Danske Bank chief executive Gerry Mallon: 'Instead of coming out as a poor engineer, I left Cambridge as a reasonable economist'
Danske Bank chief executive Gerry Mallon, from Belfast, tells John Mulgrew about taking over the top job just before the crash of 2008 and the challenges and successes of the bank ever since
Gerry Mallon turned down his first chance to work in banking — instead opting for a role working in the public sector at Stormont. But when he did take up his most senior role as Danske Bank chief executive in 2008, he did so just weeks before investment bank Lehman Brothers collapsed, and the world entered recession.
He also spent time in his earlier career working 100-hour weeks with one of the world’s largest management consulting firms, McKinsey.
The Belfast man, who went to Rathmore Grammar in Finaghy, first studied engineering at Cambridge before turning his hand to economics.
He said: “Instead of coming out as a poor engineer, I came out as a reasonable economist.”
Afterwards, the now 45-year-old father of four moved back to Belfast, studying a Masters.
The bank chief thought it was a difficult world for a young graduate, and chose a career with the civil service.
He said:“I started off in the Department for Economic Development, now DETI, and started off in the strategy or policy department and then moved into the administrator’s private office, at the time when Baroness Denton was Economy Minister.” Following a time at the former Industrial Development Board, he looked elsewhere for career progression, where he joined consultancy firm McKinsey — working in London, Dublin and Belfast.
After finishing up in 2002, he first entered the world of retail banking with Bank of Ireland, where he stayed for four years.
He then joined Danske Bank, after the Copenhagen-based company took over the former Northern Bank, where he acted as deputy chief executive.
But his promotion to head of the bank came just weeks before the collapse of Lehman Brothers in 2008 — which set the ball rolling for the one of the worst global recessions in decades.
He said: “In some ways it was good to be brand new. I think I might have been more intimidated if I had been established and stable.
“There was a very strange environment in banking, and you were used to picking up the Financial Times and seeing what was going on. But the situation was changing so rapidly that the FT was yesterday’s news and you went online for your news instead.”
The bank has had a reasonable set of numbers over the last few years, and in the first six months of the year posted pre-tax profits of £65m.
But a third of its profits last year still came from writebacks, where property held or sold by the bank has increased in value.
He said by 2016 it would be “more or less business as usual”.
And on the ever-growing political instability at Stormont, Gerry said Northern Ireland’s politicians “hadn’t succeeded” to date in providing a strong environment for businesses to flourish. He said: “Everyone in the business community wants to see stable government which is focused on providing the right environment for business to flourish.
“I don’t believe the current uncertainty is conducive to seeing that growth in the private sector.
“We need stability, and stability with progressive government which in engaging with putting policies in place, corporation tax framework in order to provide the environment to grow.”
During the last few years since the financial collapse the bank, as with the other financial institutions, had to make difficult decisions over clawing back bad debts from both retail and business customers.
The Belfast Telegraph asked whether the human cost of business failure for bank customers ever entered his mind. He said: “If you ever lose sight of the fact that you are dealing with people, then the business is gone.
“There are very few cases where what we have to do is exercise against the will of some customers, the right to reclaim some item of collateral.
“In almost every case, if a business fails, it’s the directors that call in the administrators.
“Occasionally there is litigation in relation to those and so on, but for the most part it’s been undisputed.
“Our level of arrears and repossessions has been very low compared to the market as a whole.”
And while Mr Mallon said there are no plans for further branch closures, he couldn’t rule out the possibility in the years to come.
Danske has 46 branches and five finance centres across Northern Ireland — compared to its 95 branches and 13 business centres in 2005.
Gerry said: “It feels like a pretty good balance at the moment. I don’t foresee in the short term future, unless there is further big changes of customer behaviour, that there are any closures on the horizon.
“I don’t foresee any in the first half of 2016, but you always have to review these things periodically based on usage.
“You have to keep it constantly in review.”
He said he was “very conscious” of the impact closing a bank branch could have on a small community.
His assessment of the mood of business is mixed. While the “first half of 2015 has been pretty good the current atmosphere in the business community and the current level of confidence is a little bit flat and disappointing.
“Part of the mood is driven by political developments and uncertainty.
“That is not good for business and people don’t like to invest,” he added.
The bank itself has undergone a restructure, with it becoming a standalone business unit instead of part of the Danish giant’s personal banking and business banking.
That’s prompted concerns the bank could be sold off.
But Mr Mallon poured cold water on the idea and said “there is no plan for that at all”.
He’s also a family man, married to wife Una — they met in their school days in Belfast — and they have four children, son Jude (14) and daughters Grace (12), Aoife (10) and Sarah (7).
And as if running a bank isn’t enough, Gerry is also relishing his latest role outside the bank, becoming chairman of the Irish Football Association (IFA) last month.
The former chairman of Ulster University — and diehard Liverpool fan — said it’s not about trying to “run the football association”. And he’s remaining impartial when it comes to football teams here.
But when the week draws to an end, it’s about family time, “trying to pretend to be a good father and trying to make up for the time when I’m not there”.
This time it's personal
Q. Do you prefer the town or country, and why?
A. As much as I enjoy getting out into the countryside, I’m a city boy at heart. I need the buzz — the livelier the city, the better.
Q. How has the banking sector in Northern Ireland changed since the recession in 2008?
A. This is a sector which is much more humble and which has lost some of the aggressive ‘alpha male’ characters and behaviours of the last decade — thankfully. It is much more focused on the fundamentals — giving customers what they need and earning back the squandered trust.
Q. How do you foresee it growing in the next decade?
A. Banking will become increasingly fragmented as technological innovations and new entrants start to chip away at the old industry. Customers will find that technology will make their lives easier but the numbers employed in the sector will continue to decline. The key for retail banks is building a strong relationship of trust with customers based on service and satisfaction.
Q. Have you any career advice for anyone trying to reach a top role in banking?
A. The world is becoming a much smaller place, so open your mind to international opportunities, and don’t be afraid to take an occasional leap of faith.
Q. What was the last book that you read and what was it like?
A. I read Soccernomics over the summer — it’s a very engaging look at money in football, particularly for a football and economics geek like me.
Q. What was your last holiday? What will be next?
A. We had a fantastic week in Tuscany with extended family and dinners which went on into the small hours. And I hope that all the family will be in France from June 10 next year with the Green and White Army...
Q. What is your favourite band/album or piece of music, and why?
A. I’m an old rocker with a particular soft spot for AC/DC but the song I keep coming back to is ‘Song 2’ by Blur which just puts a smile on my face every time I hear it.
Q. What is your favourite sport and team? And have you ever played any sports?
A. I’m a hardcore Liverpool FC nut and am still living off the glory of having been in Istanbul in 2005 for what I still think was the greatest match in history. My football playing career was cut short at an early stage when I was tragically diagnosed with a lack of talent.