THE FRIDAY INTERVIEW/Michael Soden, Bank of Ireland group chief executive: Michael Soden believes the takeover of domestic banks by foreign institutions could be disastrous for the Irish economy, and doesn't see making money and contributing to society as mutually exclusive pursuits, writes Siobhán Creaton

Dubliner Michael Soden takes over the top job at Bank of Ireland today. Over the next five years you can expect him to be a strong advocate for maintaining Irish control over the domestic banking sector. He also has ambitions to rehabilitate bankers as honourable members of Irish society.

The 55-year-old, who has spent most of his career outside the Republic, is excited about his new role and delighted to be home. In the months and weeks ahead, his international banking experience could prove invaluable to Bank of Ireland, particularly with rumours swirling about predators eyeing up its nearest rival, AIB.

Some analysts have suggested that Bank of Ireland may even merge with AIB in a defensive move to retain a strong Irish banking sector. Mr Soden does not rule out such a coupling but is mindful of the political resistance to the marriage.

"Over the past six months since I have been at home, I have looked at all the alternatives. But you are influenced by the political environment that we live in and the likelihood of it arising. It would not be high on anybody's political agenda to put this forward."

He believes there would be economic benefits to such a move but political concerns would centre on competition issues.

"From the shareholders' perspective, they would probably be best served. From the customers' perspective, you could argue whether they would be best served on a domestic or on an international basis.

"If it was assessed from the point of view of staff, initially there might be some problems but there would also be huge growth in terms of opportunities. The community at large could be better served by such a scenario.

"You have to take all of these constituencies into account when deciding whether it would be the right or the wrong move," he says.

Mr Soden is a realist and acknowledges that, if AIB is takeover by an international player, it is only a matter of time before other Irish financial institutions, including his own, bow to a similar fate.

"If one bank goes they will all go, and that would not be good for the Irish economy."

His strong views on this issue are based on his experience during the six years he spent with National Australia Bank.

While based in Sydney, he had responsibility for the bank's operations in markets such as New Zealand, an economy that saw all its banks slip into foreign ownership over a seven-year period. Mr Soden believes this has had a disastrous affect on the New Zealand economy and warns the same could happen here.

He says a bank with a headquarters outside the Republic will have a very different emphasis when it comes to allocating resources and funds in this market than an indigenous financial institution.

"If the decisions on whether to allocate resources in Ireland are being made in Rome or Brussels, I am not sure we would be very high up on their agenda. They would simply go into areas that reflect their own desires," he explains.

For now the decisions that influence the future direction of Bank of Ireland are firmly being made in Baggot Street and Mr Soden has very definite views on where the bank is heading under his stewardship. At the end of his five years, he wants Bank of Ireland to be recognised as a fully diversified financial institution rather than as a retail bank.

"The retail-banking element will continue to be an integral part of everything we do but, as we grow, other areas will become bigger proportionately than the retail bank."

In the Republic, he believes growth opportunities will come primarily within its life assurance and pensions businesses, Lifetime and New Ireland. He points out that, in terms of pension requirements, the Irish market is running at about 50 per cent compared to Britain, signalling enormous potential for further growth.

The bank is also keen to build on its success at Bank of Ireland Asset Management (BIAM). Mr Soden refers to this fund management business as "the jewel in the crown" for Bank of Ireland and is keen to expand this business in Ireland and in the US.

But it is in Britain that Bank of Ireland is focused in terms of acquisitions. It has been seeking to diversify its business base, which had been primarily in the British mortgage market through its Bristol & West subsidiary, principally adding advisory and fee-generating services to those activities.

The bank did look at Alliance & Leicester a couple of years ago but negotiations on the cross-border merger ended abruptly and led to much recrimination at Bank of Ireland. Mr Soden says this is now history and it will not be looking at Alliance & Leicester again.

The bank will continue to search for acquisitions but he admits that opportunities are hard to find following the spate of consolidation in the British financial services sector.

Since returning from Australia last summer, Mr Soden has been meeting the bank's major shareholders, staff and customers ahead of his accession to the chief executive's office. He says he used this time well and is confident he knows what is required of him. "Having the luxury of that time has given me a knowledge and understanding of what is motivating people."

One issue about which he is passionate is restoring the badly tarnished image of the banking sector.

"In five years' time, I would like truly to elevate in everybody's mind the integrity of the bank without there being a question mark. Banks are wonderful institutions, they are the lifeblood of our society and I think it is important that we get beyond the stage of constantly questioning ourselves and be able to assess our contribution to the community."

A bank's primary goal is to make money for its shareholders but Mr Soden believes it should also be possible for banks to give something back to Irish society. "We have to see our role in the community in terms of the contribution we make to customers, staff, arts and culture. It is not an impossible tasks to perform a variety of worthwhile endeavours for Irish society and still be financially successful."