THE FRIDAY INTERVIEW/Gerry Mallon, chief executive, Northern Bank:GERRY MALLON'S temporary fifth floor office in the heart of Belfast city centre probably has one of the best corporate vistas in the whole of Northern Ireland. It is akin to a virtual glass box, overhanging a corner of Donegall Square West, and it delivers a compelling view of the city.
On one side it provides an intriguing, almost voyeuristic snapshot of people who are unconsciously going about their daily lives. On the other it provides a window into what really lies at the heart of Mallon’s business, and in particular what drives the youngest ever chief executive of a bank in the North. Mallon’s office looks directly into the banking hall of Northern Bank’s recently revamped flagship branch.
It is also just several minutes’ walk from the scene of the £26.5 million (€29.7 million) robbery in 2004 that is one of the more controversial chapters in Northern Bank’s recent history.
The Donegall Square West branch is the largest in Northern Bank’s 90-strong portfolio across the North and the view from his office, according to Mallon, constantly reminds him of just what drives the business – “customers”.
The organisation, owned by Denmark’s Danske Bank, is the largest retail bank in the North, but it is unlikely that many of their customers would be able to pick Mallon out of any line-up of bank chief executives. At 39, Mallon does not quite fit the traditional banking profile, readily admitting that, originally, he never had any thought of a career in the industry.
A Cambridge honours graduate with a first in economics, Belfast-born Mallon has been on the fast track all his life. He returned after graduation to the North “in the middle of the last recession” and, because there was “not much else happening”, completed an MBA at the University of Ulster.
Mallon then joined the North’s Civil Service fast stream and was appointed private secretary to the then minister for the economy – Baroness Denton. From there he moved to the predecessor of the current regional economic development agency, the Industrial Development Board. After five years in the civil service he joined McKinsey Company as a senior strategy consultant in London. It was an experience he relished.
“It was professionally phenomenal. You are put along some extremely bright people, ferociously ambitious and extremely hard-working. They are given some of the most urgent and biggest business problems that are on the go in the biggest companies, and put in really pressurised situations to deliver a great result. You cannot buy experience like that – it is just fantastic.”
He still identifies with the analogy he once heard – that working for McKinsey “was like being the armed wing of the capitalist jihad”.
Mallon says that despite all the attractions of staying with the organisation, the time came when he found himself asking what was really important to him.
“I can recall the moment when I wanted to leave McKinsey – because I was desperate to get back to Belfast one night for my son’s first birthday and I was late getting out of central London to Heathrow, and I missed the last flight.
“I knew I wasn’t going to see him on his first birthday and then I thought about how much I had actually seen of him in his first year. It made me reappraise what my priorities were in life,” Mallon adds.
According to him it was a simple equation, and the banker he now is applies this logic on a daily basis. “Family life and quality of life were more important to me than money or a glittering career,” says Mallon, who has never regretted his decision to base his home life in Northern Ireland.
He does acknowledge that, once he had made his decision, there were initially “limited opportunities” when it came to his career.
Mallon got an opportunity to join Bank of Ireland as director of business and retail banking, and spent four years with the organisation. He moved to Northern Bank in 2006 as head of business development, and was later appointed deputy chief executive.
Last July he formally took up the job of chief executive – eight weeks before Lehman Brothers collapsed. It has been, he would concede, a baptism of fire.
“There are a number of challenges – if you look at the problems we are facing in the banking industry in Ireland, North and South. First there was a collapse in the property market; secondly there was an international liquidity crisis, and thirdly there has been a recession. Each one of those things would be difficult enough to deal with on their own, but we are having to deal with all three in succession,” says Mallon.
He says the industry has had to come to terms with an inability to recapitalise and to lend because of its reduced capital and reduced access to liquidity, while dealing with “businesses crying out for additional funds”.
Despite recent financial results showing Northern Bank posted impairment charges for the first quarter of 2009 of £55.5 million – of which £1.4 million was actual losses – Mallon remains upbeat.
“Northern Bank remains strong and well capitalised and, as at 31st March 2009, the Tier 1 capital ratio was 10.6 per cent and the solvency ratio amounted to 15.2 per cent, which is one of the strongest positions in the UK.
“If you are going to be the chief executive of a bank in Ireland, this is the one to be in.”
Mallon says Northern Bank is in a better position than many peers because it has solid Tier 1 capital that gives it the capability to absorb losses. “We are also not quite as exposed as some as our competitors – because we weren’t as aggressive as some of the other banks at getting into the property market. We were there, we did take pain and we will take more pain, particularly in exposure to residential development.”
He argues that, like Danske’s National Irish Bank operation in the Republic, Northern Bank has acted more quickly to address the issues it faces.
He by no means underestimates just what kind of challenge both he and Northern Bank face. Because banking “is perceived to be at the cause of this recession”, it has become “politicised, and bankers to a certain extent have become demonised”.
“The Northern Bank didn’t cause the credit crunch, we didn’t cause the international recession. We are just trying to run what is a relatively small bank in global terms but it has a big presence in Northern Ireland,” says Mallon.
He believes the big thing that is lacking in the banking industry in general is customer trust, though this is not an issue for Northern Bank, he argues.
“Northern Bank is 200 years old this year. It was started as a private partnership in 1809 and in that time the bank has been through a lot of challenges and ups and downs,” he says.
“I have a real sense that I have inherited something that is deeply ingrained in the community that we are in and that this was built fundamentally on the relationships with customers. The individual relationships are still there but the broader industry has been incredibly tarnished over the course of the last year or so.
“There is a word which is inherent to our parent Danske’s core values, and it also really embodies what Northern Bank stands for. That is integrity – both in relation to how people in the bank treat each other, and I think as a consequence, how they treat our customers.
“Longer term, everything else being equal, that will show – I believe if you treat your customers right then you will be rewarded for that,” Mallon says.
ON THE RECORD
Name: Gerry Mallon
Age:39
Position: Chief executive of Northern Bank
Family: Married with four children
Background: Belfast-born. Studied economics at Cambridge University, graduating in 1992. Joined the Northern Ireland civil service, becoming private secretary to the minister for the economy in Northern Ireland. Moved to the Industrial Development Board where he held the position of director of international operations.
Joined McKinsey and Co in London as senior strategy consultant. Moved to Northern Bank from Bank of Ireland where he was director of business and retail banking
Something you might expect: Says Northern Bank is strong and well capitalised and is in a better position than most of its competitors in Ireland
Something that might surprise: He is a devoted Liverpool fan and has a passion for running
