relet, we might take a longer-term view.

“But if market conditions aren’t as buoyant in the second half, I think you will see a lot more joint ventures formed with property companies rather than disposals, as it gets harder to make sales.” 

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Source: Property Week (www.propertyweek.co.uk)