The bank's UK wing has been pursuing potentially strong niche markets, writes Barry O'Halloran

You don't get much more British than Royal Ascot, Oxford and public schools. But increasingly, when these pillars of our nearest neighbour's establishment have been looking for cash, they've been turning to an Irish bank - AIB.

The bank's UK division, known as Allied Irish Banks GB, has been developing a specialist lending business in Britain for the last two decades. Its policy of pursuing potentially strong niche markets has led it into some interesting corners in British business.

It is the co-funder with Barclays Bank of a £140 million (€200 million) redevelopment at Ascot racecourse, owned by a trust whose ultimate beneficiary is the English monarch, and home to the midsummer "royal" meeting, at which the British Royal Estate sponsors all the races.

AIB and Barclays are equal partners in the Ascot project, but according to AIB GB's director of banking, Frank Sullivan, it made most of the running. He says that Ascot appointed PricewaterhouseCoopers as advisers, and the racecourse management were very careful when it came to making their final decision. "A total of 16 banks had been invited to participate. It was a long process, it took about two years," he says.

He maintains that it was the bank's Irish connection and the fact that this country punches far above its weight in global racing (including bagging many Royal Ascot winners down through the years) that swung it. "Irish people are taken very seriously in racing," he says.

"But there was more to it than that. We were able to demonstrate an understanding of the racing industry to a greater extent than the other banks." There is also the fact that both he and his colleague, Bill Toomey, who deals with Ascot on a day-to-day basis, have an interest in the sport. The bank understood that racing's income is drawn from diverse sources that include TV and media rights, betting levies, state funding, gate receipts and sponsorship.

"There are particular ways that some of those funds are treated from an accounting point of view and a tax point of view, and we would have an understanding of that," he says.

Ascot's redevelopment was one of the most elaborately planned projects of its kind in racing. Two years ago, the course went as far as growing new turf for its flat course in far away Lincolnshire and transporting it to the track and re-laying it. A road that ran through the course's straight leg now runs underneath. The main feature is a new stand which is shaped to give unobstructed viewing from any point, and which aims to democratise to a certain extent the traditionally hierarchical enclosures at its meetings. It is scheduled to be ready for a "dry run" meeting at the end of May and will be officially launched at the beginning of the royal meeting in the last week in June.

AIB is also the main banker to Racecourse Holdings Trust (RHT) and Northern Racing. The former is a subsidiary of the English Jockey Club, and runs high-profile tracks like Cheltenham, Aintree, Epsom and Newmarket.

The latter operates a range of courses less well known to Irish people. Aintree is working on a phased redevelopment. Newmarket is in talks with the bank about funding a face-lift for its July course, one of two tracks at the historic venue.

Becoming English racing's premier Irish bank was a result of AIB's relationship with Wetherby's, which maintains a register of thoroughbred horses, and provides the racing and breeding industry with specialised financial services.

Sullivan says that relationships are key to the way that AIB does business in the UK. "Cold calling is not our forte," he says. Instead, the bank wins custom through networking and building personal connections with the industries it targets.

Several years ago, it hosted the annual conference for principals of Britain's independent schools (once known as public schools) in Dublin. It now acts as banker to Dulwich College in south-east London. The school's luminaries include English writer PG Wodehouse and Bank of England governor Eddie George. Similarly, when Oxford University went looking for a loan for student accommodation, AIB provided that cash as well.

The bank is active in the education and non-profit sector in Britain. It has also worked on opening up niches for itself in areas such as professional services. Barristers in London and other centres are increasingly availing of its services.

Sullivan explains that AIB discovered that many professionals were looking for a service tailored to the needs of their industry, and also one that was available when they were not working. "They wanted someone who was available when they were available," he says.

The bank has taken this approach further, getting business in the professional services sector, particularly in the City of London, where there is a market in firms providing public relations and other services to the financial players. "It's a market within a market if you like," Sullivan says.

Robbie Henneberry, managing director of AIB Group (UK) stresses that the bank provides a personalised service to all its clients. He points out that its small size in comparison to established competitors in Britain has enabled it to do this.

But that does not cut it out of big projects. AIB is providing half the finance for a 600-bed hotel at the proposed terminal five for Heathrow Airport. The development is costed at €290 million.

AIB already has a relationship with the developer, Arora International, which already has three international and aircrew hotels at Gatwick and Heathrow airports in Britain, and a hotel in Manchester.

Businessman Surinder Arora chairs the group. He was recently named as one of the top 20 entrepreneurs in hotels and restaurants in Britain, with an estimated personal fortune of €140 million.

The new terminal is the biggest building project in Britain, and is being developed at a cost of €6 billion. The British Airports Authority and government are backing the plan, because it is seen as vital to the country's most important airport, and thus its economy.

Appropriate then that the British establishment's favourite Irish bank should be involved at some level.