ACC is the only target for newly-cautious Rabobank

Rabobank, the Dutch co-operative bank, yesterday said it had raised up to €1.57 billion (£1.24 billion) in fresh finance but underlined a new mood of caution by stressing it was in no hurry to rush out and spend it - although it is in the process of negotiating the purchase of ACC Bank, the last of the Irish State banks to go private.

In an interview with the Financial Times, Mr Hans Smits, chairman of the 100-year-old banking co-operative, said it would use the funds - raised by issuing member certificates - to maintain its tier-1 capital ratio at 10. That is key to retaining its Triple A credit rating, which it has held for 20 years.

His comments are in contrast to Rabobank's move last year to forge a pan-European co-operative banking alliance, which at the time was heralded as one of the most important ventures in European cross-border banking.

Mr Smits said the move did not suggest a loosening of its grip on its co-operative status. Indeed, he said it would employ other methods of raising capital from its members in the future rather than publicly list.

He said the bank was now more cautious than in the past, but confirmed that it would match the 8 per cent growth in net profit for the first half across the full year. It posted a net profit of €714 million at the half-year stage.

It has emerged relatively unscathed from the events of September 11th, due to lower exposure in the US and areas such as insurance than Dutch rivals ABN Amro and ING.

Mr Smits said the bank would aim to maintain net profit targets of 10 to 12 per cent growth.

However, one concern was that lending growth in the Netherlands was unlikely to remain at the current level of 12 per cent. "It depends on consumer and business confidence and that will be lower than this year."

Profits would be maintained by driving efficiencies in its retail network aimed at increasing revenues by 15 per cent and reducing costs by a similar amount. Rabobank has some 380 member banks with a total of 1,700 outlets.

The widescale cross-border co-operative banking alliance that it had intended to kick off by merging last year with DG Bank of Germany has - like that venture - fallen by the wayside.

"At this moment I do not feel or see a common understanding (among Europe's co-operative banks) to take such an important step," said Mr Smits.

However, having previously outlined plans to take small steps through alliances with non co-operative organisations - targeting insurance, leasing or asset management, which can work on a pan-European basis - he said no significant deals were on the table. The bank is only in negotiations to buy ACC as part of an initiative to acquire rural banks valued at up to €200 million.

"I do not expect that in two or three years we will have three strategic alliances. We will start with one and move step by step. We are more cautious than we were," said Mr Smits.

The member certificate programme finalised over the weekend follows €1 billion raised last year.

Both issues were heavily oversubscribed. The certificate pays quarterly dividends equal to the yield on 10-year Dutch government bonds plus a 1 per cent premium.

Rabobank sees it as a way to build closer ties with its 750,000 members and remove the need to list.

"People look at us jealously because co-operative banking is self-sustainable and grows its own profits."