Rabobank to stick with troubled ACC

DUTCH LENDER Rabobank has said it will have to sit out the problems at its Irish bank ACC over the next three to five years and keep setting aside large sums of money to cover bad Irish loans.

But the bank said it had no plans to exit the Irish market. Rabobank said it was supportive of its Irish business but felt it would take time to work through the problems at ACC.

“In Ireland we have to serve out the next three to five years,” said chairman Piet Moerland. “In the meantime we will have to keep provisions at a higher level.”

Speaking at the bank’s 2010 results, Bert Bruggink, chief financial officer at Rabobank, said the bank had set aside a further €375 million to cover bad loans at ACC.

This brings to €1.4 billion the total provisions Rabobank has taken against loans of just over €4 billion in the Irish bank.

Mr Bruggink said the bank was not optimistic about Ireland’s economic prospects and the high level of bad debt provisions reflects Rabobank’s cautious approach.

Government policies and budgetary cuts were affecting sectors in Ireland beyond property, he said.

ACC Bank grew its development loan book as the property market was turning over the end of 2007 and early part of 2008, providing loans to property developers such as Liam Carroll and John Fleming.

The bank was the most aggressive in pursuing bad loans through the courts, appointing receivers to property companies and obtaining judgments against developers.

ACC was responsible for most of the €596 million of bad loan provisions at Rabobank’s wholesale and international retail banking division in 2010, though this figure was down 37 per cent from 2009.

Despite the bank’s continuing troubles at ACC, the division made a profit of €774 million, up 37 per cent on the previous year.

While Rabobank increased loan provisions in Ireland, the overall bad debt charge at the bank fell 37 per cent to €1.2 billion.

– (Additional reporting: Bloomberg)