Interesting times for top banker

May 18 2009 By Peter McCusker, The Journal

When Mike Mullaney accepted one of the top jobs in North East banking in 2007 little did he know the world of finance was set to be propelled to global attention. But as Peter McCusker discovers, Mullaney and his team are confident they are going from strength to strength.

The feeling towards bankers has changed from one of ambivalence in some quarters to hostility and at one recent business dinner one North East banker was even booed by some of the audience.

Mullaney says: "The Lehman collapse was an extremely difficult time and for one or two weeks we just did not know what was going to happen next.

"There was rash of jokes about bankers. When I was getting ribbed it never put me off and I will always give a robust defence of what we do for the region."

Mullaney’s brief on joining Lloyds was to drive forward the expansion of its corporate banking team and his appointment has been a success. His team has increased in size from five to 15 and the amount of business it is doing has continued to rise with lending so far this year up by 15% on 2008.

This is no mean achievement at a time when commentators and politicians are lining up to condemn banks for keeping their purse strings tied.

Mullaney recalls how when he started as junior banker in 1987 the bank manger would never leave his office, but with today’s bankers the emphasis is on continuous dialogue, not only with customers, but the whole of the region’s professional and business community.

Mullaney and his team are taking the fresh challenges which have emerged during by the credit crunch and the recession in their stride.

He says: "Our aim this year is to support business. The approach is one of ‘let’s sit down and look at the implications of the downturn and we’ll work together’.

"This is proving to be a very useful exercise. People obviously know their businesses well and we are finding that, no matter what the sector the business is in, the issues are very similar.

"From my experience there has been no withdrawal of funding facilities for anyone. In fact we have increased our lending by 15% so far this year.

"Some MDs think that banks are not lending, that we are hoarding our cash, but that is not the case. Banks are supporting customers. But I would question whether the demand is there for money. There has certainly been a reduction in capital investment but the access to the finance is there and we are very much open for business.

"One of the key things for bankers is that they don’t like shocks so we are spending more times with management teams. We are having weekly, sometimes daily conversations with some of our customers to get a real-time understanding of their markets.

"But there will be no knee-jerk reactions and there will be no panics if a company has a month of bad results."

To date, Lloyds Corporate in the North East has had no impairments – no writedowns – on its corporate lending since the start of the credit crunch, a record Mullaney is understandably proud of.

While some bankers are saying they are finding the credit committee processes more intensive, Mullaney contends that the rigours Lloyds has always applied to lending – which its record proves have stood the test of time – are the same standards being applied now.

He says: "Risk management is our number one priority. Our lending criteria has always been fairly robust and that is still the case."

On leaving school in Chester-le-Street, his home town where he still lives with his wife of 18 years, Alison, and children Jack, 14, and Katie, 11, Mullaney had a choice of three jobs.

He plumped for banking, ahead of insurance and surveying, and after three years in the branch network he won a place on the NatWest fast-track management training programme which took him to London in 1985.

Here he settled into the world of corporate banking, a world in which he continued when he returned to the region in 1987.

The North East corporate team he heads up deals with companies with sales of between £15m and £200m. He says: "These can often be businesses that are going through a lot of change and they may not have the man agement structures or systems in place and this is an area where we can add a lot of value.

"We talk about the businesses and then we talk about banking once we understand the business. We cannot provide the right banking facilities for a business if we do not understand it."

Well-known on the North East business scene, Mullaney is undoubtedly in his element at Lloyds. He highlights the work his team has carried out in the last two years as the pinnacle of his career to date.

"I have an excellent team with the right mix of skills, people who have all been through a recession before, who are able to pick up on the signs of stress and help.

"We performed very well last year in the teeth of troublesome economic storm. I have a team that is able to deliver throughout the cycle and help companies get back into profitability."

In Mullaney’s environment it’s difficult for work not to impact in all corners of his life, so regular family holidays abroad are one panacea for this. He also enjoys cycling with his son – and always checks his Lottery numbers!

With questions now being asked about how we can prevent a repeat of the cataclysmic financial events of the last two years, Mullaney airs his views.

"In this region we never moved away from the core principles of banking and I believe that is the case with every bank in the region.

"There is a fault in the global financial system. Did it get ahead of itself? It probably did, and that is the fault of all the parties involved.

"Will we ever have sub-prime lending again? Hopefully not, but having said that we did not hear any private individuals saying" don’t give me the money".

"There was a lot of value created during the boom years and we must not lose sight of that. I do not think asset values have reached their bottom yet and although we as a bank in the North East have had no impairments yet, we still do not know what is around the corner.

"There are often more issues for business on the way out of a recession. Businesses which have had to hold back may not have the capital to take advantage of new opportunities and get left behind.

"The world may well be different when the recovery begins. It appears that people are saving more and this may impact in areas which depend on consumer demand.

"But some of the sectors where the region is strong, such as biotechnology and pharmaceutical, oil and gas and renewables, will be important drivers for growth in the future.

"We are a bank that is on the front foot and as we move forward and adapt, as a region, we will be supporting our businesses all the way."

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