Paul McGrath
Question:5 Mr. McGrath asked the Minister for Finance if he will make a statement on the situation in relation to the sale of ACC Bank. [19111/01]
Ceisteanna–Questions. Priority Questions. - ACC Bank Sale.
In January 2000, I reluctantly accepted the joint recommendation of the board of ACC Bank, the trustees of TSB Bank and the non-statutory board to abandon the merger and flotation of ACC and TSB Banks in the light of the slim prospects for a successful flotation in the then prevailing market conditions. I asked both banks to review all their options for the future. Since then, TSB Bank undertook a successful sale process which resulted in its sale earlier this year to Irish Life and Permanent plc.
I announced the publication of the ACC Bank Bill, 2001, on 31 January this year. In doing so, I stated that the board of ACC Bank had been mandated by me to prepare the bank for sale and I asked it to pursue all options in relation to a change in the ownership structure of the bank over the course of the next 12 months. The ACC Bank Act, 2001, was commenced on 15 June. The Act includes enabling provisions in relation to the sale of the bank such as the sale of shares held by the Minister for Finance, the establishment of an employee share ownership plan and the treatment of State guarantees following the sale of the bank.
The management of the sale process is a matter for the board of ACC Bank and its advisers, NCB Corporate Finance and Matherson, Ormsby, Prentice. I expect it to be conducted in a transparent and fair manner for all concerned parties. The board will revert to me in due course with its proposals and recommendation. I have retained A and L Goodbody, solicitors, to be my legal advisers in relation to this sale process.
Negotiations between the trade unions and management regarding the employee share ownership plan are in progress. The trade unions and management have already agreed the terms of a voluntary separation scheme.
While ACC Bank had a difficult year in 2000, as reflected in its annual results which disclosed a loss before tax of 23 million, the prospects for the bank are good going forward. The once-off reasons for the loss include a 21 million provision to pay for the DIRT bill arising from the Revenue Commissioner's audit of the bank, a 16 million provision in relation to the voluntary separation scheme and a 14 million provision for bad and doubtful debts which arose from a fundamental review of the loan book, particularly the large scale corporate loans. It should be noted that the results included an 11% increase in the operating profit.
Additional Information.
The bank has adopted a new strategy following a review of the bank's operations in early 2000 which involves moving away from general retail banking in order to concentrate on small and medium enterprise business banking, providing a more focused personal banking service and continuing to serve its original market, the agricultural sector.
ACC Bank has had a difficult time in the past two years but it has addressed the issues and is making changes. I look forward to receiving proposals from the board in the timescale I announced in January and will give it my full consideration. If I decide to accept its recommendation, I will take the matter to Government and, in due course, seek a motion of approval from the House before proceeding with the sale of the shares, held by me as Minster for Finance, as I am required to do under section 5 of the ACC Bank Act, 2001. Details of the board's proposals will then be given to the House in order to allow Deputies reach a fully informed view.
Has the Minister held ongoing meetings with the chief executive or the board of ACC Bank regarding the possible sale of the bank?
I do not hold regular meetings with the chief executive. However, I regularly meet the chairman of the board as that is the proper way to approach these matters. I met the chief executive and the chairman on at least one occasion.
The Deputy will recall the difficulties experienced by ACC Bank and other State companies as a result of which I initiated a process whereby I hold regular meetings with the chairmen of bodies under my remit. Since taking office as Minister I have held regular meetings with the chairman of ACC Bank who keeps me up to date regarding developments.
Now that the legislation to complete the sale of ACC Bank has almost been passed by both Houses – it is finished in this House—
The legislation has been passed by both Houses.
From his meetings with the chairman is the Minister aware of the anxiety among the staff of the bank? Many competent people work for ACC Bank who are unsure of their future. Has this issue been brought to the Minister's attention? Is he disappointed that no progress has been made, particularly when the proposed joint sale of ACC Bank and TSB fell through? Is he disappointed that the staff is left wondering what will happen?
The chairman and the board with whom I communicate have been clear for some time as to what I intend to do with the bank. I announced months ago that the bank was for sale and that I expected the board to proceed with its business plan.
Intensive negotiations have recently taken place between the unions and management. It is fair to say that, in the past decade or so, there was an unhappy relationship between the management and unions. There is no secret about this fact. The legislation provided for the commencement of the ESOP. Negotiations were slow to begin, but they are now under way. The restructuring is taking place and the bank is for sale. The board has appointed its corporate financial advisers and its legal advisers. A deadline was recently set for the receipt of indicative bids regarding the possible purchase of ACC Bank by other companies. Everyone is aware that we are moving forward. I have made it clear for some time that the status quo will not remain and that the bank will be sold.
I will allow a brief question from Deputy McGrath.
Has the Minister received any indications regarding investments in ACC Bank? The level of investments in the bank reduced for a period which was an unhealthy sign for a bank we are hoping to sell. Will the Minister comment on the savings scheme? ACC Bank appears to be offering the most attractive returns on the special savings scheme. Can the Minister comment on what I understand to be a large volume of investment in the scheme in ACC Bank?
We will not know for some time how the institutions have worked out the scheme. However, ACC Bank has achieved a high market profile in terms of this scheme. It would not be correct for me to suggest which scheme is best. However, I would refer Deputies to the media interest and to the fact that some commentators and other bodies who kite mark these schemes have placed ACC Bank's scheme at the top of the list. Other players in the market would dispute this and I will not make a judgment as to which scheme is the best. However, the scheme has proved very attractive.
ACC Bank is a sound financial institution. I agree with Deputy McGrath that hundreds of people who work for the bank have done an excellent job down the years and would compare well with staff in any other institution. It is unfortunate that there have been unhappy differences over the years, but the staff of ACC Bank are very professional.