Allied Irish Banks (AIB) yesterday officially opened a new office in Los Angeles. The branch will specialise in providing loans to the Church and non-profit organisations for the building of schools, churches, low-income housing and even cemeteries in the western United States.

Since the bank opened in New York in 1977, it has built up its non-profit portfolio to represent billions of dollars.

"We lend to 186 Catholic parishes in the US," said Mr Warren Guinane, vice president of AIB Los Angeles. "But the Catholic Church is not our only client." Indeed, the bank will provide finance to any non-profit organisation that can meet the lending criteria. In the last two years, it has provided loans to low-income housing projects in New York, Philadelphia, San Francisco and Los Angeles.

In San Francisco, the average monthly rent of a one-bedroom apartment is $900 (£652) and the state minimum wage is set at $700 per month - so low-income housing is at a premium.

One of AIB's large customers in this market sector is Mercy Charities - a charity founded by the Sisters of Mercy - which provides low-income housing in inner-city areas across the United States.

"We are at a competitive advantage over some of the US banks because they view the housing projects as real estate loans," said Mr Guinane.

"These projects are usually located in inner-city areas and would often be viewed as high-risk ventures." However, the non-profit and charitable institutions rarely, if ever, default, according to Mr Guinane, and therefore make excellent clients.

"It's very hard to find investors who are willing to undertake the risk of developing an urban area," said Ms Mandy Nelson, director of development for Mercy Charities, in San Francisco. "AIB understand the business and has taken risks that other banks would not take."

However, two of America's largest banks, Wells Fargo and Bank of America have built up their non-profit business in the past year, so AIB faces substantial competition in California.

"Our non-profit loan portfolio represents $519 million in ten states," said Mr Mark Marymee, spokesperson for Wells Fargo in San Francisco. "Most of our loans for housing projects are worth about $1 million, so we would be one of several investors in a low-income housing deal."

By comparison, AIB invests about $5 million in a given project and its low-income housing portfolio is worth about $100 million.

Once established in Los Angeles, the bank will look to diversify into other market sectors.

"It has been suggested that we should look at financing movies," said Mr Guinane. "But I think in the short term, we will be looking to expand into offering loans to US cities, county and state governments."