Bank of Ireland group chief executive Pat Molloy retires today after seven years in charge. Hailed as one of the most successful chief executives in the history of the bank, Mr Molloy is credited with refocusing the operation and driving it forward after a number of difficult years.

Pre-tax profits of about £510 million are forecast for the year to end March, up from £396 million for the previous year. These results compare with the collapse in profits from £135 million to £54 million for the year to end March 1991.

Mr Molloy became chief executive of the Bank of Ireland group on February 1st, 1991. He faced tough challenges - the severe and worsening problems in the US and heavy losses in Britain. On the positive side the domestic operation was performing well.

In the US the bank's expensive purchase in 1988 of First New Hampshire for $370 million (£230 million) had a disastrous impact on the group as the New Hampshire economy collapsed and losses at the operation mounted.

In Britain, Bank of Ireland was caught offside by the plunge in the real estate market. An aggressive corporate lending strategy had left the bank exposed to falling property prices while its hire purchase operation, British Credit Trust, was finding the going tough in weak and competitive markets.

"As I look back on my time as chief executive, the first 11/2 to two years revolved around problems and stemming haemorrhages, reducing the cost base and ensuring that the solid part of the business continued to drive ahead. The remaining five years involved growing revenue. The first period was difficult, but with the Irish economy holding up well, at least one cylinder out of three was firing strongly," Mr Molloy recalled.

In the US it was a question of getting the right resources to solve the problems, he explained.

Brave decisions were taken. The bank's strategic decision to buy its way out of trouble is widely credited to Mr Molloy, though he shares the credit more widely.

"The biggest moment in the whole saga was the successful bid for the two troubled banks, Amoskeag and BankEast. We knew we needed to sort out our own loan losses but we also knew we needed to increase revenue.

"It was an opportunity to make an acquisition with minimum risk because there was an option to hand over problem loans to the Federal Deposit Insurance Corporation. The challenges were to identify loans that were potentially troubled within the specific timeframe without throwing out loans that would become sources of revenue and you had to be able to take out costs. We reduced costs by about 40 per cent."

The risk was that the group was getting deeper into a market where it already had more than enough grief. "But there were tremendous opportunities if we could pull it off."

Bank of Ireland under Mr Molloy did just that and the merged First New Hampshire/ Amoskeag/Bank East was turned around to the point that the group bought yet another bank Great Bay Bankshares.

"I got great satisfaction from the US turnaround but I have gotten even more satisfaction from how the group has performed overall. The US was a nice elegant transition but it wasn't painless. We had to bid goodbye to some very good people who did a great job for us."

Bank of Ireland did more than the traditional US employer for people who were being made redundant with the result that its reputation in the market was enhanced despite the job losses. This was very much in line with Mr Molloy's philosophy that banking is a people business - people as customers and employees.

"By 1995 we were in wonderful shape in the US. But then the question was where next. We could not expand by acquisition or by opening new branches in New Hamphire because we had 20 per cent of the market. Among our options were to move into adjoining states or elsewhere in the US. But we made what I see as a terrific deal with the joint venture with Royal Bank of Scotland."

At the end of 1995 Bank of Ireland announced the merger of First New Hampshire with Citizens Financial Group, a Royal Bank of Scotland subsidiary. Bank of Ireland now has 23.5 per cent of a much larger operation - the third largest bank in New England with assets of about $2 billion.

"It was a terrific deal. What you have is two owners who knew each other well. The bank is performing very well. We added tremendous value to the asset we had."

In Britain more difficult decisions were made. To stem losses the group closed down its hire purchase operation, British Credit Trust, and wound down its corporate lending operation. Its branch banking and home mortgages operations had remained healthy.

Its knowledge of the British mortgage market lay behind its biggest acquisition. Last year the bank paid £600 million sterling for the Bristol and West Building Society.

"It was very nice to be able to do that deal. We had accumulated capital and the markets were wondering what we were going to do with it . . . It looks even more attractive with the passage of time. It gives us logical platform from which to build further in Britain."

Mr Molloy's last acquisition was the New Ireland life assurance group for £274 million.

"It has huge strategic logic with the ageing population and the onus on people to provide for their own long-term pensions and savings. If you are saving today for benefit you will access in 20 years' time you will want to be certain about the quality of the institution you do business with . . . that is our considerable strength."

Bank of Ireland has a lot of ground to make up in the personal pension business, he admits. It had just more than 3 per cent before the New Ireland deal brought its share to around 12 per cent.

Despite his significant achievements at Bank of Ireland, Mr Molloy, who is remaining on the group board, feels there is still a lot to be done. Issues that have to be considered include using fixed assets more intensively and ensuring that customers get the service and products they want.

"We have a huge investment in fixed assets - branches in high street locations and a huge investment in technology. But our assets are only working five days a week. More and more businesses are looking for ways to use assets more intensively. We have to look at that too."

A lot of progress has been made, he says, citing the opening of a number of Bank of Ireland branches on the Saturday before Christmas and the 24-hour telephone banking with Direct 365.

Banks operate in a very competitive market and supermarkets are one of their newer competitors.

"We have relationships with customers, so have supermarkets, ours is deeper but may not be as frequent. But we have a terrific brand name and credibility about the security and safety of funds."

Banks have more detailed information on customers and experience of the products they want, he argues. There are two potential responses to the arrival of supermarkets in the financial market. Banks could decide to be wholesalers providing the product for the supermarket in a joint venture arrangement. Bank of Ireland already has a relationship with the Post Office in Britain providing foreign exchange at 20,000 outlets.

"But the more serious response is that we need to become much better at managing customer information. If we can do this we can anticipate customer needs and communicate more effectively with them. You will see a lot of upgrading in technology, building sophisticated customer management systems."

He cites Direct 365. "It started in May 1996 and now handles 6,500 service calls per day. Imagine the value of those contacts, identifying their needs, the opportunities to sell, live and ongoing relationships with customers."

Mr Molloy takes a team approach to running the bank. "I believe strongly in the reality that you achieve through other people. I believe that most of the success we have achieved has been through having a team approach. I believe in building teams and investing in enhancing the capabilities of managers and their team-building skills in particular. If an institution can harness the innate capability of all its staff it will inevitability perform to its limit. The challenge is to unleash that talent and capability."

He also believes in rewarding performance. "I have found that people respond well to that and this is a people business."

He has seen Irish business develop "extraordinarily well" over the last 10 years. "We have terrific major businesses with management as good as those you would meet anywhere . . . our small- and medium-sized businesses have come on an absolute ton in terms of competence and capability and more especially in terms of the outward looking culture they have developed.

"We are now beginning to see the emergence of the entrepreneurial culture that was missing. It was the difference between here and the US, the extent to which success was regarded as a virtue and respected there. We have now moved to the position where we applaud success and that is a significant change which will feed through to business start-ups and successes. We have a lot of terrific young people coming through our investment in education and development is paying off."

Mr Molloy says he never came under pressure from politicians to take any particular course of action. "No politician has ever put pressure on me to do anything. We have always had constructive relationships with the public sector and politicians."

There were "discussions" on support for start-up and small businesses which the bank "responded to", he agrees. But he says: "We unashamedly say that what is good for the country is good for the bank. We have a huge amount in common with policy makers for that reason."

On bank profits he feels that success is more applauded now than criticised. "There is a realisation that as we expand we have to grow profits and that is what we are doing. It is a good thing to have business here growing in size, scale and profits. But we are still very small in overall European context. We need to expand to ensure that we continue to have indigenous businesses here," he says, answering concerns about takoevers of Irish companies as the European single currency comes into place.

"At Bank of Ireland we need to continue to invest in growth and in broadening the base of operations. We are determined to run the business in a way that makes it very profitable and very successful delivering high value to shareholders. That is the only way any business can ensure it remains a free-standing operation."

Business that fail to deliver high value to shareholders deserve to become takeover targets, he feels.

Mr Molloy believes it is great to be able to retire at 60. He will now have more time for the country life he loves. He is looking forward to spending more time at his home in the west of Ireland, fishing, shooting, golfing and gardening.

But he will retain some business interests. He is staying on the Bank of Ireland board and was recently appointed chairman of Bristol and West. He has joined the board of CRH and is chairman of Blackrock Clinic and of development board of Trinity College.

Despite many offers Mr Molloy is reluctant to take on "very much more" business appointments. "I have already allocated 50 per cent of my available time. I do not want to finish up as busy as I was without the quality of support I have become accustomed to."