Tesco has poached the boss of one of Ireland’s biggest lenders to run its financial services arm, a move that will deal a blow to the state-backed Royal Bank of Scotland (RBS).
Sky News has learnt that Gerry Mallon has resigned as Ulster Bank’s chief executive, based in Dublin, to take on the challenge of cementing Tesco’s status as one of the UK’s fastest-growing challenger banks.
Sources close to RBS, which owns Ulster Bank, said the defection of Mr Mallon was likely to be announced as soon as Wednesday morning.
One insider described it as “a major coup” for Britain’s biggest retailer, which has been hunting for six months for a successor to Benny Higgins, Tesco Bank’s chief executive for the past decade.
Mr Mallon, who is also chairman of the Irish Football Association, is likely to join the main Tesco executive committee when he arrives at the supermarket-owned bank.
He has been Ulster Bank’s chief executive since 2015, prior to which he ran the UK arm of Danske Bank.
Image: Royal Bank of Scotland will now need to line up a replacement
A highly-regarded banker, Mr Mallon will join Tesco soon after the company is expected to complete its £3.7bn takeover of Booker Group, the wholesaler.
He is likely to arrive once RBS has lined up a replacement for him, according to one source.
Tesco Bank has amassed well over £8.5bn in deposits since it was established, and recorded a pre-tax profit of £112m in the first half of this financial year.
While its earnings remain modest in the context of the company’s broader financial firepower, Dave Lewis, Tesco’s chief executive, has stressed the division’s importance as a driver of loyalty among its customer base.
It now offers a full range of personal current accounts, mortgages and insurance products, and has rebranded its digital wallet to enable customers to pay and collect Tesco Clubcard points by scanning their mobile devices.
One of Mr Mallon’s first challenges is likely to be digesting the outcome of a Financial Conduct Authority inquiry into a cyberattack on Tesco Bank in November 2016.
The City regulator, which described the defrauding of thousands of customers as “unprecedented”, is expected to disclose its findings in the coming months.
Mr Mallon’s move is also intriguing because Tesco Bank was jointly owned by the supermarket chain and RBS for a decade from its inception as Tesco Personal Finance.
The multibillion-pound fire sale forced on RBS after its taxpayer bailout in 2008 led Tesco to take full control of the business.
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RBS opted to retain ownership of Ulster Bank following a review of its structure in 2013, but then reorganised it into separate businesses comprising its operations north and south of the Irish border two years later.
Tesco and RBS declined to comment on Tuesday.