Hourican faces challenging role at Bank of Cyprus

Just eight months after leaving frontline banking in disgrace, John Hourican, the former head of Royal Bank of Scotland's investment banking division, has made a surprise return to the industry to run Bank of Cyprus. So how did his five-year reign at the taxpayer-backed lender prepare him for such a big challenge?

Internal politics: Will be tough. The Bank of Cyprus is in a turbulent transition after agreeing in March a €10bn bailout by the European Union and the International Monetary Fund to stave off the collapse of its banking sector.

Mr Hourican, 43, will have to deal with a Cypriot academic chairman of the board and a former Russian KGB agent as the deputy chair, but as the one-time poster child for banker-bashing in the UK, he will be of course be used to the heat.

He will also have to throw himself into the middle of a dispute between Cyprus' central bank and the country's president over when to raise capital controls. His experience at RBS may stand him in good stead for this. The RBS board was often at odds with government officials over both strategy and management.

Wielding the axe: BoC's need to slash costs will involve tense negotiations with Cyprus' banking unions, but after presiding over several thousand job cuts at RBS, Mr Hourican is no stranger to dealing with them. In his old job unions were furious that the cost of the UK bank's restructuring was borne by the lower ranks of its staff, while management took home multimillion pound bonuses.

Bonuses: Cutting the balance sheet and tackling the explosive issue of pay will be all too familiar. Mr Hourican oversaw a radical shrinkage of RBS' investment bank during his time. After three years of bruising political battles with the British government over the size of RBS' bonus pool, Mr Hourican caved into public pressure and turned down the offer of a long-term incentive plan for 2012.

Kid gloves and samba: Finally, Mr Hourican will have to don kid gloves to handle the unwillingness of the Cypriot business elite to confront their bad loans that total more than €1.2bn. If he has trouble winning them over, he could always entertain them with his samba dancing skills - something he resorted to at RBS' leveraged finance team Christmas party in 2000 where he drew plaudits from onlookers for his dance with Brazilians Solange and Danda.

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