DUTCH FINANCIAL institution Rabobank has said it has no plans to exit the Irish market or sell its Irish retail bank ACC Bank, saying that full-year bad debt costs at the loss-making subsidiary would be lower for 2010 than last year.
Publishing figures for the six months to the end of June, the Utrecht-based bank said that bad debt costs remained high within its international retail banking division as the Irish property sector “continues to be under pressure”.
Rabobank chairman Piet Moerland told reporters that the situation in Ireland was bad but that the bank was not considering withdrawing from the market.
“We want to wait it out and try to recover as much as we can,” he said, adding that it could take four to five years before the Irish economy recovers.
But he joked that if anyone knew of a buyer for ACC, they should let him know.
Rabobank injected “quite a bit” in additional capital to bolster ACC this year, he said, but did not disclose the figure. He said that it was less than the €275 million invested during 2009.
The bank, which had loans of €4.6 billion at ACC at the end of June, said it had taken cumulative provisions of €1.2 billion to cover Irish bad loans at ACC.
Bad loan costs fell to €569 million across the group from €1.1 billion for the same period last year, but remained high internationally as a result of Irish impaired loans.
Rabobank International’s loans to the Irish property sector “again had a significant adverse impact on bad debt costs”, the bank said.
Value adjustments were down 55 per cent to €252 million in the first half, representing a charge of 0.55 per cent of average lending.
The bank noted that this was in excess of its long-term average.
ACC made a loss of €394 million in 2009 after setting aside €383 million to cover bad debts.
The bank sought to grow its development lending in the latter stages of the boom, providing high-profile loans to developers Liam Carroll and John Fleming as late as January 2008 – more than a year after the market had peaked.
The bank is a small but significant player in the market as it was one of the first and most aggressive to pursue developers for debts, appointing receivers to companies and properties, and seeking judgments through the courts.
Rabobank has sharply reduced its retail presence in Ireland, cutting almost a third of its staff, closing 16 of its 25 branches and withdrawing cash services from the remaining branches last year.
Despite the problems at ACC,it’s understood that the bank is keen to attract business customers of Bank of Scotland (Ireland) who must find a new bank after it announced its exit from Ireland.
The Rabobank group posted a 26 per cent increase in first-half profits due to the declining cost of covering bad loans.
Net income rose to €1.66 billion from €1.32 billion for the same period in 2009.
