LEGAL BATTLE will rage again today between ACCBank, the Dutch-owned minnow of the Irish banking sector, and a significant property developer, over the recovery of multi-million-euro loans into the property sector.

It was only last Friday that Liam Carroll turned to the High Court for protection from ACC as the bank threatened to topple a substantial part of his development group, with its multi-billion-euro debts, over €131 million in loans owing to it.

Carroll and his advisers will be monitoring proceedings in Court 19 this morning closely as property developer John Fleming attempts to appoint an examiner to his company, Tivway, in the face of an insolvency action by ACC over €21 million in loans.

Fleming will apply to set aside the earlier appointment of receiver, which threatens to topple his overall group which has bank borrowings of several hundred million euro, in favour of an examiner, who will devise a rescue plan to secure the future of the business.

ACC is resisting the appointment. If Fleming is successful, ACC will have to get in line with the rest of the Fleming Group’s banks and co-operate to work out the debts in a multilateral plan.

Fleming’s case is viewed as a dry run for the application Carroll faces next week. Carroll successfully sought the refuge of the High Court last Friday and the application to appoint an examiner to six companies in his Zoe Group will proceed next Monday.

The court provided the group with protection from €1.2 billion in debts, including €1.1 billion in borrowings to eight banks. The Zoe Group represents a large part of Carroll’s overall empire but not all his borrowings and debts.

The two businessmen join a long line of developers who have been subjected to aggressive actions by ACC. Unlike most of the guaranteed and non-domestic banks, the bank has gone nuclear on developers through the courts and by seeking the appointment of receivers to recover borrowings.

Most other lenders, including the guaranteed and non-domestic banks, have agreed to adopt a softly-softly approach with beleaguered and heavily

indebted developers before the National Asset Management Agency (Nama) comes into operation.

ACC has maintained its more belligerent approach for several months but has in recent weeks started to focus more on the larger developers whose exposures are far greater for their other banks.

By taking on large developers with loans owing across several lenders, ACC’s actions could have a ripple effect across the banking sector, forcing significant writedowns of loans before Nama sets the “through the cycle” discount at which the State will buy the loans.

One source with a significant insight into ACC’s actions said developers were now turning to examiners not because they want to, but to protect themselves.

The fear is that this could lead to a flood of properties coming onto a heavily depressed market and sharp writedowns of loans across the banking sector before the Nama process kicks in.

“It is very damaging for Ireland Inc,” he said. “You look at AIB – they are heavily exposed to both Fleming and Carroll. The amount of property that is going to come onto the market as a result of these actions will be enormous.”

The reasons for ACC’s solo run are not clear. The bank has a small loan book relative to the other lenders in the market, which means it has perhaps less to lose, particularly for its large parent.

ACC had loans of €6.5 billion to customers at the end of last year.

Foremost in the minds of the bank’s Dutch owners, Rabobank, is its prized status as the only privately owned bank in the world with a triple-A rating – a label

it will fight tooth and nail to retain.

The rating stands as a massive source of strength in such uncertain financial times and a magnet for deposits, both retail and corporate across its global operations.

Last month international rating agency Standard Poor’s held Rabobank’s credit score at the top AAA-rating but noted the slight rise in the bank’s bad debts due to “material impairment losses in Ireland and in wholesale banking”.

The agency warned the rating could come under pressure by an acceleration of “risk charges” in its international banking activities, which clearly includes ACC given the earlier reference by SP.

For a bank with €402 billion in assets worldwide, the attention on its tiny Irish bank raised alarm bells.

The management team at Rabobank is spending a significant amount of its time and its focus on resolving the problem loans at its troubled Irish subsidiary.

Senior managers at Rabobank engaged directly with the Carroll camp in its bid to recover its loans, but was unwilling to accept any deferral of repayments or interest.

The Utrecht-based bank is rapidly retreating from the Irish market. Led by its Dutch chief executive Rob Hartog, ACC is working through plans to cut 200 jobs – almost a third of its workforce – and close 16 of 25 branches.

The bank is showing no signs of letting up – it is believed to be planning further actions against indebted developers as its Dutch owners retrench from Ireland.