TSB's chief found perfect partner at last

WORKING LIFE: After searching for 10 years to find a compatible institution to merge with, Harry Lorton believes Irish Permanent is the right match, writesSiobhán Creaton, Finance Correspondent

Harry Lorton knows a thing or two about mergers. For 10 years he has been the key figure seeking a partner for TSB Bank. In 1994 a flirtation with National Irish Bank foundered, five years later hopes of a union with ACC Bank were dashed but in 2000 the small bank finally found its soul mate in Irish Life & Permanent.

Over the past 18 months, the 50-year-old Cork man has been at the forefront of integrating TSB with its new owners banking operations, Irish Permanent, to create the Republic's newest bank, Permanent TSB, sponsors of the Irish rugby team.

He is a director of the large public company and chief executive of Permanent TSB. It's a demanding position but one that he is enjoying. "It's been pretty frenetic over the past 12 months but then senior executive positions in any organisation, whether in a merger process or not, tend to be," he says.

This role is a massive change for Mr Lorton. For most of his career at TSB he was an all-powerful force, largely his own master, reporting to a genteel board of trustees. The chain of command at Irish Life couldn't be more different.

The banking chief now reports to Irish Life & Permanent chief executive Mr David Went, and his performance is closely scrutinised by the group's shareholders.

The company has promised to create a commanding banking franchise in the Irish economy to complement Irish Life's life assurance business. It is a fundamental plank upon which analysts have based their forecasts for Irish Life & Permanent's share price into the future. How it progresses will be closely monitored.

So far, Mr Lorton is confident that it is delivering on its promise.

"The new Permanent TSB brand has been well received. We wouldn't like to claim that no other bank of our size has achieved so much. We have integrated our computer systems and our branches. At the same time we have had to handle the conversion to the euro and the Government Special Savings Investment Account \ scheme. It must be some kind of world record."

It has taken a valiant effort by everyone working for the company to reach this point. "Our staff have come through the toughest 18 months of their lives. At the start they had concerns about their futures. Would they have a job? What position would they hold? And what terms and conditions would be attached?"

The upheaval was an emotional strain for everyone, he says.

Staff working in the bank's branches have borne much of the burden. Some have had to switch to a new location and join a new team of colleagues.

"The two sets of staff came from similar but different cultures. In Irish Permanent there was a much greater sales culture than in the TSB, where it tended to be more service focused. Both organisations had and have great people and a very strong customer orientation that comes from Irish Permanent's roots as a mutual and from TSB, which was a sort of quasi-mutual where the customer definitely came first," says Mr Lorton.

Their professionalism and ability to adapt to their new environment was truly tested with the introduction of the euro earlier this year and the last minute rush by customers to open SSIAs ahead of the April 30th deadline.

"The conversion to the euro made for a few very tough months for staff working in the branches. It was largely very unproductive work, mainly drudgery, but it simply had to be done. And while the public had a year to open an SSIA, most left it until the last minute, and in many cases until the very last day, to avail of the scheme, which placed enormous pressure on the branches. Many shopped around all of the institutions and they caused us and every other institution untold problems in terms of lengthening the queue."

Whatever suffering Permanent TSB staff endured during this transition, some of its customers have questioned the merits of these changes as they faced long delays before they could conduct their business with the bank. Mr Lorton acknowledges the discomfort and frustration felt by some of its customers but suggests it has turned a corner and that high-quality service is being gradually restored.

"We acknowledge that customer service hasn't been as good as it should have been and will be again. Staff are becoming more familiar with our new computer systems and with our customers. We are satisfied things are improving and we are on our way back to providing a first-class service."

Mr Lorton is part of the 11-member executive team steering the Irish Life & Permanent group. It has prepared well for this phase of the merger since it first met on January 2nd, 2001.

"If you asked me if we would have done anything differently if we were to start over again, I'd have to say no. We've done a superb job but we are not complacent or smug. We think this merger is as close to a textbook merger as you can get."

The next phase of this operation is a return to a degree of normality with the entire focus now on growing and developing the Republic's fledgling bank.

"We have been lucky. The Budget changes transformed the mortgage market for us, the SSIAs did wonders for our deposits and our equity products. We took advantage of the luck that came before us."

He is mindful that its task would have been more difficult if it was trying to build a new business during a recession.

"Because the business was going so well this contributed to the commitment and to the morale of the staff. You don't mind working hard when things are going well."

Despite the pressures of his new role, Mr Lorton manages to find time to go hiking in the mountains, his favourite pursuit. In July he will spend time hill walking in Austria with his wife Mary and some friends. They will spend between five and eight hours each day exploring the mountains, he says.

"You don't have any trouble sleeping after that. You forget all about strategic planning and competitive advantage. The only thing on your mind is will there be nice food and drink that evening."