Dáil Éireann debate -
Thursday, 26 Oct 2000

Vol. 525 No. 1

Written Answers. - ACC Bank.

Denis Naughten

Question:

55 Mr. Naughten asked the Minister for Finance if he has satisfied himself that there will not be a significant liability to the State from the DIRT and four seasons liabilities at ACC bank; and if he will make a statement on the matter. [23626/00]

Minister for Finance (Mr. McCreevy)

The board of ACC Bank undertook a fundamental review of the bank, which was submitted to me in May of this year. The bank is improving its competitive position by implementing a programme of restructuring and rationalisation with the ultimate objective being to ensure a change in ownership for the bank.

In connection with the restructuring of the bank, I have sanctioned the negotiation of an employee share ownerhip plan and I understand that negotiations have commenced between the management and staff.

The bank itself plans to move away from unprofitable lines in general retail banking which demand scale and to concentrate on business banking, which has proven more attractive for the bank. ACC also plans to change the way it does business by moving away from being primarily a manufacturer of financial products to being an adviser/consultant on and a distributor of financial products. A key element in the plan is to deliver a significant reduction in the cost:income ratio. Successful implementation of this business strategy should improve the bank's financial prospects.

In 1999, ACC's underlying profits before tax and exceptional items were about £19.3 million. The bank's recent DIRT settlement of £17.9 million is expected to lead to a small net loss for the current year, but the underlying position is still profitable. On the basis of the interim results on 30 June 2000, shareholder's funds stood at IR£128.8 million. Allowing for growth in business, the capital adequacy ratio is expected to be comfortably in excess of the Central Bank's regulatory requirements.

I have communicated to the board that ACC Bank has my full support in preparing to meet the challenges of an increasingly competitive marketplace. I am satisfied that the underlying prospects for ACC, combined with the financial improvements from restructuring will allow it to continue to trade profitably and to prepare for a successful change in ownership. I expect to receive a business plan from the company setting out its strategy to achieve this objective early next year.

The Deputy will be aware that I will be bringing legislation before the House which will involve an increase in the amount of share capital I can subscribe. It will also provide for an ESOP and enabling provisions in relation to the sale of the bank.