Impossible for foreign banks to trade here, says Rabobank

DUTCH LENDER Rabobank has said it is no longer possible for foreign banks to trade in Ireland after the bank disclosed that it had set aside €1 billion to cover losses on the €5 billion loan book at its Irish subsidiary, ACCBank.

The Dutch bank said that foreign banks in Ireland had “to take care of themselves” as Government support measures were not available to non-Irish banks. The bank named Nama as one support.

“It is not really possible for non-Irish banks to compete on that market any more,” Rabobank’s chief financial officer Bert Bruggink told reporters yesterday.

Higher bad debts at Rabobank led to a 18 per cent fall in profits to €1.3 billion for the first six months of the year. Mr Bruggink said that Rabobank had decided to reduce its business in Ireland gradually.

“Given the short and medium term economic prospects we have concluded there is little hope that the Irish economy will recover in the near future and that is why we have decided to gradually reduce our operations in Ireland,” he said.

He said it was “too early” to say whether it would withdraw fully from Ireland. The Government has left the door open to foreign banks to participate in Nama but they are not expected to partake in the plan. Asked if Rabobank would complain to the EC about the disadvantages facing it in Ireland over State supports, the bank said: “You gave us an idea.”

Rabobank set aside €400 million to cover loan losses at ACC in the first six months of the year.

The Utrecht-based unlisted bank said it has provided for losses on a fifth of its Irish loans, the equivalent of a bad debt charge of 2,000 basis points, or 20 per cent.

Rabobank had taken “fairly drastic” action to reduce its presence in Ireland, Mr Bruggink said, and the bank had to examine the quality of Irish loans and take “commensurate provisions”.

He refused to rule out writing off more of its Irish loan book.

“You can never say never but I don’t think it is likely,” he said.

He said that property prices had fallen 50 to 60 per cent in Ireland, halving the collateral held by ACC.

ACC is closing 16 of its 25 branches and cutting 200 staff, almost a third of its workforce. The bank is also aggressively pursuing loans owing by developers through the courts.

ACC’s threats to liquidate companies in Liam Carroll’s Zoe Group over debts of €136 million has forced the developer to seek court protection from creditors who are owed €1.35 billion, including €1.27 billion to banks.