McCarthy to step down from Ulster Bank top job
CEO leaves lender so he can 'pursue other opportunities'
Published 03/07/2010 | 05:00
ONE of the only Irish banking bosses to survive the financial collapse, Ulster Bank chief executive Cormac McCarthy, yesterday stunned colleagues by announcing plans to step down so he can "pursue other opportunities".
The 47-year-old will step down "early next year", some 10 years after he was appointed chief executive of First Active and seven years after he got the top job at Ulster following the merger of the two institutions.
It is understood that Mr McCarthy, who earned as much as £1.4m (€1.7m) a year in the good times, will get no redundancy package as his departure is voluntary.
The banker's pay packet has been particularly contentious in recent years -- in 2008, when Ulster returned losses of £689m, Mr McCarthy was paid £870,000 for his efforts.
The massive losses -- followed by another £368m hit in 2009 -- came after a period of rapid expansion as Ulster championed 100pc mortgages and lent heavily to several developers, most notably Sean Dunne.
Ulster Bank's parent, RBS, had an even more bruising time in the UK and Mr McCarthy's then group chief executive, Fred Goodwin, fell on his sword in late 2008 when RBS was bailed out by the British taxpayer.
Mr McCarthy, however, has retained the backing of his superiors at RBS and in February the Irishman became "acting deputy chief executive" of the group's British retail division.
In a statement yesterday, RBS thanked Mr McCarthy for his "contribution" to the group and said Ulster Bank had "taken major steps to move in the right direction for recovery and strength" over the coming years.
Ulster Bank announced plans to make 750 Irish staff redundant last January as First Active's branches were finally closed -- the number of redundancies has since risen to more than 1,000 on foot of high demand from staff.
The Irish bank continues to suffer heavy losses, reporting a £137m operating loss for the first quarter of 2010 as the bank booked £218m of loan impairments for the three months.
Mr McCarthy blamed the losses on cuts in last December's Budget and higher unemployment, which had triggered higher levels of mortgage payment default.
In a prospectus recently issued as part of a bond issuance, Ulster Bank said it continued to see "adverse changes in the credit quality of its borrowers and counterparties, for example, as a result of their inability to refinance their indebtedness, with increasing delinquencies, defaults and insolvencies across a range of sectors (such as the personal and banking and financial institution sectors) in Ireland".
"This trend has led, and is expected to continue to lead, to further and accelerated material impairment charges, higher costs and additional material write-downs and losses for the issuer during the course of 2010, 2011 and possibly thereafter," the bank added.
Mr McCarthy will stay on as chief executive until a successor is found, while his role in RBS' British Retail operations will continue until "early next year"
His future plans beyond that are unclear, although he is expected to remain in Ireland.