New AIB chief Colm Doherty

Irish banks regularly relied on their commercial property borrowers to provide their own valuations of buildings and sites to raise billions worth of loans which were never challenged by the lenders, the Sunday Tribune has learned.

Fears have been raised that the numbers could have been changed in some cases, inflating values and allowing purchasers to borrow more through the property revaluations during the boom years.

Purchaser valuations, particularly for revaluations, regularly involved just a spreadsheet from a valuer, a senior investment source said, adding he had never been rung by a bank to check the accuracy of the numbers. His fear is that some may have been changed.

Anglo Irish Bank and parts of AIB in particular were criticised by industry sources for their valuation processes.

A source in Britain said that due diligence by one of the Irish banks was "very sloppy, left right and centre".

Concerns were heightened last week as further details emerged about a fraud committed on AIB in Britain after its corporate banking division for four years allegedly accepted bogus commercial mortgage documents. Britain's Serious Fraud Office (SFO) has been investigating the fraud since September 2008.

A third investment source said that purchasers would regularly ask in advance if a valuation would meet what they were paying. The source also said that some Irish banks regularly gave funding for development land at 100% of the anticipated final value, meaning there would be no profit in the venture for a developer unless property prices increased. The collapse in property prices since then left the banks even more exposed. The source also criticised the continuing availability of non-recourse lending to some developers.

AIB policy in both Ireland and the UK is that the valuation of a property is the responsibility of the purchaser and it is in their interest to establish the valuation independently of the bank.

"In the Republic, purchasers must provide a valuation report signed and stamped by a suitably qualified valuer, surveyor, architect or engineer who must be a member of a prescribed professional body. In GB and NI, purchasers choose from a panel of independent valuers."

Anglo Irish Bank relied on a panel of valuers, but sometimes allowed the same valuers to provide separate valuations to both the bank and the purchaser. "Anglo would have been the most relaxed about it," said the source in Britain.

The SFO has been investigating allegations that AIB's corporate banking division received bogus documents from a prominent London developer to raise hundreds of millions from the bank.

AIB sold and wrote down the value of the mortgaged properties by £56m in 2008. The SFO raided the developer's office in March last year.

Citing the SFO investigations, AIB said it could not comment on whether the bank had claimed insurance for its loan losses, whether shareholders should have been informed about the alleged fraud and about the nature of the due dilligence the bank carried out on leasehold documents.

The Irish Stock Exchange said it could not comment on whether AIB should have alerted shareholders about the fraud. The Financial Regulator said it could not comment on when AIB told it of the bogus documents.