Bank chief quick to learn the lessons of history - change job

Peter Fitzpatrick set out to become a history teacher but quickly realised that accountancy was really what he wanted to do. Today as finance director of Irish Life & Permanent, he holds one of the best-paid jobs in the financial sector and has few regrets.

Born in Belfast, Mr Fitzpatrick studied modern history at Queen's University. His wife Maria is a teacher and she, together with some friends and family, arranged a short teaching job for him in his final college year. After six weeks he says he knew this was definitely not the career for him, and decided to try his hand at accountancy.

At that time they decided to move away from the troubled North and set up home in Britain. "It nearly broke our hearts to leave our friends and family behind but sadly, we decided we should move."

In the 1970s the major accountancy firms had launched an initiative to widen the intake into the profession from other disciplines and this provided an entry into the profession for Mr Fitzpatrick.

In 1975 he joined Coopers & Lybrand in Manchester as a trainee accountant, progressing quickly. Five years later he moved to the firm's Dublin office where he became a partner. AIB's current retail banking director, Mr Kevin Kelly was managing partner of the firm at the time and Fitzpatrick's role was largely focused on auditing financial services companies.

"I quickly developed a fascination for the sector. There were always technical issues which were thrown up, such as the treatment of derivatives in the accounts, which was interesting and it was a very good time to be involved there."

Some years later he switched into insolvency work and came to prominence when he was appointed to act as an administrator to Goodman International in 1989 when it got into financial difficulties. He eventually acted on behalf of the banks and was instrumental in devising a strategy which would restore the company to profitability. This continued until mid-1990.

The following year, Irish Permanent's newly-appointed chief executive, Mr Roy Douglas, approached him to join the building society as finance director. The two men had met when Mr Douglas was at AIB Capital Markets and the approach was made at a time when the building society was assembling a management team which would bring the business to the stock market.

The job was a highly attractive one and held the prospect of lucrative stock options which would make Mr Fitzpatrick and his colleagues very wealthy once the company was floated on the Dublin market in 1994. Based on the current share price these options offer him a potential paper profit of around #1.4 million (£1.1 million). This is of course a long way from the #3 million the same options were worth when the shares hit a high of #14.93 last year but he is confident the shares will eventually recover.

Irish Life & Permanent's shares have been hit by the surge in interest in high-growth technology and telecommunications stocks. All shares in the sector have fallen dramatically in value and there is little sign of any immediate reversal in their fortunes.

Mr Fitzpatrick admits it is a difficult time for the bank's senior management. "It is disheartening for a management team to be bringing in a great set of results and then to see the backside fall out of the share price. We will eventually trade out of this. As more companies like ourselves bring in results there will be a return to commonsense. There is only so far that the markets can run with this."

With the share price in the doldrums the group's board and senior management are also acutely aware of their vulnerability to a takeover. "Given the share price it is natural to worry about being taken over. Our shares are currently around 50 per cent off their all time high. And with the strength of sterling and the dollar there is a worry that someone is going to move into the Irish banking sector and start mopping up."

Mr Fitzpatrick believes that it could be some time yet though before someone swoops to make an acquisition here.

"There is no great interest in the Irish market from the US while banks in the UK have plenty of issues of their own to be getting on with. Consolidation is continuing in that market and it is unlikely that a UK financial institution would peep over the fence at Ireland until that process is complete."

The huge degree of scepticism towards the Irish economic growth story particularly in Britain, is also a factor which may dictate against any imminent takeovers from the UK market.

Mr Fitzpatrick says the recent Royal Bank of Scotland takeover of NatWest gave some insight into the thinking of British banks regarding the Irish market. Royal Bank of Scotland has decided to keep NatWest's Irish banking arm, Ulster Bank, whereas, Natwest and Bank of Scotland had indicated during the takeover battle that they would sell it.

"Royal Bank is only here because Ulster came as part of Natwest. Royal Bank has made it fairly clear that it wants to hold onto Ulster in the short term. Maybe that will change over time. It may decide to take the benefits for a couple of years."

Royal Bank's decision to retain Ulster Bank was a huge disappointment to Irish Life & Permanent. It joined with Bank of Ireland to launch a joint bid, estimated at up to £2 billion (#2.54 billion) for the bank. Irish Life & Permanent wanted Ulster's retail operations in the Republic, while Bank of Ireland was keen to expand its presence in the North. If it had been successful, Ulster Bank would have given Irish Life & Permanent a critical mass in the current account banking sector and delivered a new client base to the organisation.

"We would have gladly taken Ulster Bank but we look at lots of potential acquisitions. We are always at the financial services bus stop. Sometimes we flag them down and take a good look at them before deciding whether to get on or not."

It also considered acquiring ICC Bank, which would have added a small business banking dimension to the bank, but failed to make a bid saying it was not the right fit for its business. Mr Fitzpatrick says it would look at TSB Bank if it were to come back on the market now that its proposed merger with ACC has been abandoned, but it is not in negotiations with anyone at the moment.

The merger of Irish Life & Irish Permanent last year was the biggest corporate deal to be completed in the Irish market. Mr Fitzpatrick says the deal is delivering even more than it initially promised. At this rate, everything is going according to plan at Irish Life & Permanent, except for the share price. Mr Fitzpatrick and his colleagues are hoping that will turn out to be a temporary setback and that the strengths of the enlarged business will eventually be appreciated by the stock markets.