Aggressive chief of biggest bank must wonder what he is doing wrong

There must be times when Tom Mulcahy wonders what he is doing wrong. The aggressive chief executive of the State's biggest bank is highly regarded within the investment community and acknowledged as having the vision and ability to drive Allied Irish Banks (AIB) forward. Yet the bank's share price is in the doldrums. His personal wealth accruing from bank shares and share options has halved in the past 12 months and there is no sign of an early recovery. With another 18 months to go before retirement, Mr Mulcahy could be forgiven for thinking that things can only get better.

The 58-year-old chief executive is a career banker and, as easily, could have ended up running the bank's biggest domestic rival, Bank of Ireland. From Carrick-on-Suir, Co Tipperary, he joined the National Bank straight from school to work as a counter clerk. The National later merged to become the Bank of Ireland group and Mr Mulcahy worked in branches in Athlone, Listowel and Dublin over a five-year period.

He then won a scholarship from the bank to attend university and studied commerce at University College Dublin, followed by accountancy. When he qualified he was promoted to head office and worked in a number of departments there.

He switched allegiance in 1972 to join AIB's Investment Bank to launch its merchant bank subsidiary in London. He remained as general manager there until 1980, when he returned to Dublin to become a director of Allied Irish Investment Bank.

In 1985 he was appointed AIB's group general manager for corporate and international banking. This role gave him responsibility for the bank's treasury and corporate finance operations and its investment centres in the Republic and overseas and brought him to prominence within the group.

He was appointed to the bank's board in 1990 and was charged with establishing AIB Capital Markets at the International Financial Services Centre in Dublin which brought together the bank's treasury, investment and international banking activities.

It was from this base that Mr Mulcahy launched his drive to become Mr Gerry Scanlan's successor as group chief executive. At that time, Mr Mulcahy was not considered to be in the running, with the head of AIB's US operations, Mr Gerry Casey, being talked about as the heir apparent.

Though a dark horse at the time, Mr Mulcahy - a forceful individual - managed to convince AIB's then chairman, Mr Peter Sutherland, that he was the man for the job. And while his appointment in 1994 was greeted with surprise, he has few critics today.

Mr Mulcahy has a low-profile style; he is softly-spoken but direct, sometimes to the point of being brusque, and is not a natural performer when in the media spotlight.

Colleagues describe him as a hard taskmaster, a stickler for detail and someone for which you would harbour a fearful respect. "He is very tough and has a gruff manner but is always very professional," according to one.

"When he speaks he has the ability to make those around him jump." For all that though he is said to give his team great autonomy in their roles. He is very accessible and operates an "open door" policy at the bank. He makes his own calls to colleagues and is respected as a good manager.

"He has spent his entire career as a banker. He has been through all of the facets of the business and has a great understanding of the business," one source stated. "He picks the people he wants to undertake various tasks and lets them get on with it."

To those who do not work for him directly, he appears aloof. He is very sensitive to criticism and gets hot under the collar when he perceives he is misrepresented.

Today the bank's senior management team is perceived as being stronger than its rivals in the other Irish financial institutions. One source suggested that Mr Mulcahy's low profile is due to his desire to allow others in the bank to take credit for developments in their area.

He is due to retire in July 2001 and most analysts expect his successor will be drawn from the existing top tier of executives. They include Mr Micheal Buckley, who currently heads the bank's operations in Poland and who succeeded Mr Mulcahy as head of Capital Markets. Another contender is the bank's US chief, Mr Frank Bramble, and group finance director, Mr Gary Kennedy. Some sources also point to Mr Colm Doherty, who now heads up Capital Markets, as being in the running.

During his six years, Mr Mulcahy has built AIB into an international bank, leading its expansion into Poland and underpinning its success in the US. Soon after his appointment the bank acquired Dauphin Bank in Maryland and he has overseen the bank's development into a substantial regional player. Its entire US operations are now consolidated to trade as Allfirst, which includes 250 bank branches and is based in Baltimore. The strategy of establishing itself as a regional player rather than gaining a foothold in a major US city has proved to be the most successful one for banks entering the US market.

AIB's expansion into Poland is another long-term strategic move which is expected to reap handsome dividends for the bank. At the moment, the Polish operations contribute around 10 per cent of the group's results. Last year it completed the acquisition of 80 per cent of Bank Zachodni which when combined with its other subsidiary, WBK, makes it the sixth largest banking group in Poland.

In 1999 it also positioned itself to become a player in the Asia region through the acquisition of an option to acquire a 25 per cent stake in Keppel TatLee Bank. The move allowed the bank to gain a foothold in that market without making a direct investment. It was the first international bank to forge such an alliance.

These investments have shown that Mr Mulcahy can put the bank's surplus capital to good use abroad and have helped to diversify its business base beyond the Republic.

Of course, the chief executive also had plenty to keep him occupied in the domestic market. The bank was alleged to have been one of the main offenders in the 1980s and 1990s in facilitating tax evasion by customers. AIB could owe the Revenue up to £100 million (€127 million) in unpaid Deposit Interest Retention Tax following the investigation carried out by the Dail Public Accounts Committee.

Mr Mulcahy made an appearance as a witness at the inquiry but was not central to the allegations which relate to events during his predecessor's tenure. He does however have to deal with the fall-out. The bank has made no secret of its intentions to fully defend its staff and will vigorously contest any DIRT liabilities.

When he is not working, Mr Mulcahy likes to play golf and can often be found on the greens at the K Club in Co Kildare. As in business, he is said to be highly competitive. "He likes to win," says one observer.