How Does Lunch at a Merchant Bank Decide a Loan?

David Senra describes how lunch at an old merchant bank decides a loan of a million pounds. The talk is about farming, roses, horses, politics, and families, and it skips the credit itself. The chairman grows roses and the deputy chairman breeds racehorses.

The person at the table does not realize he is being carefully scrutinized the whole time. The general impression he leaves decides whether the bank backs him with a million pounds and whether any other security is demanded for the loan. The assessment mixes experience and flair, analysis and instinct inherited from generations of shrewdly assessing ancestors. Merchant banking is not a concrete science but an abstract art.

Mistakes are inevitable. People have been fired for incompetence, but never for making an occasional mistake, because the bankers have to move fast. They know they are completely differentiated. They are not a big bank or a giant corporation. They are always encouraged to make fast decisions, though a decision may be the wrong decision once in a while.