ACC needs a new capital injection of about £5 million from the Government this year if it is to continue to grow, according to chief executive Mr John McCloskey.

The bank is now half way through its four year development plan, which is to be updated later this year. Under this plan, new capital is needed each year to support lending growth. The Government invested £5 million in September 1995 and ACC wants a further £5 million this year.

New capital of £5 million would support new lending of about £75 million under capital adequacy rules.

While the Government considers ACC's future - the bank still favours takeover or a strategic alliance with a large European bank - the bank will continue to need State funds to grow and develop.

In intensely competitive markets, one of the main issues now facing ACC is cost control. The cost of running the bank increased faster than its operating income last year.

Some of the increase represented investment to improve products and services which should boost income in the future. But cost control is essential to ensure the bank remains able to compete in aggressive markets.

US consultants, PMI, have suggested a way forward but changes have yet to be agreed with staff. ACC is targeting a cost/income ratio of 65 per cent this year falling to 60 per cent over four or five years.

Although 30 per cent of its loans are advanced to farmers ACC does not see any need to increase provisions because of the beef crisis.

ACC chairman, Mr Dan McGing, whose term of office ends on April 17th, expressed concern about price inflation in the housing market, particularly in Dublin, and in the land market. "There have been problems before when banks lent on land prices that were too high," he said.

Mr McGing said he would be talking to the Minister for Finance about his position, stating that he would be prepared to continue as chairman.