ACCBANK chief executive, Mr John McCloskey, is looking forward to seeing the shares of a merged ACC and TSB Bank listed on the stock exchange. In a little over a year's time he is confident this prospect will become a reality.

In 10 years, ACCBank has come back from the brink of disaster. In 1989, it reported losses of £15 million (€19.05 million) as its fortunes waned with the dire financial difficulties that beset the Republic's farming sector. This week it announced profits of £20.5 million mainly on the back of strong growth in mortgage and business lending, and is limbering up to become a significant player in the personal banking market with its new partner, TSB Bank.

Mr McCloskey believes the future is bright for the bank's employees and customers.

The bank, which was set up in 1927 to provide banking services to the Republic's farming sector, has come a long way.

When Mr McCloskey took over as chief executive in 1988, it was on its knees. The entire agricultural sector was in financial difficulties and the ACC's sole objective was survival.

"We nearly drowned. There was no bank that I know of that was dealing with agriculture at that time that didn't get into difficulties. The big banks here had very large debts to be written off but they also had a stream of income from other business banking activities that allowed them to do that. We didn't have that.

"I was delighted to get the opportunity at that stage to become chief executive because there was only one way it could go," he says.

The bank was effectively bailed out by its major shareholder - the State - with the Government issuing an £18 million guarantee against its loan book.

Forced to deal with the cold commercial realities, ACC had to take a new direction. "We were quite down in ourselves and in 1989 began to slowly diversify away from farming. We went for low-risk business, primarily mortgages, and took a conservative approach to how much we were prepared to lend.

"Everybody put their shoulder to the wheel and came up with a formula. We spent £1,000 per person training people to sell new products and this has proved to be a great investment. Prior to that we spent nothing on training because we were under siege with our profits and we were cutting costs all of the time."

Today 50 per cent of ACC's loans are to the business sector, 30 per cent is accounted for by mortgages and personal loans while 20 per cent is still lent to the farming sector. Restored to financial health, ACC is now in a strong position to move forward and Mr McCloskey believes the link up with TSB will be mutually beneficial. "We will do what we are good at. We will provide funds for farming, we will do what TSB is good at and what we are getting good at and that is to provide a very slick service for personal customers. And the staff will have a stake in the company, so in a sense they will be working for themselves. We'll end up with a very successful merger and flotation."

He insists he is pleased to be getting into bed with TSB although it was clearly never his first choice as a business partner. Mr McCloskey and the board had favoured bringing in a strategic partner, such as the French co-operative bank, Credit Agricole, as far back as 1992.

In an unusual move, ACC staff, had a different view and presented a proposal to the Minister for Finance, urging a merger with TSB. This was eventually accepted by ACC's senior executives who are now embracing it with great enthusiasm.

Mr McCloskey says he is not disappointed with the outcome.

"There has been a lot of talk that John McCloskey identified with Credit Agricole. Let me put that in context. I sit on the council of the European Association of Co-operative Banks and have close relationships, not just with Credit Agricole but with a number of those banks. I saw the ethos of those banks sitting very well into ACC. It has been said that I favoured Credit Agricole but that's not the case, they were very proactive. I would have favoured any bank with that ethos."

He insists things have moved on since then. With legislation now in place to allow ACC workers to participate in an employee share-option scheme, the background against which decisions are made is radically different.

"I am completely happy. The merger creates opportunities for synergies and will place us in a stronger position than the two banks would otherwise be."

He is still enamoured with the idea of an international partner though, and suggests it is not inconceivable that one of the co-operative banks would take a minority stake in the merged entity when it begins trading. But he says that no such discussions are in progress.

Newbank as the two banks are collectively known at the moment, is protected under legislation for five years from becoming a takeover target, although another institution can take a maximum 15 per cent shareholding when it is floated.

"It's not outside the realms of possibility that some foreign bank, and I'm not saying Credit Agricole, will take a stake at the flotation stage."

But such talk is somewhat premature, as Newbank still has a number of hurdles to cross, before it even gets to the market.

A bitter dispute at ACCBank that has filtered into TSB Bank has threatened this project and there are concerns it could yet derail the flotation. Mr McCloskey insists these problems can be resolved.

"I'm certain we will overcome whatever little set backs we are experiencing at the moment. Talks are continuing and the issues can almost certainly be resolved within a month."

Another potential fly in the ointment is that TSB could walk away from ACC. It retains an effective veto over the merger. Under the terms of the highly unusual agreement which was struck between the Government and TSB, the two banks will not be merged until the day of the flotation.

Mr McCloskey says he is confident the merger will happen. "TSB can theoretically walk away, but I don't see that happening and I will put on a wager now that they won't walk away. I don't see any turning back at all. It's not material whether it should be tied in more securely at this point. It's all systems go."

The ACC chief executive is a member of the Government appointed non-statutory board of Newbank and is charged with implementing the flotation, with TSB chief executive, Mr Harry Lorton overseeing the merger. Mr Lorton will then become chief executive of the merged group.

Mr McCloskey says he will be happy to take a back seat when his role in the flotation is completed. "I'll be delighted at that stage to see the bank where I have served most of my working life quoted on the stock exchange."