To lend or not to lend...

The decision to approve a loan is often fraught with difficulties – both financial and political. And if the client is one of the bank's largest, the situation is complicated still further. David Boorer looks at the steps credit risk analysts need to take before okaying a loan.

In the 1980s, the UK’s TSB bank marketed itself as “the bank that likes to say yes”. This is probably one of the reasons it was bought by another UK bank, Lloyds, in the 1990s – saying yes to the wrong borrowers is a sure-fire way of losing money.

Every bank employs, or at least should employ, people who like to say no just as much as TSB liked to say yes. But just as in advertising – half of it works but nobody knows which half – a foolproof method of saying yes only on the right occasion has