WILDGEESE/EMIGRANT BUSINESS LEADERS ON OPPORTUNITIES ABROAD:LIKE SO many others at the time, Declan Sheehan came to London in 1985, sharing a house with "six trainee accountants" in Wembley after he had earned an economics degree in Trinity College, by way of a detour through its medical school.
Today, Sheehan is chief executive of HSBC’s Private Bank in St James’s Street in London, in a building that for decades housed the Conservative Club, a home for dissident Tories uncomfortable with the more establishment leanings of the Carlton Club.
Many of the rich are not quite as rich as they once were but there is no shortage of clients for a bank that requires its customers to have £2 million “in liquid wealth” – ie, outside of their home – before they can join.
HSBC, he says, had “a fairly good crash”, on the back of conservative habits that meant that it relied on deposits to make loans, rather than seeking to get funding, as so many others did, on the wholesale markets.
“HBOS had a loan to deposit ratio of 148. For every 148p they were lending, 48p of that was coming from the wholesale market. As soon as the market became concerned about that, it wasn’t the depositors heading into the bank taking their money out; it was the wholesale lenders.
“In Ireland, it was more than that, because the depositors were also going in taking their money out. We have always funded very conservatively.
The bank typically has less than a 90 per cent loan-deposit ratio, and it is a requirement that it be maintained pretty much across all its businesses.
“Coming into the crisis, we were well-positioned, our credit standing was very good. In the last two months of 2008, we ran out of account opening forms. We had people coming to us from HBOS, Coutts, which is RBS, and any other number of banks,” he says.
Banking had not been the ambition. Raised on Orwell Road in south Dublin, Sheehan had gone to Trinity to study medicine, which he did for two years. “I come from quite a medical family. I hated it, even though I thought I would love it.”
Back in 1985, the now 49-year-old son of a retired Aer Lingus pilot came to London to work as a trainee with JPMorgan “with the promise that there was going to be all sorts of interesting things, like going to New York”. Interesting is a word Sheehan uses a lot.
After six months toiling in the bank’s oil department and on loan syndications, Sheehan transferred to New York for Morgan’s legendary training, where competition was fierce and a participant’s future was decided by how they performed.
Sheehan did well, returning to London in 1986 to trade in the field of structured synthetics “where you would find something over here that the market for which it was created did not want and then add interest rate swaps, or currencies and create something that somebody over here wanted”.
Sheehan moved to New York, where he bought a house and became the landlord of television host Charlie Rose, before heading to Hong Kong for “an exhausting period” handling equity offerings.
And then it was on to Tokyo, before heading back to Hong Kong. “Six months there and I had finally got the last picture on the wall. Then I got the call to say, ‘You need to move to Geneva by Wednesday’.
“It comes down to the fact that they don’t offer you bad things. If they are asking you to move there is usually something interesting in it,” he says.
Following a six-month break, he moved back to Dublin in 2004 for a little consultancy with AIB, among others, realising as he did that living in Dublin during “the crazy period” was expensive “even for investment bankers”.
Soon, he was approached by Morgan to go back to China, and by HSBC to head the private bank in London.
He chose London life, saying the bank has “the same sort of values” as Morgan, “decent people, teamwork, people trying to get on with each other. This is not a macho place.”
Looking at Ireland, Sheehan says low corporation tax rates must be defended at all costs, while the interest rate on the EU-IMF loans must be renegotiated.
“The rate that we are paying right now is a market rate and it was intended to penalise.”
Equally, though, the Irish public must realise that the National Asset Management Agency (Nama) will sustain losses when it offloads some properties, while the prospect that those property developers involved in the blunders may get a second chance cannot be ruled out.
Acknowledging the PR headaches such an outcome would cause, Sheehan says; “There is a commercial reality: prices have dropped, the loan is now worth 80 cent on the dollar.
“If they are willing to pay 80 cent, then you sell it and part company with it and they will develop it.
“If you are selling it back to the developer, you need to leave something on the table where they have an incentive.
“Right now, selling the loan at 100, there is no incentive, so Nama will need to take some discount.
“I think they are probably entertaining that.”
Declan Sheehan Head of private banking in UK and Ireland at HSBC
