UB's definition of "Modestly"

Obviouslty, Ulster Bank’s understanding of the word “modestly” differs from the dictionary definition!

An almost 40% drop in housing construction is modest … I would hate to see what it takes for him to use “significant” let alone “severe”


Blue Horseshoe

Modest indeed. Well, I had the misfortune of using our state-of-the-art public transportation system over the weekend (my car is being repaired): I can safely say that the number of cranes in view on the east side of the dart line between Connolly and Clontarf has decreased by a factor of ten since the last time I was on the DART (about two years ago).

number of for sale signs, on the other hand, has not…

Unlike historical property bubbles in other countries, we now live in a unique market here in Ireland in 2007, where the internet is probably the first port of call for most purchasers via two predominant websites. Estate agents don’t have the need to stick up swathes of “for sale” signs for fear of irking potential buyers. Technology can be used to their advantage.

I’ve yet to see an article in the media about how the internet impacts on the property market. Lot harder to hide price falls in this day and age with google cache, message boards etc and easier to see how many properties are for sale in the market as a whole or in any particular region/price bracket.

But then when the Chief executive is making predictions that would make David Icke baulk, who knows…

Courtesy of the Sunday Independent, Ulster reckon they’ll be the biggest in 5 years. Check out his bullish outlook for Irish property towards the end.

Bringing just a little rivalry to Ulster

BANK of Ireland chief Brian Goggin recently announced that despite increased banking competition nobody was going “to eat his lunch”. He should open his window and listen to the revving noise coming from George’s Quay. It’s the sound of Ulster Bank’s Cormac McCarthy starting his engine. The blue-eyed boy of Irish banking is setting out to park his tank on AIB and Bank of Ireland’s manicured lawns. And then eat their lunch too.

Ulster Bank is the third-biggest bank in Ireland by market share. McCarthy has his eyes firmly fixed on the number one slot.

“I don’t for a minute suggest that in 18 months we’ll be the number one bank, but I certainly think that over a five-year period we can do a hell of a lot towards getting to that game,” he says, as he throws his Louis Copeland suit jacket over the back of a chair.

AIB’s Eugene Sheehy and Bank of Ireland’s Brian Goggin may be sniggering at the prospect of Ulster Bank taking them on. After all, AIB reported operating profits of €2.6bn last week, with Bank of Ireland chalking up €1.5bn last year. Ulster Bank’s operating profits were just €575m.

But can Ulster Bank really be a threat to the big two? Yep, according to Manchester United fan McCarthy. It’s a pretty chunky beast already, the number one player in the North. Ulster has 200 branches, 32 business centres, an asset base of €50bn and 1.7m customers. You’d notice if it stood on your toe.

Crucially, it’s also owned by Royal Bank of Scotland - which is to banking what Paul O’Connell is to line-outs. RBS is one of the 10 biggest banks in the world. It could eat AIB, BOI, Permanent TSB, NIB and Anglo Irish Bank for breakfast without burping. “This is a very, very powerful engine to have behind you,” says the 44-year-old father of four.

“AIB and Bank of Ireland have the lion’s share of the market and they are not going to give it up easily. But with the physical infrastructure we have, the numbers and the people and the shareholder we have, then we can actually do that,” he suggests.

But Bank of Ireland and AIB have to lose serious amounts of business for that to happen. It would take Ulster Bank over eight years at a current growth rate of 20 per cent to match AIB’s 2006 profitability. Bank of Ireland could be caught in over five years.

The big two banks have to sit completely still - and both Brian Goggin and Eugene Sheehy are paid a few million each to ensure that doesn’t happen. But look what happens if you slowly boil a frog.

Buying AIB or Bank of Ireland would catapult Ulster to the top of the charts. "When you look at the market share data, we’re pushing up against limits for competition and all the rest of it.

“So virtually anything you’d look at acquiring in the market would lead you into that territory,” he admits. “And acquisitions are fraught with lots of integration issues.”

He certainly knows. The former GE Woodchester banker was once upon a time the youngest ever chief executive of a major financial institution, back in 2000 when he took over the rudderless and badly listing First Active.

He did one heck of a job turning it around, flogging it to RBS for €887m in 2003. RBS legendary boss Fred ‘the Shred’ Goodwin soon plonked him in charge of its joint Ulster Bank/First Active operations.

“We don’t have to buy to grow. There are very few things out there that would be transformational for us,” he says, adding that Ulster would have “no chance” of buying something like AIB. However, he says that Anglo Irish Bank is “in a different space”, before deciding not to comment on other possible targets - like the €1.5bn-valued Irish Nationwide.

So, ultimately, Ulster aims to become number one in Ireland through boring but relentless organic growth?

“I think so. We’re not too far off it in terms of distribution.”

Organic growth doesn’t lend itself to cool nicknames though. It’s less Cormac the Crusher and more Cormac the retail distribution network expander.

Ulster is looking at opening another 20 to 30 branches, with a further 20 new business centres. “That’s nearly a whole new bank,” he says. True enough. NIB has 59 branches and 13 business centres, with Halifax having north of 40 or so. “We have the capacity to do that within ourselves, we don’t need to buy anyone.”

McCarthy is also ferociously ramping up in the other lucrative but watching-paint-dry-types of banking like treasury, corporate and business banking and invoice financing. Business and SME banking are Ulster’s sweet spot, chipping in over 50 per cent of its profits last year.

Royal Bank of Scotland has swat teams of specialist bankers that can be parachuted in for deals. Head office has over 700 top professionals in areas as diverse as healthcare and distribution for private placements. McCarthy’s Irish rivals simply don’t have the same firepower.

But the high street retail operations are the builder’s bum of banking. You just can’t ignore it. McCarthy suggests that Ulster Bank products from mortgages to current accounts are “leading” or “best in market” or indeed “very strong”.

Hmmm. If you turn over the page, we do a bit of an old product price comparison column ranging from mortgage quotes to personal loans and credit cards. Most weeks, Ulster doesn’t score highly. Interest rates on its standard

‘It would take Ulster Bank over eight years at a current growth rate of 20 per cent to match AIB’s 2006 profitability’

credit card would embarrassa loan shark. Some savings products are awful. “I take issue with that,” growls McCarthy.

Yikes. Some of the other stuff is all right. The free banking current account, especially with €150 hello money thrown in, is actually pretty good. “I think we have the products. We wouldn’t have grown our customer base if we hadn’t. We wouldn’t be opening 1,500 customer accounts per week.”

And to be fair, fixed-rate mortgages at Ulster’s First Active have improved beyond recognition in recent weeks to top the lists. They needed to, not just because they were terrible, but because of increasing competition in the sector and with the uncertainty over the property market.

On the outlook for property, McCarthy is cool as a cucumber sipping iced tea. “I think the property market’s demise has been written about ad nauseam for several year now,” he says. “I think it’s cooling and that’s not a bad thing. It’s to be expected. But I don’t think it’s over. The economy is growing and people need houses. They’ll be built and they’ll be sold. I just think that it’s quieter but we’re still doing good business.”

Concerns that banks have been lending irresponsibly have heightened in recent weeks, with EBS rapped over the knuckles over its plans to water down loan stress testing and new suggestions that mortgages are being offered at multiples of up to seven times wages.

Unlike most of his contemporaries, McCarthy doesn’t wuss out of the latest controversy. He gives it both barrels.

“There are certain circumstances that we’ll lend certain multiples over a certain length of time,” he snaps. “If we’re dealing with professionals with clear careers and career paths, then why shouldn’t we take a view on their futures?”

However, these loans are only a “small subset” of the whole Ulster loan book.

“The core of the market is written with loans to values of 65 to 75 per cent, with affordability rates of less than 40 per cent. It’s very solid,” he adds. “We don’t just throw money out.”

Further comfort is in the fact that 40-50 per cent of Ulster customers are looking at the security of fixed-rate mortgages.

McCarthy is satisfied with the quality of Ulster Bank’s loan book. “We see nothing in our portfolio to give us any cause for concern. There’s no rise in defaults.”

Allegations that repossessions are going through the roof are wrong. “It’s just not happening.”

Mind you, he’ll be sending the boys round to lift business off Bank of Ireland and AIB. Maybe Brian Goggin and Eugene Sheehy should lock their ham sandwiches away in the desk for a bit.

So true. I drove up to see two houses at the weekend around the SCR area which have been listed for sale for many months on myhome and agent’s own site and there were no for sale signs outside. It occurred to me that the agent has probably deliberately taken them down so as not to cause low morale among the neighbours (its very cose to portobello - nice part of town). Psychology is crucial to sustaining the market. It may well be that we may have a soft landing in certian areas because agents can afford to hide the outward signs of slump by just relying on the internet.

Such is the need for a place like the PIN, and hopefully with the other buble watch sites we can somehow hope to redress this distorted market. Or as Mr Trichet calls it “abnormal”.

Or to be honest, the agent has a limited number of signs and has just moved them to fresher properties.

Blue Horseshoe

Or to be honest, the agent has a limited number of signs and has just moved them to fresher properties. Blue Horseshoe

Blue Horseshoe - ever done jury service? You would make one fine juror.

Hi ,

I can assure you that EA’s will not think like that…

'for sale ’ board presence is drilled into the young un’s that are out selling , they will get a board up anywhere they can - mad , but its true.

Remember , most EA’s in Ireland have ONLY ever known/worked in the mad ‘bull run’ we have had for 15 yrs , even the guys at the very top of big companies - many have ideas WAY above their station and frankly dont know how to deal with this slowdown , so they will just plug away as normal and see what happens - Crazy huh? :unamused:

… also an EA will not run out of boards , 100 extra can be made in a matter of days. :open_mouth:

Murrayo (an EA of 15yrs - for my sins!)

Am sure you are absolutely right about EAs not running out of Boards - perhaps in developing countires it would be conceivable.

Am not sure about EAs being as dozy as you suggest however - I have dealt with the particular agent who has removed the boards from the properties I mentioned (which I know are still for sale) and she would give the cutest Kerry man a run for his money. There is not a chance it has escaped her notice that too many boards aint so good for business.

Article in today’s Sindo about people not turning up for jury service in Ennis.
No mention of the number of ‘special professions’ that can avoid doing this because their job is so essential to the continuing function of society.
I mean, why TF should a stockbroker be allowed skip jury service?
BTW, does anyone know where the list of excluded jobs is published on the web?


citizensinformation.ie/en/ju … ction.html