Shares in Alliance & Leicester, the mortgage lender, rose by 17.5p to 232.25p this morning as it announced that it has appointed Alan Gillespie as its chairman.

Mr Gillespie, who spent 14 years at Goldman Sachs, is chairman of Ulster Bank, the Northern Irish subsidiary owned by Royal Bank of Scotland. He will step down shortly before taking up his new role.

His appointment follows the death of chairman Sir Derek Higgs, who was 64, in April. Roy Brown, the acting chairman, will return to his previous role of deputy chairman and senior independent director.

Shares in Alliance & Leicester have plunged 79 per cent in the past year to a record low as its funding costs have jumped and its earnings have fallen amid the credit crunch and tough UK housing market.

Analysts expect profits to fall to £195 million this year, less than half last year’s £399 million, as higher funding costs and losses on risky assets cut earnings, while revenue is be held back by reduced mortgage lending.

Before joining Ulster Bank, Mr Gillespie, a 57-year-old from Northern Ireland, spent 10 years working at Citigroup, specialising in debt capital markets, before moving to Goldman Sachs, where he became co-head of the European financial institutions group.

Gillespie said of A&L: “With its distinctive brand and customer franchise and broadly diversified retail and commercial banking businesses, it is well positioned to face the challenging times in the banking industry.”

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