'A great question that’s stayed with me is: what if you’re wrong?'

Jane Howard got a shock in April last year when she heard that news was about to break that she was being lined up as Ulster Bank's next chief executive in the Republic.

“I hadn’t told anybody. I hadn’t even told my children – though obviously my husband knew,” recalls Howard as we sit in a glazed meeting room on the fourth floor of the bank’s Liffey-side headquarters. “So, I ended up having to go down to see my parents to tell them before it got out.”

It would be another four months before Ulster Bank's parent, Royal Bank of Scotland (RBS), would be in a position – following necessary regulatory approvals – to confirm the appointment. That gave Howard more than enough time to leave her three grown-up sons with directions on how to take care of the family home in her native Manchester.

Ulster Bank's fourth CEO this decade, Howard succeeded Gerry Mallon, who quit in early 2018 after only 19 months to takeover over the helm of Tesco Bank in the UK.

Irish authorities and AIB drawn into $9.6bn Nigerian dispute

---

Irish paying at least €80,000 more on €300,000 mortgage than EU counterparts

---

Galway medical device company receives €10m in EIB backing

---

A year into the job, the 55-year-old, whose soft Mancunian accent is immediately disarming to an Irish ear, says she's "proud" of what Ulster Bank has achieved since she arrived.

The list includes the bank finally completing refunds and compensation payments to customers hit by the tracker mortgage scandal and dealing with other overcharging issues, that have cost the bank a combined €500 million; finding restructuring solutions for “four out five” troubled borrowers who engaged in a fresh drive to sort out arrears; and lifting its mortgage market share, which had fallen to below 10 per cent at one stage, to 16.5 per cent.

We've now got to base camp on Mount Everest, the easiest part. Now it's about how do we really build the future"

“We’ve now got to base camp on Mount Everest, the easiest part,” she says. “Now it’s about how do we really build the future, which is exciting, but also challenging. We’ve got to find our unique place in the market so we can grow safely and sustainably.”

Established in 1836 as a conservative Belfast-based lender – whose Ulster linen trade customers continued to thrive even as the island was ravaged by the Famine a decade later – Ulster Bank set up a Dublin office in the 1860s before merging in 1917, amid the uncertainty created by the Easter Rising, with London County and Westminster Bank, a precursor to National Westminster Bank, or NatWest.

RBS inherited an exposure to the Celtic Tiger economy in 2000 through its takeover of NatWest, before doubling down three years later in Ireland through the purchase of First Active.

With caution thrown to the wind, Ulster Bank would more than double its assets to the equivalent of €72 billion in the four years before the property bubble burst, fuelled by the bankrolling of boomtime developers like Sean Dunne and the launching of the State's first 100 per cent mortgages.

While Ulster Bank accounted for only 3 per cent of RBS’s assets in 2008, its £15.3 billion parental bailout during the crisis equated to a third of the money UK taxpayers pumped into the entire group.

Having spent the last decade selling off problem loans, cutting jobs and branches, and separating its businesses in the Republic from the North, the bank had shrunk assets in the Dublin-based business to €29.5 billion by the end of last year.

That has brought its own issues. Ulster Bank’s running costs were almost 99 per cent of its income in the first half of the year, double what is considered to be the holy grail by the industry. Its return on equity (RoE), a key gauge of profitability, amounted to 2.1 per cent as it and other Irish banks struggle to rebuild their loan books. RBS’s group-wide RoE target is over 12 per cent.

Break even

Outgoing RBS CEO Ross McEwan warned last month that it will be “another three to four years” – a decade and a half after the crisis – before the Irish unit is making enough money to break even on the cost of its own funding.

The task has become a whole lot harder since the European Central Bank (ECB) moved earlier this month to cut its main deposit rate and relaunch its quantitative-easing (QE) bond-buying programme in an effort to push down market borrowing costs and reboot inflation in a weakening economy. The spectre of lower-for-longer rates is generally bad news for banks, as it depresses their lending margins and income.

I think we all thought that, by now, we were going to be in a position where interest rates were rising but from the latest coming out of the ECB, it looks like it could be four years"

“I think we all thought that, by now, we were going to be in a position where interest rates were rising but from the latest coming out of the ECB, it looks like it could be four years,” says Howard. “It is going to be a challenge to generate new income, and we’re not prepared to go outside [our risk] appetite [for lending] for all the reasons we all know about. Therefore, the lever we’re going to have to pull is cost.”

Howard said early last month, as Ulster Bank reported a 75 per cent drop in operating profit in the first half to €26 million, that she plans to cut jobs in the company’s 400-strong problem loans unit to rein in expenses as the arrears crisis eases. The scale of cost cutting envisaged now is more far-reaching.

“We will look across the whole organisation,” she said, adding that opportunities to make cuts will come as the group works to simplify its processes and takes greater advantage of its parent’s technology, the subject of major investment since its systems crashed spectacularly in 2012, affecting millions of customers.

The inevitable outcome from Ulster Bank living up to its latest slogan of making the customer experience “effortless everyday and brilliant when it matters” is that it will require fewer workers in the future. The bank had an average of 2,368 staff and 247 temporary employees last year, according to its latest annual report.

Still, Howard doesn’t appear to be a slash-and-burn type parachuted in from group headquarters. “I don’t want to take out cost if it impacts the customer proposition, because we need to protect income,” she says. “We will do it thoughtfully by removing complexity, then taking out cost.”

Experience

She’s certainly got the broad banking experience to delve deeply into the weeds. Howard joined NatWest’s Rochdale branch, north of Manchester, straight from school in 1980, starting off printing cheque books for the first month before being let loose at the customers’ enquiries desk.

Initially encouraged by a manager in another branch who was able to spot talent, she would go on to do banking exams, before securing a first-class honours degree in financial services from Sheffield Hallam University. Taking courses in compliance and corporate directorships as she climbed up the ladder in the group, Howard was managing director of personal banking at RBS before the Ulster Bank gig came up.

A period as chief operating officer in the group risk department between 2009 and 2013, she was part of a team that worked furiously to shrink RBS’s balance sheet as it abandoned former CEO Fred Goodwin’s global ambitions following the financial crisis.

“It was a tough period,” she says “There were long, pretty dark days, but you had probably [the] best learning experiences. And in some respects, you were learning from other people’s mistakes. If I’m being honest, you probably don’t really appreciate it at the time. It’s only when you look back afterwards that you do.”

The main lessons? “Any leader, while they’ve got to be thinking strategically, has got to have the ability to go deep down and find what is happening at the bottom of an organisation,” she says.

“A great question that’s stayed with me is: what if you’re wrong. You have to make assumptions when you are planning. But I ask my management team in meetings all the time: ‘What if we’re wrong? How wrong can we be? What are the alternatives’?”

I can't think of any women that would have been role models 39 years ago"

Howard says that she had no ambition when she started off in banking to eventually make it to senior management. “I can’t think of any women that would have been role models 39 years ago,” she says.

But times are changing – albeit all too slowly – for the better. Last week, RBS named Alison Rose, another group veteran of 27 years, as McEwan's successor and the first woman to lead one of the UK's big four banks. It follows Katie Murray's appointment as group chief financial officer (CFO) last year.

Howard’s certainly not going to speak ill of her new boss, whom she used to come across a lot in her last role. “She’s a great leader who’s got a great reputation,” she offers, when asked. “I know people who’ve worked for her talk about her very, very highly.”

The new team will inevitably take a fresh look at where the group is going.

McEwan and the former group CFO, Ewan Stevenson, presided over a decision in 2014 to remain in Ireland, even after Ulster Bank cost its parent billions of euros in bailouts.

However, there is a widespread view among banking analysts and industry executives that the bank will ultimately need to merge with a local rival to regain sufficient scale and profitability. Permanent TSB, struggling with its own issues, is the name most often cited as a tie-up candidate.

“I’ve not got a mandate to think about mergers and acquisitions,” said Howard. The current plan involves continuing to restructure problem loans, selling a €900 million portfolio currently on the market to lower non-performing loans (NPLs), growing the loan book “sensibly”, and taking out some costs to, ultimately, delivering an acceptable return for RBS over the next three to four years, she adds.

Howard said she expects to have conversations next year with Rose about the next steps.

“Anybody new to the role of CEO is going to do a strategic review with the entire bank,” she says. “But the boards of Ulster Bank and RBS have approved the strategy. So, I don’t expect that to change.”

Brexit

As a British banker, Howard often finds herself being asked in Dublin about how Brexit is going to pan out.

“They think I’ve an informed view. But, of course, I don’t,” she says. “It’s the uncertainty that’s a bigger challenge for people than whether it’s going to be a hard Brexit or a soft Brexit. If you’re a big business and you can afford to invest in contingencies, fine. But small businesses can’t afford to do that kind of parallel investment – until they get certainty about what it’s going to be like.”

Still, she says that with the unemployment rate having fallen back to about 5 per cent – less than a third of its 15.9 per cent crisis-time peak in 2011 – labour shortage is the biggest challenge for businesses she’s met in the past year, further curtailing investment in expansion.

Banks are also grappling with mortgage limit rules introduced by the Central Bank in 2015 to protect borrowers and lenders from themselves. While Howard agrees with limits in principle, she said that there is need for “some thought leadership” to tackle the issue where renters who would like to buy a home find it difficult to build a deposit amid record-high lease costs. Average monthly rents in Dublin hit a new high of over €1,700 in the second quarter, according to the data released this week by the Residential Tenancies Board.

“I don’t know the answer to it, but I think that’s the thing we’ve got to work on,” she says.

Meanwhile, the bank, which has returned €3 billion of its RBS rescue funds between late 2016 and early last year by way of special dividends, has got an application in with financial regulators at the Central Bank and the ECB to hand back more excess equity.

Analysts estimate the company could be sitting on at least €1.5 billion of surplus capital, though it is likely that regulators will like to see a good portion of this remain in Ireland to help cushion the business against a fallout from Brexit.

“I expect we’ll be making an announcement before the end of the year,” she said. “We want to get to a normalised capital position. We don’t want trapped capital. We want to be able to use it well.”

CV

Name: Jane Howard

Age: 55

Job: Chief Executive, Ulster Bank Ireland DAC

Family: Married to Kevan with three grown-up children

Lives: Dublin

Hobbies: Manchester City Football Club, Cycling, Gardening

Something we might expect: Howard is a huge Manchester City fan and is a season ticket holder at the City of Manchester Stadium

Something that might surprise: From time to time, you might find Howard spending the weekend in a tent at a festival, like the 80s Rewind Festival!

Name: Jane Howard

Age: 55

Job: Chief Executive, Ulster Bank Ireland DAC

Family: Married to Kevan with three grown-up children

Lives: Dublin

Hobbies: Manchester City Football Club, Cycling, Gardening

Something we might expect: Howard is a huge Manchester City fan and is a season ticket holder at the City of Manchester Stadium

Something that might surprise: From time to time, you might find Howard spending the weekend in a tent at a festival, like the 80s Rewind Festival!