A&L rises after hiring Ulster Bank chairman to see it through turmoil

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The Independent Online

Alliance & Leicester has hired Alan Gillespie, a tough Ulsterman, as chairman to guide the bank through the financial turmoil.

The former building society announced the arrival of the veteran banker yesterday. Mr Gillespie will join in September from Ulster Bank, part of Royal Bank of Scotland, where he has been chairman since 2001.

At A&L, he will replace Sir Derek Higgs, who died in April. His appointment will bring stability to A&L, which has gone through much of the financial crisis without either a permanent chairman or chief executive. David Bennett, the chief executive, was off ill for three months before returning to work in May.

Banking insiders describe Mr Gillespie as a dominant character who will leave the rest of the board in no doubt who is in charge. As non-executive chairman at Ulster Bank, he has presided over the business's integration with RBS, expansion in the Republic of Ireland and the absorption of the First Active mortgage business.

One of Mr Gillespie's first tasks will be to lead the board in deciding A&L's dividend policy. Analysts expect the bank to cut its dividend this year to conserve capital. but the bank is keeping its options open.

Mr Gillespie, 57, will also lead discussions on the long-term future of A&L, which has stripped back its core mortgage-lending business amid a shortage of funding. A&L has been run more conservatively and is more diversified than Northern Rock and Bradford & Bingley, but the credit crunch has cast doubt on the business models of banks that rely heavily on mortgages.

The bank's shares rose 8.4 per cent yesterday to 232.75p, partly on speculation that the former investment banker might engineer a takeover of A&L.

Mike Trippitt, banking analyst at Oriel Securities, said: "Number one on the agenda has got to be the dividend policy. The big picture of the strategic direction is in place for a year. The only strategy for a bank at the moment is to avoid stepping on land mines."

Mr Gillespie joined Ulster Bank after a career in investment banking with Citi, where he specialised in debt capital markets, and as a partner at Goldman Sachs, where he spearheaded Goldman's European financial institutions business. His public sector work includes chairing the Northern Ireland Industrial Development Board from 1997-2002.

Mr Bennett said: "Alan has a wealth of experience as a successful banker and a proven record as a successful chairman of both banking and government organisations."

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