ACC Bank, which is now part of Rabobank, delivered a strong performance in 2001 producing pre-tax profits of €26.5 million just ahead of its sale to the Dutch group.

In 2000, the then State-owned bank's profits were wiped out by a €22.8 million payment to the Revenue Commissioners in unpaid DIRT tax and penalties. At that stage the ACC Bank reported a loss of €21.8 million but this has since been restated to €23.3 million. The Minister for Finance, Mr McCreevy, ordered a complete restructuring of the bank in 2000 to prepare it for sale.

Last December, Rabobank bought it from the State for €165 million.

Accounts lodged at the Companies Office show that much of the restructuring, which included a voluntary redundancy scheme and a withdrawal from less profitable business lines and branch closures, has put the bank on a more stable footing.

The bulk of the costs associated with this radical overhaul were borne in 2000 with the bank returning to profit in 2001.

The voluntary severance scheme cost €16.3 million in 2000 with the bank spending a further €1 million in 2001. Last year the bank increased its voluntary separation scheme to make allowance for an additional 77 departees which brings the total to leave ACC voluntarily to 197.

About 90 staff have already left the bank during this phase with ACC chief executive, Mr Colm Darling, stating that another 57 are also contracted to avail of the scheme and management remains confident that its overall target of 197 job losses will be achieved.

The bank's core net interest income rose from €75.8 million to €78.9 million.

ACC took a particularly aggressive stance to win new business under the Government-backed Special Savings Investment Account scheme offering one of the highest rates of interest to savers who opened accounts at the bank. It is understood to have won around 60,000 of these accounts, mainly from new customers.

Customer accounts increased from €1.7 billion to €1.8 billion. Some of this new business would have boosted its net interest income to some degree although most of the new SSIA business would have won in the months after its December 31st financial year end.

The bank's income was also helped by €780,000 raised from the sale of its Visa card business, one of the lines of business it has decided to discontinue.

Administrative expenses were substantially higher at €58.2 million compared to €51.1 million in the previous 12 months. The bank's total payroll costs increased from €24.8 million to €28.6 million.

Mr Darling got a 10.5 per cent pay increase receiving a total package worth €324,000. This included a basic salary of €218,000, a performance related bonus of €66,000, pension contributions of €31,000 and other benefits worth €9,000.

The bank also substantially reduced its provisions for bad and doubtful debts during the 12 months, to €1.4 million.

In 2000 it had made provisions of €14.4 million, much of which related to its exposure to the Four Seasons Hotel development.

As part of the sale agreement with Rabobank, the State provided an indemnity against any litigation that may arise against ACC. It is being sued by two of its partners in the Four Seasons Hotel deal, Scotia Bank and Bank of Scotland Ireland.

Rabobank has since appointed a new board of directors to ACC Bank.