DUTCH LENDER Rabobank injected a further €255 million to cover losses at its struggling Irish bank ACC in 2010, bringing to €705 million the total capital injected into the bank since 2008.
ACC reported a pretax loss of €234 million for 2010, down from €405 million the previous year.
This was due to a lower charge of €263 million for bad debts, compared with €383 million in 2009.
ACC had a loan book of €4.9 billion at the end of 2010, down from €5.5 billion a year earlier.
The bank, a significant lender to the construction sector, particularly towards the end of the property boom, has taken cumulative bad debt charges of more than €1 billion against a loan book valued at €6.5 billion at the end of 2008.
Deposits at the bank rose 29 per cent to €1.17 billion in 2010 after dropping 36 per cent the previous year. Total income fell by 9 per cent to €117 million in 2010.
ACC said that it continued “to make progress in addressing issues it faces resulting from the severe economic downturn”, which had “dramatically impacted” the property market.
“In light of the ongoing property market difficulties, the short-term outlook continues to be challenging,” said the chief executive of ACC, Kevin Knightly.
“However, the support of Rabobank enables us to deal with these issues through continuous engagement with customers in difficulty while continuing to serve those customers who are less impacted by the downturn and who require ongoing funding for their businesses.”
The bank cut operating costs by 19 per cent to €90 million in 2010.
ACC operates nine business centres after closing 16 of its 25 branches during 2009 and the first half of 2010. The bank reduced staff numbers by 200, almost a third of its staff.
The bank said the restructuring of the business left it “well positioned to serve the needs of its customers”. ACC withdrew cash services for its customers from its branches in January 2009.
Rabobank said last March it would have to sit out the problems at ACC over the next three to five years and continue taking large provisions to cover bad loans but that it had no plans to exit the Irish market.
National Asset Management Agency chief executive Brendan McDonagh said in a Financial Times interview in April that many of the country’s “ghost estates” – partially completed housing projects – were funded by ACC and Bank of Scotland (Ireland), part of UK bank Lloyds.
An ACC spokeswoman yesterday denied ACC was heavily involved in the development of ghost estates. “In fact, the bank has quite a small property property portfolio relative to other market participants,” she said.
The bank has taken an aggressive approach to writing down loans in value over the past three years. The lender has pursued high-profile legal actions against property developers such as Liam Carroll, John Fleming and Paddy Kelly to recover multimillion-euro debts.
